Q&A with Prophecy Platinum (V.NKL) Chairman John Lee
What’s been keeping you busy today?
We at Prophecy Platinum (TSX: V.NKL, Stock Forum) are busy drilling at our Wellgreen property in the Yukon, one of world’s largest undeveloped nickel sulphide - PGM projects. We believe Wellgreen has better economics than most other large nickel sulphide projects, due to its higher grades, PGM credits and location near roads and international sea ports. As well, in July we completed the acquisition of the Shakespeare nickel copper PGM mine in Ontario; this was the Prophecy group’s fifth transaction in the last 2.5 years.
Can you describe your company and say what it does?
Prophecy Platinum is an industry-recognized mining company focused on the acquisition and development of nickel sulphide projects – with particular attention to those with significant platinum group metals exposure – in stable, mining-friendly jurisdictions, primarily Canada. We are not an exploration company looking for greenfield discoveries, but rather a development company that acquires deposits or mines with the intent of moving them towards production.
What distinguishes Prophecy Platinum from companies in your space?
The company has a good track record of fund raising, with management and directors who specialize in the nickel PGM space. We continue to add to our personnel base, increasing our overall team expertise in order to most effectively and efficiently advance the projects. Our Wellgreen deposit itself also distinguishes the company.
What is your flagship project?
The Wellgreen nickel-copper-platinum group metals project in the Yukon is Prophecy’s main focus due to its size and potential. As noted, it is extremely large, amenable to open pit mining, in an attractive location beside a major highway with access to deep sea ports, and has higher grades of platinum and exotic PGEs than most other North American deposits. We have completed a PEA, have excellent relations with the Kluane First Nations and continue to bring seasoned, respected experts from the mining industry to the Prophecy team.
What stage is the project at?
We finished a PEA on the Wellgreen project in July of this year that demonstrated the economic potential. Since then, we have also received metallurgical test results that indicate we can produce separate nickel and copper concentrates from the Wellgreen ore, which should make the economics even more attractive because separate concentrates should lower transportation, smelting and refining costs.
What do you think you could do with that project over time? What would the goals for it be?
The PEA was based on an open pit mine with that will produce 53 million pounds of nickel, 55 million pounds of copper and 192,000 ounces of Pt+Pd+Au per year in concentrate, on average over a 37-year mine life.
Can you explain why you have chosen to work in the Yukon, Canada?
The location of a project is of fundamental importance to its viability as a mine. Wellgreen is clearly a very exciting property and is made even more so by virtue of its location in the southwest of this very mining-friendly jurisdiction. The area has a long and storied mining history with a skilled and ready workforce, supportive local communities and a government that recognizes the importance of the industry. The Fraser Institute ranks the Yukon among the world’s top-10 mining jurisdictions and a number of major firms like Atac, Kinross and others are well-established there.
Are there other projects within the company that you want people to be aware of?
In July, Prophecy acquired the Shakespeare nickel-copper PGM mine in Ontario, Canada. We’ve seen a recent upturn in nickel and copper prices – as well as PGMs – and we feel very confident that it will be brought back into production once those commodities reach a certain threshold price. Shakespeare is a fully-permitted mine, so putting it into production could be done relatively quickly in the right price environment.
What are the key challenges that you face in your business?
Global financial pressures have greatly restricted investors’ appetite for risk and junior mining companies, particularly those in the exploration stage. Access to the capital required to advance projects has been somewhat difficult but, in spite of this, we have managed to progress and the markets do seem to recognize the quality and viability – the unique character – of our Wellgreen project and other endeavours.
We’ll see what effect the recently announced QE3 from the U.S. Fed will mean for commodities, capital markets and investment trends, but we’re confident we have the team in place to ensure Wellgreen is ultimately advanced to production.
What are the key goals for 2012 and going into 2013?
Continuing from our positive PEA, Prophecy is now working towards completing a Prefeasibility Study.
We are continuing to build our team and consider potential partners as we embark on transportation and environmental studies, consult with the Yukon government regarding permitting and look ahead to continued infill/exploration drilling and metallurgical work.
Who are the major shareholders Prophecy Platinum?
Parent company Prophecy Coal Corp. is the largest shareholder and Sprott Asset Management is the largest institutional shareholder.
How much money does the company have right now?
We are funded well into 2013, having recently raised $10.25 million.
Why should investors be thinking of investing in Prophecy Platinum?
Investors should consider the increasing scarcity of large nickel sulphide deposits, especially those than can be mined as an open pit. Nickel prices have fallen due to the supply of nickel pig iron and nickel laterite mines, but nickel pig iron is lower quality and nickel laterite projects have faced a number of technological hurdles. There will always be a demand for high quality nickel from nickel sulphide deposits like Wellgreen and industry experts are forecasting a lack of smelter supply after 2015.
Is there anything else you would like to say?
The platinum content within the Wellgreen deposit is worth mentioning given the deteriorating labour situation in South Africa, which accounts for 75% of the world’s platinum supply. We believe that South African platinum supply will diminish over time and that industrial consumers of platinum, such as auto manufacturers, will look for secure sources of platinum supply in the future. The Wellgreen pitshell contains an estimated 2.76M ounces of platinum, as well as 3.79M ounces of palladium. This PGM content really increases the strategic value and economics of the Wellgreen property.
Disclosure: Prophecy Platinum is a Stockhouse client.