Silver Zinc Lead
District Project
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Investor Presentation – April 11, 2017
Forward Looking Statements
This presentation may include certain “forward-looking statements” within the meaning of applicable Canadian securities legislation. All statements,
other than statements of historical fact, included herein, including, without limitation, statements regarding future plans and objectives of the
Company, projected capital and operating expenses, permitting approvals, timetable to permitting and production and the prospective
mineralization of the properties, are forward-looking statements that involve various risks, assumptions, estimates and uncertainties. Generally,
forward looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is
expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such
words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". There
can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those
anticipated in such statements. Forward-looking information is subject to known and unknown risks, including but not limited to: general business,
economic, competitive, geopolitical and social uncertainties; the actual results of current exploration activities; acquisition risks; and other risks of
the mining industry. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those
contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. These
statements reflect the current internal projections, expectations or beliefs of Prophecy Development Corp. (“the Company” or “Prophecy”) and are
based on information currently available to the Company. The Company does not undertake to update any forward-looking information, except in
accordance with applicable securities laws.
The technical content of the Company’s presentation was reviewed and approved by Christopher M. Kravits CPG, LPG., who is a Qualified Person
within the meaning of National Instrument 43-101. Mr. Kravits is a consultant to the Company and serves as its qualified person and general mining
manager.
Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred Resources – The information presented uses the terms
“measured”, “indicated” and “inferred” mineral resources. United States investors are advised that while such terms are recognized and required by
Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms. “Inferred mineral resources” have a
great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the
basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated
mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an
inferred mineral resource exists, or is economically or legally mineable.
1
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Prophecy Development Corporate Highlights
TSX (Toronto Stock Exchange Main Board): PCY, OTC: PRPCF, Frankfurt: 1P2N
Formally known as Prophecy Resource Corp. and Prophecy Coal Corp.
www.prophecydev.com
[email protected] +1.604.569.3661
Head office in Vancouver, Canada with regional offices in Mongolia and Bolivia
Business: mineral exploration
silver/lead/zinc/antimony in Bolivia, vanadium/titanium/iron in Canada, coal in Mongolia
Shares Outstanding 5.26 million (fully diluted 7.15 million) , 52week trading range $1.0 to $7.2 (current $4.1)
Shareholding:
John Lee: 19.1%, Apogee Silver Ltd: 9% , 5 others: 20%
Distribution: 40% Asia, 30% Europe, 30% N. America,
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Management
John Lee, CFA
CEO and Chairman
John Lee is an entrepreneur with degrees in economics and engineering from Rice University.
under John’s leadership, Prophecy raised over $100 million and acquired substantial silver
assets in Bolivia and coal assets in Mongolia.
Damdinjav Davaajav
Mongolia Advisor
Mr. Damdinjav has over 20 years of power distribution and generation experience in
Mongolia. Mr. Damdinjav was Deputy Director of the energy department at Newcom Group.
Chris Kravits, CPG,LPG
Chief Geologist
Irina Plavutska
CGA: Chief Financial Officer
Bekzod Kasimov
Vice-President, Operations
Tony S.K. Wong
B.A., J.D: General Counsel &
Corporate Secretary
3
Christopher M. Kravits, CPG, LPG holds a Master of Science in Geology, has been a
professional geologist for over 39 years and is a Qualified Person within the meaning of
National Instrument 43-101.
Ms. Plavutska is a professional accountant with over 20 years of diverse international
experience in financial reporting, auditing, and accounting. She is a member of Certified
General Accountants Association of British Columbia.
Mr. Kasimov has served on the board of directors of several Mongolia-focused companies
and holds a Master of Science in Finance from the Stockholm School of Economics. Mr.
Kasimov is fluent in English and Russian.
Mr. Wong is a lawyer who has practiced law throughout Canada for over 12 years. He served
as a senior securities regulator in British Columbia from 2005 to 2010
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Potosi : World’s Premier Silver Address
Potosi Department, Bolivia, 30 million oz Ag produced in 2014
Pulacayo
Production started 1833
670+ mm oz Ag, 200,000t Pb, 200,000t Zn produced*
Prophecy acquired Pulacayo in January 2015
Prophecy to announce construction decision in 2017
Cerro Rico (200km NE Pulacayo)
Founded 1545, 1.8 billion oz Ag produced
2014 Coeur produced 6 mm oz Ag
San Cristobal (100km SW Pulacayo)
Third largest silver mine by reserve (500+ mm oz)
2014 Sumitomo produced 20+ mm oz Ag
San Vicente (150km SE Pulacayo)
2014 Pan American Silver produced 4 mm oz Ag
- mine
*source: wikipedia, company websites, SERGEOTECMIN bulletin no. 30, 2002
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Bolivia Update
November 2016: Luncheon meeting with Mining
Minister, who is coming to PDAC 2017
October 2016: Prophecy and Canadian Embassy meet
Mining Minister
The Company considers its investment in the Pulacayo project to be safe. As reported in Mining Journal “At a UK-Bolivia
trade and investment forum in London this week, Félix César Navarro, minister of mining and metallurgy, talked of new
safeguards for foreign investors looking to put cash into the country. New contracts governing exploration, mining and
processing were currently going through Bolivia’s congress that would give foreign investors the legal security they need
to invest in the country, he said.“ (report by Mining Journal June 10, 2016) Affirmation of the Bolivian government’s
support and protection of foreign investment and mining were later received during the Company’s meetings with Mr.
Navarro in October and November 2016.
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Why Pulacayo? $30 mm, 8 yr work in progress
Exploration Potential
Resource with Permitted Operation
• Pulacayo Resource
@ 500 AgEq Cutoff
• Paca Satellite Resource
@ 300 AgEq Cutoff
• Mining and Milling Construction Permitted
•
•
•
•
•
Infrastructure in place
•
•
•
•
6
90,000+ meters drilled for Pulacayo & Paca
Open pit, Underground, Tailings
Several exploration areas yet to be drilled
District Style Silver – Zinc – Lead play
Rare Antimony Surface Discoveries
Strong Local Community Relations
Power and water onsite
20km paved road to rail
Rail connects to Chilean Port
Trial Toll Mill Concentrate sold to Trafigura
•
•
•
•
200 years mining tradition
Generational miners
Supportive of Prophecy’s operation
Pulacayo town within 1km from mine
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Open Pit + Underground + District Potential
Paca Resource
Pacamayo Anomaly
El Abra Anomaly
7km
Pulacayo Resource
Pulacayo mine access tunnel
(dotted line)
Nap Pero Anomaly
Anomaly found during Plant
condemnation drilling
Pulacayo
Town
Position of Planned Mill
Resource
Tailings
7
Resource drilling only covered approximately 30% of the known Tajo vein
system which is open beyond 3km strike length and 1km depth.
Prior operator had developed much larger resource at lower cut-off.
Drilling along strike and down dip could discover additional mineralization.
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Paca Resource Estimate
Paca Mineral Resource Statement – Effective September 9, 2015
Ag Eq. Cut-Off
(g/t)
Category
Tonnes*
Ag
(g/t)
Zn
(%)
Pb
(%)
Ag Eq.
(g/t)
Ag**
(Moz)
Zn**
(Mlbs)
Pb**
(Mlbs)
200
Inferred
2,540,000
256
1.10
1.03
342
20.9
61.6
57.7
300***
Inferred
1,260,000
363
0.98
1.02
444
14.7
27.2
28.4
400
Inferred
650,000
462
0.90
1.00
538
9.7
12.9
14.3
500
Inferred
330,000
558
0.79
1.04
631
5.9
5.7
7.6
Prepared in accordance with the CIM Definition Standards for Mineral Resources and Mineral Reserves referenced
in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). The effective date of the
estimate is September 9, 2015. The mineral resource estimate was prepared by Mercator Geological Services
Limited (“Mercator”) under supervision of Michael Cullen, P.Geo., who is an independent Qualified Person within
the meaning of NI 43-101.
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Notes:
Mineral resources are estimated in conformance the CIM Standards referenced in NI 43-101.
Raw silver assays were capped at 1,050 g/t, raw lead assays were capped at 5% and raw zinc assays were capped at 5%.
Silver equivalent Ag Eq. (g/t) = Ag (g/t) + (Pb% * (US$0.94/lb. Pb/14.583 Troy oz./lb./US$16.50 per Troy oz. Ag)*10,000) +
(Zn% * (US$1.00/lb. Zn/14.583 Troy oz./lb./US$16.50 per Troy oz. Ag)*10,000; 100% metal recoveries are assumed based
on lack of comprehensive metallurgical results.
Metal prices used in the silver equivalent calculation are US$16.50/Troy oz. Ag, US$0.94/lb Pb and US$1.00/lb. Zn and
reflect those used in the June 16, 2015 Pulacayo mineral resource estimate by Mercator.
Metal grades were interpolated within wireframed, three dimensional solids using Geovia-Surpac Ver. 6.7 software and
inverse distance squared interpolation methods. Block size is 5m (X) by 5m (Z) by 2.5m (Y). Historic mine void space was
removed from the model prior to reporting of resources.
The block density factor of 2.26 reflects the average value of 799 density measurements.
The mineral resource is considered to have reasonable expectation for economic development using underground
mining methods based on the deposit history, resource amount and metal grades, current metal pricing and comparison
to broadly comparable deposits elsewhere.
*Tonnes are rounded to nearest 10,000.
**Estimated by the Company.
***The resource estimate cut-off value is 300 g/t Ag Eq. and resource estimate values are presented in bold type.
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Paca Drilling Highlights (18,160 meters drilled)
hole Nº
PND003
PND008
PND029
PND031
PND062
ESM2
from - to
(m)
Int
(m)
11.0 – 28.0
18.0 – 33.5
12.0 – 22.3
0.0 – 37.0
10.0 – 52.0
0.0 – 38.0
17.0
15.5
10.3
37.0
42.0
38.0
True
width
(m)
15.6
7.8
5.3
18.6
29.7
18.6
Ag
(g/t)
Pb
(%)
Zn
(%)
260
314
436
217
406
411
0.9
1.0
0.0
0.9
0.8
1.4
0.1
0.4
0.0
0.3
0.1
1.2
Dist from
surface
(m)
7.8
12.7
8.5
0.0
7.1
0.0
PND062
PND008
PND029
ESM2
Paca Open Pit Resource Area
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Paca : Near Surface Mineralization
Ag Eq (g/t)
0-100 g/t
100-200 g/t
200-300 g/t
300-400 g/t
400-500 g/t
500g/t+
Elevation Level
Within 75m of Surface
Within 100m of Surface
Within 125m of Surface
Within 150m of Surface
Within 175m of Surface
% of Total Resource Tonnes
at 300 g/t Ag Eq Cutoff
63.42%
95.61%
99.60%
99.93%
100.00%
15
Open
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Open
OP – open pit
Open
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Paca – OP1 Long Section E739800
A positive production decision would not be based on a feasibility study of mineral reserves demonstrating economic and technical viability so
would carry increased uncertainty and the risk of failure as to the mining method and profitability
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Paca – OP2 Long Section N7750000
A positive production decision would not be based on a feasibility study of mineral reserves demonstrating economic and technical viability so
would carry increased uncertainty and the risk of failure as to the mining method and profitability
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Paca – OP2, Long Section E739850
A positive production decision would not be based on a feasibility study of mineral reserves demonstrating economic and technical viability so
would carry increased uncertainty and the risk of failure as to the mining method and profitability
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Pulacayo Underground Resource Estimate
Pulacayo Mineral Resource Statement – Effective June 16th, 2015
Ag Eq. Cut-Off
(g/t)
400
500***
600
Category
Tonnes*
Ag
(g/t)
Zn
(%)
Pb
(%)
Ag Eq.
(g/t)
Ag**
(Moz)
Zn**
(Mlbs)
Pb**
(Mlbs)
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
2,080,000
480,000
1,270,000
350,000
750,000
170,000
455
406
530
419
608
394
3.19
3.93
3.63
4.58
4.02
6.75
2.18
2.08
2.51
2.47
2.91
3.49
594
572
688
620
785
710
30.4
6.3
21.7
4.7
14.7
2.2
146.3
41.6
101.6
35.3
66.5
25.3
100
22
70.3
19.1
48.1
13.1
Prepared in accordance with the CIM Definition Standards for Mineral Resources and Mineral Reserves referenced
in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). The effective date of the
estimate is June 16th, 2015. The mineral resource estimate was prepared by Mercator Geological Services Limited
(“Mercator”) under supervision of Michael Cullen, P.Geo., who is an independent Qualified Person within the
meaning of NI 43-101.
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Notes:
Mineral resources are estimated in conformance the CIM Standards referenced in NI 43-101.
Raw silver assays were capped at 1,700 g/t, raw lead assays were capped at 15% and raw zinc assays were capped
at 15%.
Silver equivalent Ag Eq. (g/t) = Ag (g/t)*89.2% + (Pb% *(US$0.94/ lb. Pb /14.583 Troy oz./lb./US$16.50 per Troy oz.
Ag)*10,000*91.9%) + (Zn% *(US$1.00/lb. Zn/14.583 Troy oz./lb./US$16.50 per Troy oz. Ag)*10,000*82.9%).
Metal prices used in the silver equivalent calculation are US$16.50/Troy oz. Ag, US$0.94/lb Pb and US$1.00/lb. Zn.
Metal recoveries of 89.2% Ag 91.9% Pb 82.9% Zn used in the silver equivalent reflect historic metallurgical results
disclosed by Apogee Silver Ltd.
Metal grades were interpolated within wireframed, three dimensional silver domain solids using Geovia-Surpac Ver.
6.6.1 software and inverse distance squared interpolation methods. Block size is 10m(X) by 10m(Z) by 2m(Y).
Historic mine void space was removed from the model prior to reporting of resources.
Block density factors reflect three dimensional modeling of drill core density determinations.
Mineral resources are considered to have reasonable expectation for economic development using underground
mining methods based on the deposit history, resource amount and metal grades, current metal pricing and
comparison to broadly comparable deposits elsewhere.
Rounding of figures may result in apparent differences between tonnes, grade and contained ounces.
*Tonnes are rounded to nearest 10,000.
**Estimated by the Company.
***Mineral resource statement cut-off value; resource statement values are presented in bolded form.
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Pulacayo Drilling Highlights*
hole Nº from - to (m)
int
(m)
true
width
(m)
Ag
(g/t)
Pb
(%)
Zn
(%)
PUD005 96.2 – 108.0
PUD007
88 - 100
11.9
12
7.9
8.8
689
540
1.9
3
1.4
4.6
vertical
Distance
below San
Leon adit
(m)
67.5
44.5
PUD057 374.0 – 378.0
4.0
2.0
1,184
0.8
2.3
137.5
PUD069
30
20.5
414
1.2
3.6
46.0
PUD109 293.6 – 298.4
4.8
3.5
3,607
3.8
4.1
30.4
PUD118 174.0 – 184.0
10.0
8.5
1,248
1.7
2.6
93.9
PUD134 128.2 – 151.5
23.3
19.3
514
1.3
1.9
55.7
PUD150 290.0 – 302.0
12.0
8.8
882
0.4
0.6
75.2
PUD159 343.0 – 354.0
11.0
8.7
790
0.6
0.6
116.6
PUD170 237.0 – 239.0
2.0
1.8
3,163
0.1
0.9
32.5
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276 - 306
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*Total 137 holes:
29 holes (21%) Ag >1000 g/t
67 holes (49%) Pb or Zn >5%
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Pulacayo Map
A positive production decision would not be based on a feasibility study of mineral reserves
demonstrating economic and technical viability so would carry increased uncertainty and the risk of
failure as to the mining method and profitability
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Pulacayo Long View
UG1
UG2
LEVEL 0
UG3
A positive production decision would not be based on a feasibility study of mineral reserves demonstrating economic and technical viability so
would carry increased uncertainty and the risk of failure as to the mining method and profitability
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Pulacayo UG2 Plan View
A positive production decision would not be based on a feasibility study of mineral reserves demonstrating economic and technical viability so
would carry increased uncertainty and the risk of failure as to the mining method and profitability
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Pulacayo UG2 Long Section E740050
A positive production decision would not be based on a feasibility study of mineral reserves demonstrating economic and technical viability so
would carry increased uncertainty and the risk of failure as to the mining method and profitability
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Pulacayo UG2 Long Section E740100
A positive production decision would not be based on a feasibility study of mineral reserves demonstrating economic and technical viability so
would carry increased uncertainty and the risk of failure as to the mining method and profitability
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Pulacayo UG2 Long Section E740150
A positive production decision would not be based on a feasibility study of mineral reserves demonstrating economic and technical viability so
would carry increased uncertainty and the risk of failure as to the mining method and profitability
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Pulacayo UG2 Long Section E740200
A positive production decision would not be based on a feasibility study of mineral reserves demonstrating economic and technical viability so
would carry increased uncertainty and the risk of failure as to the mining method and profitability
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Pulacayo Underground Mining
4 to 8 meter thickness
A positive production decision would not be based on a feasibility study of mineral reserves demonstrating economic and technical viability so
would carry increased uncertainty and the risk of failure as to the mining method and profitability
25
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Tailing Piles: Selected Assays Results
Tailings Piles
Pulacayo 2
Pero 1
Pero 2
Pulacayo 3
* In = indium
Ag
(g/t)
112
302
219
380
Au
(g/t)
1.2
0.2
0.2
1.0
In*
(g/t)
7.1
3.4
18.1
69.4
Pb
(%)
0.21
1.00
1.01
1.76
Zn
(%)
0.23
0.31
0.51
1.30
# Samples
105
36
4
5
Tailings
Tailings
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Typical Mining and Processing Work Flow
Ore Milled on site
High grade concentrate
produced on site
Concentrate moved by
rail to port
A positive production decision would not be based on a feasibility study of mineral reserves demonstrating economic and technical viability so
would carry increased uncertainty and the risk of failure as to the mining method and profitability
27
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Paca North(400m x 100m): Selected Assays Results
Surface Outcrop
Interval (Chip
Sample
Channel Sampling)
PC-011
2 metres
PC-005
2 metres
PC-016
2 metres
PC-002
2 metres
PC-017
2 metres
Ag
(g/t)
833.0
377.0
330.0
226.0
219.0
Pb
(%)
0.03
1.64
0.06
2.16
0.10
Zn
(%)
0.03
0.05
0.04
0.08
0.03
Ag Eq
(g/t)
835.3
434.8
333.5
303.1
223.6
Pero(400m x 300m): Selected Assays Results
Surface Outcrop Interval (Chip Channel
Sample
Sampling)
PR-067
1 metre
PR-163
1 metre
PR-121
1 metre
PR-007
1 metre
PR-032
1 metre
Ag
(g/t)
27.0
118.0
62.8
28.6
39.7
Sb*
(%)
0.65
0.22
0.04
0.03
0.52
Pb
(%)
3.65
2.13
3.39
4.32
1.61
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Ag Eq
(g/t)
251.0
227.7
189.3
187.7
169.6
* Sb = antimony
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El Abra(250m x 110m): Selected Assays Results
Surface Outcrop
Interval (Chip
Sample
Channel Sampling)
EA-049
2 metre
EA-51
2 metre
EA-066
2 metre
EA-065
2 metre
EA-48
2 metre
Ag
(g/t)
5.6
5.6
21.5
38.9
3.2
Sb *
(%)
2.54
0.90
0.59
0.48
0.49
Pb
(%)
1.56
0.30
0.73
0.66
0.44
Ag Eq
(g/t)
502.7
173.4
149.8
145.2
103.4
Pacamayo(2m x 26m): Selected Assays Results
Underground
Sample
MPU-77
MPU-69
MPU-70
MPU-74
MPU-75
29
Interval (Chip
Channel Sampling)
1 metre
0.60 metre
0.60 metre
1 metre
1 metre
Ag
(g/t)
7,379.5
3,867.5
2,547.5
1,330.0
135.0
Sb *
(%)
2.49
1.79
0.85
2.25
1.34
Pb
(%)
17.60
2.29
0.80
0.01
0.01
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Zn
(%)
6.96
2.40
1.15
0.42
0.29
Cu
(%)
3.10
1.97
1.06
1.60
1.24
Ag Eq
(g/t)
8,982.6
4,516.6
2,859.4
1,820.4
457.7
* Sb = antimony
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Infrastructure before 2006
(dirt road Uyuni to Pulacayo, now paved)
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Today: Extensive Infrastructure and Development
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On-site and Nearby Infrastructure
Approved Mill Site
Power on site
Core Storage
Uyuni Rail Station to Port of Antofagasta
Approved Tailing Site
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Pulacayo Community and Cooperatives
Prophecy has great relationship with the Pulacayo community who are proud of its 200 years of mining tradition. The
Pulacayo community and Prophecy share the common goal of bringing the Pulacayo mine into production and to
restore Pulacayo town to full employment and prosperity.
February 2015
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Next Steps
Target Concentrate off taker, Equipment Supplier, and Equity to finance mining and construction in 2017
2015 H2
2015 H2
2016-17
•Disclose per NI 43-101 (at 500g/t AgEq cut off) resource estimate at Pulacayo Underground
•Disclose per NI 43-101 (at 300g/t AgEq cut off) resource estimate at Paca Open Pit
• Evaluate concentrate off take agreements and project financing
• Evaluate mill purchase options for 500 tpd operation (annual mining rate > 140,000 tonnes)
• Mining and construction decisions (minimize CapEx): equipment rental, toll milling
• Conclude off take contract and modest financing
A positive production decision would not be based on a feasibility study of mineral reserves demonstrating economic and technical
viability so would carry increased uncertainty and the risk of failure as to the mining method and profitability
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Titan (100%) Vanadium – Titanium – Iron Project
Located in Ontario Canada, between Angus and Flett townships, with access to excellent infrastructure
Near Surface mineralization to an open vertical depth of 500 metres, potentially open-pittable
Selected drilling intercept assays:
142 metres of 0.27% Vanadium (0.48% Vanadium Pentoxide) from Hole RA-5-21
174 metres of 0.26% Vanadium (0.46% Vanadium Pentoxide) from Hole RA-5-10
Vanadium is used in steel manufacture and recently, in vanadium redox batteries (VRB).
Titanium Oxide is used in paint
A technical report prepared by Mine Development Associates dated Feb. 26, 2010, disclosed in compliance with
National Instrument 43-101, Standards of Disclosure for Mineral Projects (“NI 43-101”) an inferred resource
for the Titan project is shown in the associated table.
Tonnage
Fe2O3**
TiO2**
V**
Inferred (Mt)*
(%)
(%)
(%)
49
48.1
14.8
0.24
V converted to V2O5: 0.24% V equals 0.43% V2O5. The company estimates vanadium content at 259 million
pounds and titanium dioxide content at 7,259 million kilograms. * Based on resource estimated at cut-off
grade of 40 per cent Fe2O3. ** 100-per-cent metals recovery is assumed.
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Titan (100%) Vanadium – Titanium – Iron Project
2016 Vanadium Pentoxide price exceeded US$5/lb, up 50% in the last 12 months.
Unlike lithium-ion batteries, Vanadium redox flow batteries (VRB) are not flammable and do not gradually lose
their capacity, which should mean long working lives (20 years) and therefore much lower costs.
VRBs are ideal for “grid constrained” solar and wind farms that currently struggle to sell their electricity at times
of peak production but cannot afford other forms of storage to store unsold electricity in order to sell during
non-peak times. In June 2016, Japan's Hokkaido Electric Power (HEPCO) and Sumitomo Electric Industries (SEI)
have installed a 15 MW vanadium redox storage system on the northern island of Hokkaido.
RMB/t, http://www.sunsirs.com/uk/prodetail-645.html
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Permitted, Favorable Grades
District Potential
Infrastructure
Local Support
Silver, Zinc, Lead, Antimony
Think Prophecy
Silver market is relatively small, 246 million oz coins
and bars investment demand amount to only $4
billion at $16/oz, JPM recently started accumulating
silver ETF (2015)
2013 Silver coins and bars demand increased 76%
from 2012, robust investment demand at current price
levels (@$15 to $20/oz)
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S/O 5.2mm, 52week $1.0 to $7.5
[email protected]
+1.604.569.3661
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Appendix
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Pulacayo Historic Resource Estimate*
Ag
Pb
Zn
Ag
Pb
Zn
(g/t)
(%)
(%)
(oz)
(M. lbs) (M. lbs)
Combined Open Pit and Underground Resources including Oxide and Sulphide Zones
Open Pit Resources (Base case, 42° average pit wall slope angle)
Open Pit Indicated
Oxide
1,500,000 95.9 0.96
0.13
4,626,000
NA
NA
Open Pit Inferred
Oxide
248,000
71.2 0.55
0.31
569,000
NA
NA
Open Pit Indicated
Sulphide
9,283,000 44.1 0.66
1.32
13,168,000 135.90 269.54
Open Pit Inferred
Sulphide
2,572,000 33.4 0.92
1.36
2,765,000 51.99 76.88
Waste Rock
71,679,000 NA
NA
NA
Strip Ratio 5.3 : 1
Underground Resources (All blocks below 4,159 m ASL with NSR>US$58)
Underground Indicated Sulphide
6,197,000 213.6 0.86
1.74
42,547,000 117.50 237.72
Underground Inferred Sulphide
943,000 193.1 0.43
1.61
5,853,000 8.94
43.47
Totals
Total Indicated
Oxide+Sulphide 16,980,000 110.5 0.74
1.49
60,341,000 253.40 507.26
Total Inferred
Oxide+Sulphide 3,763,000 75.9 0.79
1.43
9,187,000 60.93 120.35
Resource Class
Type
Tonnes**
* The historic Pulacayo deposit mineral resource estimate by Mercator that was prepared for Apogee has an
effective date of September 28, 2012. The same estimate and associated model were subsequently used as the
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resource base of the Pulacayo project feasibility study prepared by TWP Sudamerica Ltd., with an effective date of
January 17, 2013. Results of both projects were disclosed previously by Apogee in accordance with NI 43-101 and
are now historic in nature. The historical estimate is not considered reliable because it is four years old. It is
presented here to assist the reader when considering the current Pulacayo deposit resource estimate. Though some
of the methods and assumptions used in the historical estimate are still valid, others are not. The historical estimate
assumed a 42° pit wall slope for the open pit resources. The key parameters included an NSR cut-off of US$13.20 for
open pit sulfide resources and US$23.10 for open pit oxide resources, and US$58.00 for underground resources
below 4159 m ASL, metal prices of US$25.00/oz silver, US$0.89/lb lead, and US$1.00/lb zinc where lead and zinc do
not contribute to revenue in the oxide zone, and contributing 1.0 meter assay composites were capped at 1500 g/t
Ag, 15% Pb, and 15% Zn. The key methods included use of inverse distance squared algorithm to estimate grade,
variography to assess grade distribution, and use of a proprietary NSR calculator. The historical estimate uses the
same resource categories described in Sections 1.2 and 1.3 of NI 43-101. The historical estimate does not include
any more recent estimates or data available to the issuer. The work needed to upgrade the historical estimate as
current mineral resources is to use current metal prices in the NSR calculation. A qualified person has not done
sufficient work to classify the historical estimate as current mineral resources. The Company is not treating the
historical estimate as current mineral resources.
** Rounded to nearest 1000 t.
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Paca Historic Resource Estimate *
Ag Pb
(g/t) (%)
Open Pit Inferred 18,416,100 43 0.68
Resource Class
Tonnes**
Zn
(%)
1.16
Ag ***
Pb ***
(oz)
(M. lbs)
25,484,000 276.08
Zn ***
(M. lbs)
470.96
* The historic Paca deposit mineral resource estimate by Micon was prepared for Apogee and has an effective date
of January 16, 2007. The estimate was disclosed previously by Apogee in accordance with NI 43-101 and is now
historic in nature. It is presented here to assist the reader in considering the current Paca deposit resource estimate.
The historical estimate is not considered relevant or reliable because it is over ten years old. Though some methods
and assumptions used are still valid others are not. The historical estimate assumed the up-dip and down-dip limits
of the mineralization domains to be the lesser of half of the distance to the next barren drill hole or 25 metres, not to
cap grade values, and a 45° pit wall slope for the open pit resources. The key parameters included a gross metal
value cut-off of US$20 for mineralized areas and metal prices of US$10.43/oz silver, US$0.55/lb lead, and US$1.30/lb
zinc. The key methods included use of length weighted composite calculation, inverse distance squared algorithm to
estimate grade, variography to assess grade distribution, and a proprietary NSR calculator. The historical estimate
uses the same resource categories described in Sections 1.2 and 1.3 of NI 43-101. The historical estimate does not
include any more recent estimates or data available to the issuer. The work needed to upgrade the historical
estimate as current mineral resources is to use current metal prices. A qualified person has not done sufficient work
to classify the historical estimate as current mineral resources. The Company is not treating the historical estimate as
current mineral resources.
** Rounded to nearest 100 t. Strip ratio 3.1t to 1t for constraining pit shell.
*** Estimated by Company.
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Ulan Ovoo Project Summary
Mongolia, Russia & China (via Manzhouli)
Ulaan Ovoo Coal Seam and Pit
Ulan Ovoo Deposit Cross Section
Source: Prophecy Development Corp.
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Ulaan Ovoo Project Summary
• Over 200 Mt M&I resource*, thick single coal seam 40 metres+, open pit mining, low strip ratio
• 5,000 kcal/kg, low ash 10% & low sulfur 1% (ARB)
• Customers – Mongolia, Russia, China (via Manzhouli)
• Strategically located just 17 km from the Russian border
• Approximately 500,000 tonnes produced 2011 to 2014, mine currently on standby
• Low risk project, fully permitted, low mining cost, and great leverage to thermal coal price
* Wardrop Engineering (Tetra Tech) in their 2010 report affirmed the 174 Mt of measured and 34 Mt of indicated
coal resources estimated by Behre Dolbear following the methods described in Australian Code for Reporting of
Mineral Resources and Ore Reserves (the “JORC Code”) dated September 1999 and the Proposed Revisions
to the JORC Code dated 2 June 2004 and disclosed in accordance with NI 43-101 in their October 2006 report.
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Russian Market for Ulaan Ovoo
Ulan- Ude Power Plant 1 & 2
Ulan-Ude city (boilers, residential)
Demand: 2 mt pa
220 km from Mongolian – Russian border
Blending Plant
Demand: 2mt pa
Tugnuiskiy Mine
Gusinoozersk Power Plant
Demand: 3 mt pa
120 km from Mongolian – Russian border
Zeltura Border
Kharanor Power Plant
Demand: 0.5mt pa
~300kms
Ulaan Uvoo
Source: Prophecy Development Corp.
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Chandgana Project Summary
Chandgana
Power
Plant
Source: Turquoise Hill Resources, Prophecy Development Corp.
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Chandgana Project Summary
•
•
•
•
Advanced Greenfield Mine Mouth Power Project in Mongolia
Phase 1 – 300MW, Phase 2 – 300MW
Mongolia: Fast growing country in need of energy
Power plant next to coal deposit (124Mt measured resources, GCV 3,300 kcal/kg, low ash & sulphur*). Additional
resources available 14 km SW (1048 Mt measured+indicated, GCV 3,600 kcal/kg, low ash & sulphur**)
• Central location near existing Mongolian power grid
• Coal mining and power plant construction licenses obtained
• Environmental Impact Assessment and Land Use Rights obtained
• Concession Agreement, Power Purchase Agreement and Tariff application submitted
• Plant design and Engineering-Procurement-Construction contract finalized
Target Next Steps:
• Signing of the Concession Agreement and Power Purchase Agreement: 2017
• Project Financing (Debt + Equity): 2017
* 2014 Technical Report by John T. Boyd Company
• Construction and Commercial Operation Date: 2018 - 2021
disclosed according to NI 43-101, ** 2010 Technical
Report by Kravits Geological Services LLC disclosed
according to NI 43-101
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Chandgana Power Project Location
Chandgana aerial
view, 5.3 sq. km land
> 1 Bt coal, featuring
40 m to 60 m thick
coal seams
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Chandgana Power Project Benefits to Mongolia
• Contribute to pollution reduction – Various studies have linked Ulaanbaatar air pollution to respiratory death
and women miscarriages. Chandgana power plant will eliminate the need for additional power plants in
Ulaanbaatar, reduce dependence on Power Plants #3 and #4, and reduce emission of harmful nitrogen and
sulphur oxides and particulates.
• Save water, coal transportation and operational cost – Chandgana power plant will be built next to the
Chandgana coal mine, 300 km east of Ulaanbaatar. This will avoid transporting 2 to 4 million tonnes of coal to
congested city (more than 100 wagons per day). Water will be extracted from the mine so avoids sharing
precious water resource (up to 6 million tonnes per year, 16,000 tonnes per day) within city of Ulaanbaatar.
Water scarcity problem exists in Ulaanbaatar, and is expected to intensify in the future. Assuming each
Ulaanbaatar resident consumes 20 liters of water a day, a new power plant will take water away from about
800,000 residents annually as estimated by the Company.
• Relief on power supply shortage – Chandgana power plant is planned to supply power to Mongolia by 2021.
Mongolia GDP roughly doubles every 5 years mostly from mining. Current installed capacity is 1150MW with
demand expected to increase at least 36% by 2021 as estimated by the Company.
• Energy independence – Chandgana power plant project will reduce expensive power import from Russia and
China, and help achieve Mongolia’s energy independence. Prophecy’s proposed electricity tariff will be less than
for imported electricity.
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Chandgana Power Project Benefits to Mongolia
• Stabilization of transmission grid – Prophecy will finance a transmission line from Baganuur to Chandgana in
phase 1, and a Chandgana to Choir transmission line in phase 2. Chandgana is 300 km away from Ulaanbaatar,
150 km from Choir (further to South Gobi) and 120 km from Choibalsan. Therefore, it can potentially provide
power to Ulaanbaatar and southern and eastern Mongolia.
• Project readiness – Chandgana power plant project is 6 years under development with plant design, construction
license, environmental impact assessment, land use rights, and mining license obtained. Construction can start
right after Concession Agreement, PPA, Tariff Agreement and Financial Close, with remaining work completed
concurrently.
• Extension to Coal to Gas and Coal to Liquid projects – Chandgana is next to a highway, has plenty of land and is
within a coal basin containing an estimated 3.5 billion tonnes of coal resources. Once the power project is
operational, it is a natural progression to develop coal to gas and coal to liquid projects.
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