Prophecy Acquires Louie Hill Project in Nevada for Third Vanadium Transaction in 2017
Prophecy Acquires Louie Hill Project in Nevada for
Third Vanadium Transaction in 2017
Vancouver, British Columbia, July 13, 2017 – Prophecy Development Corp.
(“Prophecy” or the “Company”) (TSX:PCY, OTCPK:PRPCF, Frankfurt:1P2N) is pleased
to announce that it has successfully acquired through lease, the Louie Hill vanadium project
in Nevada, USA (the “Louie Hill Project”) from arm’s-length, private parties (the “Lessors”)
with the intent to carry-out mining operations there.
Transaction Summary
Under the mineral lease agreement, Prophecy has leased the Louie Hill mining claims
which constitute the Louie Hill Project by paying to the Lessors , annual advance royalty
payments which will be tied, based on an agreed formula (not to exceed $28,000 per year),
to the average vanadium pentoxide price for the prior year.
Upon commencement of production, Prophecy will maintain its acquisition through le ase of
the Louie Hill mining claims by paying to the Lessors , a 2.5% net smelter return (“NSR”) of
which, 1.5% of the NSR may be purchased at any time by Prophecy for $1,000,000, in such
case, leaving the total NSR to be reduced to 1% over the remaining life of the mine (and
referred to thereafter, as “production royalty payments”).
All advance royalty payments made, will be deducted as credits against future production
royalty payments.
The lease will be for a term of 10 years, which can be extended for an additional 10 years at
Prophecy’s option.
With the acquisition of the Louie Hill Project, together with the previously acquired Gibellini
and Titan projects, Prophecy is well -positioned to be a leading North American vanadium
exploration company.
Louie Hill Project Summary
The Louie Hill Project lies approximately 500 met res south of the Gibellini project, is easily
accessed by a graded gravel road extending south from US Highway 50 , and is about 25
miles south of the town of Eureka, Nevada.
The Louie Hill Project is comprised of ten unpatented lode claims totaling approximately 207
gross acres in the state of Nevada, which is ranked among the world’s top 10 mining
jurisdictions according to the Fraser Institute. Opportunities also exist to further expand the
project beyond its current definition.
Union Carbide reportedly drilled a series of 60 holes at the Louie Hill Project in 1956.
Noranda Exploration, Inc. completed five reverse circulation holes (total 610 ft) in 1973.
During the 2007 to 2010 period, RMP Resources Corporation (predecessor to American
Vanadium Corp. or “ AVC”) completed a total of 11,010 ft of drilling in 38 drill holes on the
Gibellini project and Louie Hill Project. Nine were drilled in the Louie Hill Project.
The Louie Hill Project is located in the same formation and lithologic units as the Gibellini
project. The general geology in this area is considered to be similar to the Gibellini project.
AMEC E&C Services, Inc. (“AMEC E&C”) prepared the Louie Hill Project resource estimate
as part of the feasibility study titled “American Vanadium, Gibellini Vanadium Project”
having an effective date of August 31, 2011 for AVC following the guidelines of the CIM
Definition Standards for Mineral Resources and Mineral Reserve s. The report which was
prepared according to the disclosure requirements of National Instrument 43 -101 –
Standards of Disclosure for Mineral Projects (“NI 43 -101”) outlined a resource of 7.67
million tons at a weighted average grade of 0.27% vanadium pent oxide (V 2O5) in the
inferred category for Louie Hill. The total metal content of the inferred category resource is
41.87 million pounds V2O5.
Inferred Louie Hill Mineral Resource Estimate, Effective Date 20 May 2011, Mark Hertel,
SME Registered Member:
Cut-off V2O5 (%) Tons (Mt) V2O5 (%) V2O5 (Mlb)
0.077 7.67 0.27 41.87
Notes to accompany Louie Hill Mineral Resource Table:
1. Mineral Resources are reported above a 0.077% V205% cut-off grade
2. Mineral Resources are reported as undiluted
3. Mineral Resources are reported within a conceptual pit shell
4. Rounding as required by reporting guidelines may result in apparent summation
differences between tons, grade and contained metal content
5. Tonnage and grade measurements are in US units. Grades are reported in percentages.
*The historic Louie Hill mineral resource estimate that was prepared by AMEC E&C for AVC
has an effective date of May 20, 2011. Results of the study were disclosed previously by
AVC in accordance with NI 43 -101 and are consider ed historic in nature by the Company.
This historical estimate was prepared using currently accepted methods and assumptions
but the costs and prices assumed are not current. It is considered reliable since the
geologic model developed by AVC geologists wa s used. The historical estimate uses the
same resource classes described in Section 1.2 of NI 43 -101. The historical estimate does
not include any more recent data or estimates available to the Company. The work needed
to upgrade the historical estimate as current mineral resources is to use current costs and
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 re sources. Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
Direct leaching of black shale vanadium materials
To the Company’s knowledge, the Gibellini project is the only North American black shale
vanadium project with a full feasibility study. The Company considers the Louie Hill Project
to have similar geology and to be amenable to the same open pit mining and heap leach
processing as Gibellini. The Gibellini-Louie Hill district has the potential to become the first
primary vanadium mine in the United States.
Black shale (also called stone coal) is an important vanadium resource in China, which is
world’s largest vanadium producer. Black shale is rega rded as a low -grade multi-element
ore. However, because of its relatively high vanadium grade compared to other metallic and
nonmetallic elements found in black shale, research and studies of the recovery of
vanadium from black shale have received consider able attention and investment in China
since early 2000 , based on the Company’s research . This has resulted in several black
shale vanadium-producing mines in China utilizing established, low cost, solvent extraction
and precipitation methods today.
The Gibellini project and Louie Hill Project represent a pure -play vanadium opportunity in
North America to investors because Gibellini material is low in deleterious metals and non -
metals (typically less than 1% Fe, 0.5% Ca, 0.3% Mg, 0.2% Ti) and is thus condu cive to
well-established solvent extraction and precipitation methods. Since the process already
yields vanadium in sulfuric acid in an intermediary step to producing vanadium pentoxide, it
is expected that this intermediary product can be pulled from the process stream and used
directly as an electrolyte for grid-scale energy storage batteries.
Direct leaching of titaniferous vanadiferous materials
Direct leaching of titaniferous vanadiferous materials requires extraction of vanadium
(typically less than 0.5%) from titaniferous vanadiferous solution containing 30% to 70% of
iron, titanium, MgO, and other interfering elements. The project economics are dependent
on the prices of titanium dioxide and pig iron and the ability to manage extraction costs of
those elements from solution in a continuously operating commercial setting.
John Lee, Executive Chairman of Prophecy states:
“A company managed by mining financier and founder of Ivanhoe Capital Corporation,
Robert Friedland , has invested a total of $90 million thus far in a vanadium battery
manufacturer. A vanadium exploration company in Quebec, Canada secured a CAD 40
million equity financing led by Orion Mine Finance Group in June 2017. We believe the
unique merits (location, low mining strip ratio, and proven metallurgy) of the Gibellini -Louie
Hill district project will be further appreciated as more investment is made in this strategic
sector”.
Note: All references to “$” are expressed in US dollars unless otherwise noted.
Qualified Persons
The technical contents of this news release have been reviewed and approved by
Christopher M. Kravits, CPG, LPG, General Mining Manager of Prophecy. Mr. Kravits is a
Qualified Person as defined in NI 43-101. Mr. Kravits is a consultant to the Company and is
not independent of the Company since most of his income is derived from the Company.
About Prophecy
Prophecy Development Corp. is a Canadian public company listed on the Toronto Stock
Exchange. The Company aims to provide exposure and leverage to rising vanadium prices
by defining and adding attributable vanadium resources in the ground in politically safe
jurisdictions, and to b uild the first vanadium mine in North America by steadily advancing
mine permitting, project financing and construction.
Further information about Prophecy can be found at: www.prophecydev.com.
PROPHECY DEVELOPMENT CORP.
ON BEHALF OF THE BOARD
“JOHN LEE”
Executive Chairman
For more information about Prophecy, please contact Investor Relations:
+1.888.513.6286
www.prophecydev.com
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adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this news release, including statements which may contain
words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, or similar
expressions, and statements related to matters which are not historical facts, are forward -
looking information within the meaning of applicable securities laws. Such forwa rd-looking
statements, which reflect management’s expectations regarding Prophecy’s future growth,
results of operations, performance, business prospects and opportunities, are based on
certain factors and assumptions and involve known and unknown risks an d uncertainties
which may cause the actual results, performance, or achievements to be materially different
from future results, performance, or achievements expressed or implied by such forward -
looking statements. These estimates and assumptions are inher ently subject to significant
business, economic, competitive and other uncertainties and contingencies, many of which,
with respect to future events, are subject to change and could cause actual results to differ
materially from those expressed or implied in any forward -looking statements made by
Prophecy. In making forward -looking statements as may be included in this news release,
Prophecy has made several assumptions that it believes are appropriate, including, but not
limited to assumptions that: there being no significant disruptions affecting operations, such
as due to labour disruptions; currency exchange rates being approximately consistent with
current levels; certain price assumptions for coal, silver and other metals; prices for and
availability o f fuel, parts and equipment and other key supplies remain consistent with
current levels; production forecasts meeting expectations; the accuracy of Prophecy’s
current mineral resource estimates; labour and materials costs increasing on a basis
consistent with Prophecy’s current expectations; that any additional required financing will
be available on reasonable terms; and market developments and trends in global supply
and demand for coal, energy, silver and other metals meeting expectations. Prophecy
cannot assure you that any of these assumptions will prove to be correct.
Numerous factors could cause Prophecy’s actual results to differ materially from those
expressed or implied in the forward -looking statements, including the following risks and
uncertainties, which are discussed in greater detail under the heading “Risk Fa ctors” in
Prophecy’s most recent Management Discussion and Analysis and Annual Information
Form as filed on SEDAR and posted on Prophecy’s website: Prophecy’s history of net
losses and lack of foreseeable positive cash flow; exploration, development and pr oduction
risks, including risks related to the development of Prophecy’s mineral properties; Prophecy
not having a history of profitable mineral production; commencing mine development
without a feasibility study; the uncertainty of mineral resource and mi neral reserve
estimates; the capital and operating costs required to bring Prophecy’s projects into
production and the resulting economic returns from its projects; foreign operations and
political conditions, including the legal and political risks of ope rating in Mongolia and
Bolivia, which are developing countries and being subject to their local laws; the availability
and timeliness of various government approvals, permits and licenses; the feasibility,
funding and development of Prophecy’s projects; pr otecting title to Prophecy’s mineral
properties; environmental risks; the competitive nature of the mining business; lack of
infrastructure; Prophecy’s reliance on key personnel; uninsured risks; commodity price
fluctuations; reliance on contractors; Prophecy’s need for substantial additional funding and
the risk of not securing such funding on reasonable terms or at all; foreign exchange risk;
anti-corruption legislation; recent global financial conditions; the payment of dividends; the
inability of insura nce to cover all potential risks associated with mning operations; and
conflicts of interest.
These factors should be considered carefully, and readers should not place undue reliance
on Prophecy’s forward -looking statements. Prophecy believes that the e xpectations
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 to be correct. In addition, although Prophecy has
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 a nticipated, estimated or intended.
Prophecy undertakes no obligation to release publicly any future revisions to forward -
looking statements to reflect events or circumstances after the date of this news or to reflect
the occurrence of unanticipated events, except as expressly required by law.