The subject of this report is Prophecy Platinum (PNIKF.PK) and the Wellgreen deposit. The company Website has a wealth of information that every investor should become familiar with. The company has about 81 million shares fully diluted. The management team has some recognized names and is growing. Wellgreen is located in the Yukon, and is, in my opinion, one of the best places in the world for a mining company to have operations. It is a stark contrast from other PGM mines in South Africa or Russia that have issues beyond the scope of this report.
Wellgreen is less than a four hour drive from Whitehorse. The Alaska Highway leads right up to the property boundary. The open pit is located another 15 Km or so off an established gravel road and is accessible even by car. There is also a deep seaport located about 400 Km south that can be utilized year round.
Right now Wellgreen is clocking in at over 446 million tons of pay dirt, with grades of .87 grams per ton PGMs + Au, .31% Ni, and .25% Cu in the inferred category. For the Indicated, there are currently 14 million tons with grades of 2.23 grams per ton PGMs + Au, .68% Ni, and .62% Cu. I have no doubt the confidence level of the Wellgreen deposit will increase significantly when the next Ni 43-101 resource estimate is out.
The management team is burning the candle at both ends with an aggressive infill and exploration drill program. Wellgreen is more or less in the center of the land package. There is also drilled mineralization on both ends of a 17+ Km stretch that is not included in the current resource estimate! For some visuals of just how big this is, see the below photo. It was taken on what will be the open pit and there is drilled mineralization that extends beyond the mountain range!
In July 2012, the company released a PEA with an IRR of 32%, an NPV of $2.4 billion, and a CAPEX of $863 million. Along with a mine life of 37 years, payback is less than 5 years, and the average strip ratio is a meager 2.57.
Impressive numbers to say the least, and for a company with a market capitalization of less than $150 million, it makes for a compelling investment. Also of note is that cash cost is $2.59 per lb Ni, net of Cu, PGM, and Au credits.
Now lets get into some core. This core doesn't even need to be wet for the reader to know this is very high grade massive sulphide. I'm sure the whole team is looking forward to seeing the assays.
Here is a look at core from the same hole. Again this shows that the core doesn't have to be soaking wet to know this is pay dirt.
I can look at core all day long, so without further ado, here is more core waiting to be split and sent off to the lab.
And no trip to Wellgreen would be complete without a trip underground.
There has been a few missteps by management in the past, most recently with the botched private placement a few months back. The share structure went from outstanding to ho-hum. When taking into account the large resource base and the big blue sky potential, I still consider the share structure to be much better than average. Looking at the road ahead, we are funded well into 2013. At that point, I expect the next resource estimate to be out. I have no doubt it will shed a new light on Wellgreen and eliminate any lingering doubt that Wellgreen will be a mine.
Prophecy Platinum is a new company, and I still consider this to be the ground floor on a deposit that will one day be bought out. The CEO is bringing on board some very talented people. I recently had a lengthy discussion with Neil Froc, and I have full faith that management will create shareholder value in the days and weeks ahead. Management should be working on a listing on a more prestigious exchange. The company also has numerous projects that could be monetized in the future. To sum it up, I think Wellgreen is a great deposit. Make no mistake, it's world class. The core looks great and I'm sure the assays will knock some socks off!
Disclosure: I am long PNIKF.PK and have been adding to my position when opportunity knocks.