Exhibit
99.1
Prophecy Incorporates Silver Elephant Mining Corp and Asia Mining
Inc, Prepares for Silver Spinoffs
Vancouver, British Columbia, August 19, 2019 – Prophecy
Development Corp. (“Prophecy”
or the “Company”) (TSX:PCY,
OTCQX:PRPCF, Frankfurt:1P2N) is
pleased to announce the formation of two wholly owned Canadian BC
subsidiaries; Silver Elephant Mining Corp.
(“Silver
Elephant”) and Asia
Mining Inc. (“Asia Mining”) in order to facilitate potential future
spinoffs of the Company’s wholly owned Bolivian silver
operation and Mongolian coal operation.
John Lee, Prophecy Chairman, states that “We foresee a strong
upward performance in silver prices. Silver Elephant is structured
and intended to be a premier pure silver play, which may go public
in the near term”.
The Gibellini vanadium project is firmly on track to formally start
the 12-month streamlined Environmental Impact Assessment by early
2020. Prophecy aims to be the single purpose vehicle that offers
vanadium investment exposure in Nevada.
Gibellini vanadium, Pulacayo silver, and Ulaan Ovoo coal projects
had received over US$100million in investment since 2005. Through
this reorganization, to be completed by end of August, Prophecy
will be the parent company to the following direct
subsidiaries:
Silver Elephant Mining Corp (BC, Canada):
Through its Bolivian subsidiaries, Silver Elephant will focus on
Pulacayo-Paca silver mining project in Bolivia. Pulacayo-Paca
received over US$25 million in investments which included over
98,000 meters of drilling since 2005. Prophecy is in the final
stage of obtaining the Pulacayo-Paca mining production contract
from the Bolivian government, enabling Silver Elephant to explore
and mine Pulacayo for up to 40 years. Prophecy intends to perform
infill and exploration drilling at Paca in the fall of
2019.
On October 20, 2017, Mercator Geological Services Limited published
a 43-101 compliant Pulacayo Technical Report (available on SEDAR)
which outlined 30 million ounces of silver in the indicated
category grading 455g/t, and a further 21 million ounces of silver
in the inferred category grading 256g/t.
The Company’s research has shown relatively few silver
underground deposits grading at over 400 g/t Ag and open pit silver
projects grading at over 200g/t Ag.
Highlights from historic underground diamond drill results (2005 to
2015) at Pulacayo include:
1
|
Hole No.
|
from - to (m)
|
Interval (m)
|
Ag (g/t)
|
Lead (%)
|
Zinc (%)
|
Dist from adit (m)
|
|
PUD005
|
96.2 – 108.0
|
11.9
|
689
|
1.9
|
1.4
|
-67.5
|
|
PUD007
|
70.0 – 96.8
|
26.8
|
517
|
2.3
|
4.2
|
-44.5
|
|
PUD057
|
374.0 – 378.0
|
4
|
1,184
|
0.8
|
2.3
|
-137.5
|
|
PUD069
|
281.0 – 294.0
|
13
|
624
|
2.1
|
4.2
|
-46
|
|
PUD109
|
293.6 – 298.4
|
4.8
|
3,607
|
3.8
|
4.1
|
-30.4
|
|
PUD118
|
174.0 – 184.0
|
10
|
1,248
|
1.7
|
2.6
|
-93.9
|
|
PUD134
|
128.2 – 151.5
|
23.3
|
514
|
1.3
|
1.9
|
-55.7
|
|
PUD150
|
290.0 – 302.0
|
11.2
|
882
|
0.4
|
0.6
|
-75.2
|
|
PUD159
|
343.0 – 354.0
|
11
|
790
|
0.6
|
0.6
|
-116.6
|
|
PUD170
|
237.0 – 239.0
|
2
|
3,163
|
0.1
|
0.9
|
-32.5
|
Highlights from historic surface diamond drill results (2005 to
2015) at Paca include:
|
Hole No.
|
from - to (m)
|
Interval (m)
|
Ag (g/t)
|
Lead (%)
|
Zinc (%)
|
Dist from surface (m)
|
|
PND003
|
11.0 – 28.0
|
17
|
260
|
0.9
|
0.1
|
-7.8
|
|
PND008
|
18.0 – 33.5
|
15.5
|
314
|
1
|
0.4
|
-12.7
|
|
PND029
|
12.0 – 22.3
|
10.3
|
436
|
0
|
0
|
-8.5
|
|
PND031
|
0.0 – 37.0
|
37
|
217
|
0.9
|
0.3
|
0
|
|
PND062
|
10.0 – 52.0
|
42
|
406
|
0.8
|
0.1
|
-7.1
|
|
ESM2
|
0.0 – 38.0
|
38
|
411
|
1.4
|
1.2
|
0
|
With access to water, power, and a paved road to toll milling
facilities, Pulacayo-Paca can be commissioned on a trial mining
basis with minimal lead time and startup costs. Over 20 million oz
of silver was produced by Sumitomo, Pan American Silver, and
Manquiri (previously owned by Coeur Mining) in 2018 in
Bolivia’s Potosi department, where Pulacayo-Paca is
located.
Bolivian constitutional court recently cleared Company’s
historic tax liability related to the Company’s Bolivian
operation in 2005. Silver Elephant will have no government tax or
bank debt.
2
Nevada Vanadium Mining Corp (BC, Canada):
Through Prophecy’s US subsidiary, Nevada Vanadium will be
developing its 100% owned Gibellini and Louie Hill vanadium mining
projects in Eureka county, Nevada. This open pit-heap leach
vanadium project is scheduled to start a 12-month Environmental
Impact Statement starting in Q1 2020, with construction in 2021 and
production by end of 2022. The recent Preliminary Economic
Assessment titled “GIBELLINI VANADIUM PROJECT, November
2017” published by AMEC (Available on SEDAR) stated annual
vanadium pentoxide (V2O5) production of 9.7 million pounds a year
for 14 years at cash cost of a US$4.77 pound and capex of
US$117million (see Company’s press release dated May
28th,
2018). Gibellini and Louie Hill vanadium projects received over
US$20million investment since mid-2000 that included, drilling,
metallurgy, feasibility and environmental baseline
studies.
Nevada Vanadium offers leverage on vanadium prices and is the only
US vanadium mine poised to go to production by 2022. Nevada
Vanadium will have no bank debt.
Asia Mining Inc (BC, Canada):
Through its Mongolian subsidiaries, Asia Mining will operate the
100% owned Ulaan Ovoo and Chandgana coal mines under existing
20-year mining licenses that can be extended for another 20
years.
Ulaan Ovoo is located in northern Mongolia, 17km from the border to
Russia, and 120km by road from Mongolia’s Sukhbaatar railway
station (which connects to the Trans-Siberian railway
network).
Ulaan Ovoo had received over US$50million investment since 2010 and
features an average strip ratio of 1.8. The coal mine yielded 5,000
kcal/kg GCV, less than 1% Sulphur, and low ash (8 to 11%) which is
well-suited for power plants, cement plants and boiler heat
applications. Wardrop Engineering (Tetra Tech) estimated 174 Mt of
measured and 34 Mt of indicated coal resources in an NI 43-101
compliant report titled “Ulaan Ovoo – Pre-Feasibility
Study” dated December 13th,
2010 (available on SEDAR).
Ulaan Ovoo is being operated by a lessee since March 2019 and
achieved a record production of 37,800 tonnes in June 2019. The
Lessee has reportedly secured close to 400,000 tonnes of orders
through to April 2020. Asia Mining stands to earn $2 per tonne of
Ulaan Ovoo coal sold.
Chandgana is a lignite coal project with mining licenses and
contains an estimated 43-101 compliant resources of 509 million
tonnes of coal in Measured and further 539 million tonnes of coal
in Indicated categories (Refer to NI-43-101 compliant
“UPDATED TECHNICAL REPORT ON THE COAL RESOURCES OF THE
CHANDGANA KHAVTGAI COAL issued by Chris Kravits on September 8,
2010, available on SEDAR).
Asia Mining will be a premier thermal coal play and expects to be
cash flow positive in 2019. Asia mining will have no bank
debt.
Prophecy is led by CEO Mike Doolin, previously chief operating
officer of Klondex Mines Ltd which was acquired by Hecla in 2018.
Mr. Doolin has over 30 years of experience in permitting,
commissioning, and operating both open pit and underground mines.
Prophecy’s board consists of experienced multi-national
executives specialize in mine engineering and
financing.
Mr. Doolin comments “Our team has been examining various
production scenarios at Pulacayo Paca which may be implemented as
soon as the mining production contract is granted to take advantage
of rising silver prices. We believe there is strong potential to
increase the silver resources at Pulacayo Paca through modern
exploration and drilling methods in this prolific silver
district.”
The
Company further announces that pursuant to the terms of the
Company’s Share-Based Compensation Plan as approved at its
Annual General Meeting of shareholders held on June 2, 2016, and
amended on June 13, 2017, it has granted in aggregate, 1,685,000
incentive stock options (the “Options“), to certain directors,
officers, employees and consultants of the Company. The
Options are exercisable at a price of $0.20 per Common share for a
term of five years expiring on July 29, 2024 and vest at 12.5% per
quarter for the first two years following the date of grant. As
part of its continuous review, the Company cancelled a total of
1,356,000 stock options with various exercise prices.
3
Qualified Person
The technical content of this news release has been prepared under
the supervision of Danniel Oosterman, VP, Exploration. Mr.
Oosterman is not independent of the Company in that he is employed
as a consultant to the Company and most of his income is derived
from the Company.
About Prophecy
Prophecy
is developing the Gibellini project – the only large-scale,
open-pit, heap-leach vanadium project of its kind in North America.
Located in Nevada, Gibellini is currently undergoing EPCM and
Permit preparation. Prophecy also has mining projects in Mongolia
and Bolivia. Further information on Prophecy can be found at
www.prophecydev.com.
PROPHECY DEVELOPMENT CORP.
ON BEHALF OF THE BOARD
“Michael Doolin”
Chief Executive Officer
For more information about Prophecy, please contact Investor
Relations:
+1.604.569.3661 ext. 101
ir@prophecydev.com
www.prophecydev.com
Neither the Toronto Stock Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the Toronto
Stock Exchange) accepts responsibility for the adequacy or accuracy
of this release
Cautionary Note Regarding Forward-Looking Statements
Some statements in this news release are about future events and
performance. Such statements are based on current estimates,
predictions, expectations, or beliefs. The subjects of the
statements include, but are not limited to, (i) the PEA
representing a viable development option for the project; (ii)
construction of a mine at the project and related actions; (iii)
estimates of the capital costs of constructing mine facilities,
bringing the mine into production, and sustaining the mine,
together with estimates of the length of financing payback periods;
(iv) the estimated amount of future production, of metal recovered;
and (vi) estimates of the life of the mine and of the operating and
total costs, cash flow, net present value, and economic returns,
including internal rate of return from an operating mine
constructed at the project. All forward-looking statements are
based on Prophecy’s or its consultants’ current beliefs
and assumptions, which are in turn based on the information
currently available to them. The most significant assumptions are
set forth above, but generally these assumptions include: (i) the
presence and continuity of vanadium mineralization at the project
at the estimated grades; (ii) the geotechnical and metallurgical
characteristics of the rock conforming to the sampled results;
(iii) infrastructure construction costs and schedule; (iv) the
availability of personnel, machinery, and equipment at the
estimated prices and within the estimated delivery times; (v)
currency exchange rates; (vi) vanadium sale prices; (vii)
appropriate discount rates applied to the cash flows in the
economic analysis; (viii) tax rates applicable to the proposed
mining operation; (ix) the availability of acceptable financing on
reasonable terms; (x) projected recovery rates and use of a process
method, which although well-known and proven with other commodity
types, such as copper, has not been previously brought into
production for a vanadium project; (xi) reasonable contingency
requirements; (xii) success in realizing proposed operations; and
(xiii) assumptions that the project’s environmental approval
and permitting is forthcoming from county, state, and federal
authorities. The economic analysis is partly based on Inferred
Mineral Resources that are considered too speculative geologically
to have the economic considerations applied to them that would
enable them to be categorized as Mineral Reserves, and there is no
certainty that the PEA based on these Mineral Resources will be
realized. Currently there are no Mineral Reserves on the Gibellini
property. Although the Company’s management and its
consultants consider these assumptions to be reasonable, given the
information currently available to them, they could prove to be
incorrect. Many forward-looking statements are made assuming the
correctness of other forward-looking statements, such as statements
of net present value and internal rates of return. Those statements
are based in turn on most of the other forward-looking statements
and assumptions made herein. The cost information is also prepared
using current values, but the time for incurring the costs is in
the future and it is assumed costs will remain stable over the
relevant period.
These factors should be considered carefully, and readers should
not place undue reliance on forward-looking statements by Prophecy
or its consultants. Prophecy and its consultants believe that the
expectations reflected in the forward-looking statements contained
in this news release and the documents incorporated by reference
herein are reasonable, but no assurance can be given that these
expectations will prove correct. In addition, although Prophecy and
its consultants have attempted to identify important factors that
could cause actual actions, events, or results to differ materially
from those described in forward-looking statements, there may be
other factors that cause actions, events, or results not to be as
anticipated, estimated, or intended. Prophecy and its consultants
undertake no obligation to publicly release any future revisions of
the forward-looking statements that reflect events or circumstances
that occur after the date of this news release or reflect the
occurrence of unanticipated events, except as expressly required by
law.
4