Picture seven football fields in a row of continuous mineralization, and that’s the width of platinum group metal (PGM) mineralization intercepted in a single drill hole at Prophecy Platinum’s (TSXV: NKL; US-OTC: PNIKF) Wellgreen PGM–nickel–copper project in the Yukon, president and CEO Greg Johnson says.
"It is one of the best holes in my career," Johnson says, whose 25 years of developing large-scale projects includes sitting in the corner office at South American Silver (TSX: SAC; US-OTC: SOHAF) and being part of the discovery team at the Donlin gold project in Alaska, now a 40 million oz. gold deposit co-owned by NovaGold Resources (TSX: NG; NYSE-MKT: NG) and Barrick Gold (TSX: ABX; NYSE: ABX).
Hole 215 drilled into the Far East zone at Wellgreen returned 756 metres of continuous mineralization grading 1.92 grams platinum equivalent per tonne, or 0.46% nickel equivalent. Within that zone there is a higher-grade portion that includes a 66-metre-wide zone grading 4.19 grams platinum equivalent per tonne, or 1% nickel.
"Regardless of what metal you’re looking at, a drill hole that has 756 metres of mineralization that is close to 2 grams is just a phenomenal intercept," Johnson continues. "It is as good — or better than — some of the best holes we drilled at the Donlin gold deposit in Alaska when I was with NovaGold . . . In my mind, it just demonstrates how large the system is, and that it is world-class."
Johnson says he is unaware of any other ultramafic PGM-containing deposits in the world with continuous mineralization over comparable widths, and argues that while platinum mines in South Africa struggle because "they typically mine mineralized seams just a few metres at great depths underground," the mineralization at Wellgreen "is typically several hundred metres wide and begins at surface, making it amenable to open-pit mining."
And unlike South Africa, Zimbabwe and Russia, which together account for 92% of the world’s platinum supply and 84% of its palladium, and where political risk is high, Canada’s Yukon Territory has been ranked by the Fraser Institute as being one of the world’s top mining jurisdictions.
Wellgreen is just off the Alaska Highway along a 15 km all-season road, and can be worked all year-round. The sea ports of Haines and Skagway are 410 km and 485 km south.
Based on a preliminary economic assessment of the deposit last year, nickel is the project’s single-largest contributor of value at current metal prices, using anticipated metallurgical recoveries for separate nickel and copper concentrates. But the company anticipates that the net economic contribution will be largest for platinum, palladium and gold, followed by nickel, and then by copper and cobalt.
(TSX: HBM; NYSE: HBM) discovered the deposit in the 1950s and put it into production in the 1970s, but only operated the mine for a few years before falling metal prices and challenging ground conditions forced the company to shut it down. Since then the property has passed through a series of hands, and Prophecy picked it up in 2011.
In July 2012, Wellgreen completed a preliminary economic assessent that was based on bulk concentrate produced through conventional-sulphide flotation, and in August of the same year metallurgical test results showed that separate nickel and copper-sulphide concentrates could be produced.
This year Prophecy completed 4,735 metres of drilling in 29 holes, and assayed another 8,136 metres of core from 21,784 metres of historical drill core that previously had only been selectively sampled.
Johnson says the company will take all the drilling information, along with new metallurgical test work, and put out an updated PEA in the second quarter of 2014, and hopes to kick off a prefeasibility study in the second half of next year.
The company is looking at the potential value of the rhodium, iridium, osmium and ruthenium that is present within the deposit. (The initial PEA did not include these metals.)
In June the company raised $5.9 million, and it has no debt. Management and insiders hold 8% of the company’s shares, with institutions holding 21%; large private investors, 25%; and retail investors, 46%.
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