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Underground drilling takes advantage of the former mine, which produced 171,652 tonnes grading 2.23% nickel, 1.39% copper and 4.2 g/t PGEs from 1972 to 1973. Prophecy, however, has its sights set on an open pit.
But apart from 16,000 metres of infill work, Prophecy plans 4,000 metres of exploration this year. “Every hole we’ve drilled at depth hits mineralization,” Oosterman reports. In addition, geological data “shows the intrusion that hosts the Wellgreen Deposit potentially extends for at least another two and a half kilometres onto our adjacent property [the 2,500-hectare Wellgreen East Zone]. That two and a half kilometres has never been drilled before, so it has huge blue-sky potential.”
The project has year-round road access to the Alaska Highway, 15 kilometres away. The power grid is about 120 kilometres south and the deep-sea port of Haines, Alaska, is about 400 kilometres away. “Relations with the local community are good,” Director Greg Hall says. “We have dialogue with them and discuss how all parties can benefit.”
We pick up these projects and aggressively move towards production by developing, de-risking, permitting, financing and continuing discussions with strategic companies as well as end-users. But at the same time, we’re really driven by maximizing shareholder value. If a compelling approach were made, we’d certainly take it to the shareholders —Greg Hall
Prophecy‘s Lynn Lake Property in north Manitoba is a former mine with the third-largest historic nickel production in North America, Hall says. The project features intact infrastructure and an April 2011 resource estimate of 20 million pounds nickel and 10 million pounds copper measured, 250 million pounds nickel and 130 million pounds copper indicated, and 80 million pounds nickel and 50 million pounds copper inferred, using a 0.4% nickel-equivalent cutoff. Prophecy has exploration slated for later this year.
On May 30, shareholders will decide whether to approve a merger with Ursa Major Minerals Inc TSX:UMJ, which would become a Prophecy subsidiary. The 25-for-one share swap would leave Prophecy with about 58.7 million shares outstanding, as well as options and warrants for an additional 8.2 million shares. The prize would be Ursa‘s Shakespeare Nickel Mine in north-central Ontario. (Update: On May 31 the two companies announced Ursa shareholder approval.)
The mine suspended operations after nine months of production ending January 2011, when Ursa failed to negotiate a new processing agreement. Production totalled approximately 1.3 million pounds nickel, 1.5 million pounds copper, 92,204 pounds cobalt, 1,900 ounces platinum, 2,100 ounces palladium, 1,100 ounces gold and 12,100 ounces silver. Shakespeare’s operating profit for the year ended January 31, 2011 came to $2.3 million.
Hall sees Shakespeare enhancing Prophecy‘s strategy. “What we look for is projects that have very strong, robust economics at today’s metal prices but with a view of a strengthening commodity cycle over the next few years,” he says. “We’re interested in projects like Wellgreen, very long-life, large, sulphide-nickel-copper-PGM and gold deposits. The majors are looking for deposits with lifespans of 30-plus years. So we pick up these projects and aggressively move towards production by developing, de-risking, permitting, financing and continuing discussions with strategic companies as well as end-users. But at the same time, we’re really driven by maximizing shareholder value. If a compelling approach were made, we’d certainly take it to the shareholders.”
Major shareholders include Prophecy Coal TSX:PCY with 41%, Sprott Asset Management with 13%, and management and insiders with 6%.
On March 1, Northern Securities placed a buy recommendation on Prophecy with a 12-month target of $7.50. On March 13, Mackie Research rated the company a speculative buy with a 12-month target of $7.50. Casimir Capital’s May 14 recommendation was a speculative buy with a $7 target. At press time Prophecy had 55.45 million shares outstanding at $1.98 for a market cap of $109.8 million.
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