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Prophecy Platinum Announces $20-Mln Special Warrant Financing

Prophecy Platinum

Corp. (

CVE:NKL

)(OTCQX:PNIKF) announced just as markets were set to close last night a $20 million brokered private placement offering of special warrants, in a bid to advance its flagship Wellgreen property in the Yukon to pre-feasibility stage.

The financing, conducted by a syndicate of agents led by Casimir Capital, will consist of special warrants at a price of $2.25 each, and flow-through special warrants at a price of $2.50 each.

Each special warrant, upon exercise, will be comprised of one common share of the company and one common share purchase warrant. Every warrant will allow the holder to acquire one additional share at a price of $3.00 for a period of 2 years.

Meanwhile, each flow-through special warrant, once exercised, will be comprised of one common share, and will be issued as "flow through shares" as defined in the Canadian Income Tax Act.

The company said the agents will also be granted an over-allotment option to purchase up to an additional 15 per cent of the base offering, which can be used two days prior to the closing of the financing.

In the statement Thursday, Prophecy said it plans to use the new funds to advance its Wellgreen property toward pre-feasibility as well for exploration on the balance of the projects in its mineral portfolio, and for general corporate purposes.

In just a year's time since its listing, the company has managed to outline an initial resource, generate a robust economic report, and kick start a 20,000 metre drill program at its flagship Wellgreen project, a

Platinum

group metals (NYSEARCA:PGM)-rich

Nickel

-copper property in the Yukon.

The project is comprised of 120 claims over 2,500 hectares.

The company, which spun off of

Prophecy Coal

(TSE:PCY) in June of last year, is focused on increasing the resource at Wellgreen, with the highly-anticipated preliminary economic assessment (PEA) of the project just released last week.

The PEA, prepared by

Tetra Tech

, evaluated a base case open pit mine at an 111,500 tonne per day mining rate, and an onsite concentrator at a 32,000 tonne per day milling rate.

The project is expected to produce 1.959 billion pounds of

Nickel

in concentrate, 2.058 billion pounds of copper and 7.119 million ounces of

Platinum

plus palladium plus gold over a 37-year mine life, with an average strip ratio of 2.57.

The study further noted that the development of the Wellgreen deposit will produce a pre-tax internal rate of return (NYSE:IRR) of 38 per cent and a net present value (NYSE:NPV) of $3.0 billion, based on 8 per cent discount rate.

Initial capital costs were pegged at $863 million, including 25 per cent contingency. The deposit is to be processed using a conventional concentrator to produce bulk

Nickel

-copper-

Platinum

group element (PGE) concentrate.

The company said permits to start construction are anticipated to be obtained in 2016, with the production of concentrated expected to begin in 2019.

An updated resource is planned for early 2013 after the underground and surface drill program at the site, with a pre-feasibility study expected soon after, based on the updated numbers.

Prophecy also stands to benefit from its recently-announced acquisition of Ursa Major Minerals (

TSE:UMJ

), which is expected to close in July 2012, creating a mid-tier resource company with a pipeline of

Platinum

and

Nickel

projects.

The merger, which was announced in March, will see Prophecy take hold of the Shakespeare

Nickel

-copper mine near Sudbury.

Shakespeare has a probable reserve of 11.82 million tonnes grading 0.33%

Nickel

, 0.35% copper and 0.02% cobalt with 0.33 grams per tonne (g/t)

Platinum

. This includes 0.36 g/t palladium and 0.18 g/t gold.

Closing of the private placement deal remains subject to regulatory approvals. Agents will be paid a cash fee of 6.5 per cent of the gross proceeds from the offering.

The company said it will use its "reasonable best efforts" to obtain a receipt for the final prospectus by the securities regulatory authorities within 45 days of the closing date. If it fails to do this, each unexercised special warrant will allow the holder to get additional shares and warrants.