Prophecy Announces Positive Preliminary Economic Assessment Study for the Gibellini Vanadium Project
Prophecy Announces Positive Preliminary Economic Assessment
Study for the Gibellini Vanadium Project
Vancouver, British Columbia, May 29, 2018 – Prophecy Development Corp. (“Prophecy” or
the “Company”) (TSX:PCY, OTCQX:PRPCF, Frankfurt:1P2N) is pleased to announce results
of a positive preliminary economic assessment study (the “PEA”) for its Gibellini vanadium project,
designed to be an open pit, heap leach operation in Nevada’s Battle Mountain region, about 25
miles south of the town of Eureka. The PEA reported an after tax cumulative cash flow of $601.5
million, an internal rate of return of 50.8%, a net present value of $338.3 million at a 7% discount
rate and a 1.72 years payb ack on investment from start -up assuming an average vanadium
pentoxide price (V2O5) of $12.73 per pound. As of May 29, 2018, the price of vanadium pentoxide
is $14.20 per pound according to www.asianmetal.com. The PEA was prepared by Amec Foster
Wheeler E&C Services Inc. (" AMEC"), part of the Wood Group of companies. All dollar values
are expressed in US dollars unless otherwise noted.
The PEA Highlights:
Highlights of the PEA (after tax):
Internal rate of return 50.8%
Net present value (NPV) $338.3 million at 7% discount rate
Payback period 1.72 years
Average annual production 9.65 million lbs V2O5
Average V2O5 selling price $12.73 per lb
Operating cash cost $4.77 per lb V2O5
All-in sustaining costs* $6.28 per lb V2O5
Breakeven price** $7.76 per lb V2O5
Initial capital cost including 25% contingency $116.76 million
Average grade 0.26% V2O5
Strip ratio 0.17 waste to leach material
Mining operating rate
3.4 million tons (leach material and
waste) per year
Average V2O5 recovery through Direct Heap Leaching 62%
Life of mine 13.5 years
*includes selling costs, royalties, operating cash cost, reclamation, exploration and sustaining
capital costs.
**includes selling costs, royalties, operating cash costs, taxes (local, state, and federal), working
capital, and sustaining & capital costs.
The PEA is preliminary in nature, and includes 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 will be realized.
Mineral resources are not mineral reserves and do not have demonstrated economic viability.
Sensitivity Analysis
The tables below show the sensitivity analysis to the vanadium pentoxide price, grade, and to the
PEA capital cost and operating costs. This sensitivity analysis indicates strong project economics
even in very challenging conditions, and that the project i s well positioned to benefit from the
current rising vanadium price environment. A 20% increase in the vanadium price relative to the
base case translates to a $491.3 million after-tax NPV at a 7% discount rate.
V2O5 price
change
V2O5
price $/lb
After-tax
IRR
After-tax NPV
$M @ 7%
After-tax
cashflow
$M
30% 16.55 69% 568.0 996.0
20% 15.28 63% 491.3 864.4
10% 14.00 57% 415.2 733.2
Base price 12.73 51% 338.3 600.4
-10% 11.46 44% 261.0 467.2
-20% 10.18 36% 183.1 333.2
-30% 8.91 26% 103.9 196.9
V2O5 grade
change
V2O5
grade
After-tax
IRR
After-tax NPV
$M @ 7%
After-tax
cashflow
$M
30% 0.34% 68% 554.4 972.8
20% 0.31% 63% 482.4 849.0
10% 0.28% 57% 410.7 725.4
Base grade 0.26% 51% 338.3 600.4
-10% 0.23% 44% 265.6 475.0
-20% 0.21% 37% 192.2 348.9
-30% 0.18% 28% 118.3 221.6
Capex
change
Capex
$M
After-tax
IRR
After-tax NPV
$M @ 7%
After-tax
cashflow
$M
30% 151.8 40% 307.2 564.3
20% 140.1 43% 317.6 576.3
10% 128.4 47% 328.0 588.4
Base Capex 116.8 51% 338.3 600.4
-10% 105.1 55% 348.6 612.5
-20% 93.4 61% 358.9 624.6
-30% 81.7 67% 369.3 636.8
Opex
change
Opex
$/lb
After-tax
IRR
After-tax NPV
$M @ 7%
After-tax
cashflow
$M
30% 6.20 45% 257.9 450.2
20% 5.72 47% 284.8 500.3
10% 5.25 49% 311.6 550.4
Base Opex 4.77 51% 338.3 600.4
-10% 4.29 53% 364.8 650.0
-20% 3.82 55% 390.7 698.4
-30% 3.34 56% 416.0 745.4
Mineral Resources
The PEA was based on the Measured, Indicated and Inferred Mineral Resource estimates for the
Gibellini deposit and the Inferred Mineral Resource estimate for the Louie Hill deposit.
Gibellini Deposit Mineral Resource Statement
Confidence Category Domain Cut-off
V2O5 (%)
Tons
(Mt)
Grade
V2O5
(%)
Contained
V2O5 (Mlb)
Measured
Oxide 0.101 3.96 0.251 19.87
Transition 0.086 3.98 0.377 29.98
Indicated
Oxide 0.101 7.83 0.222 34.76
Transition 0.086 7.19 0.325 46.73
Total Measured and Indicated 22.95 0.286 131.34
Inferred
Oxide 0.101 0.16 0.170 0.55
Transition 0.086 0.01 0.180 0.03
Reduced 0.116 14.80 0.175 51.72
Total Inferred
14.97 0.175 52.30
Louie Hill Deposit Mineral Resource Statement
Confidence Category Cut-off
V2O5 (%)
Tons
(Mt)
Grade
V2O5 (%)
Contained
V2O5 (Mlb)
Inferred 0.101 7.52 0.276 41.49
Notes to accompany mineral resource tables for Gibellini and Louie Hill deposits:
1. The Qualified Person for the estimate is Mr. E.J.C. Orbock III, RM SME, a Wood Group
employee. The Mineral Resources have an effective date of May 29, 2018.
2. The oxidation state for the Louie Hill deposit was not modeled.
3. Mineral Resources are reported within a conceptual pit shell that uses the following
assumptions: Mineral R esource V 2O5 price: $14.64/lb; mining cost: $2.21/ton mined; process
cost: $13.62/ton processed; general and administrative (G&A) cost: $0.99/ton processed;
metallurgical recovery assumptions of 60% for mineralized material; tonnage factors of 16.86
ft3/ton for mineralized material, royalty: 2.5% net smelter return (NSR); shipping and conversion
costs: $0.37/lb V2O5. For the purposes of the resource estimate constraining pit shell, an overall
40º slope angle assumption was used.
4. Rounding as required by reporting guidelines may result in apparent summation differences
between tons, grade and contained metal content. Tonnage and grade measurements are in US
units. Grades are reported in percentages.
High Grade Mineral Resources
Gibellini Deposit Mineral Resource at higher cut-off grades
Cut-off grade
V2O5
Measured and Indicated Inferred
Tons
(Mt)
Grade
V2O5
(%)
Contained
V2O5 (Mlb)
Tons
(Mt)
Grade V2O5
(%)
Contained
V2O5 (Mlb)
@0.25% cut-off 13.8 0.35 96.4 0.5 0.271 2.5
@0.35% cut-off 5.5 0.43 48.0 - - -
Louie Hill Deposit Mineral Resource at higher cut-off grades
Cut-off grade
V2O5
Inferred
Tons
(Mt)
Grade
V2O5
(%)
Contained
V2O5 (Mlb)
@0.25% cut-off 4.0 0.35 28.1
@0.35% cut-off 1.5 0.45 13.8
Mining & Processing
Mining at the Gibellini and Louie Hill projects is planned to be a conventional open pit mine utilizing
a truck and shovel fleet comprised of 100 -ton trucks and front end loaders. Average mine
production during the 13.5 year mine life is 3.4 million tons of leach material (3 million tons) and
waste (0.4 million tonnes) per year at a strip ratio of 0.17. Mining is to be completed through
contract, with Prophecy’s mining staff overseeing the contracted mining operation and performing
the mine engineering and survey work.
Oxide
‘000 tons
Transition
‘000 tons
Reduced
‘000 tons
Grade
% V2O5
Metal contained
V2O5 (Mlb)
Metal Produced
V2O5 (Mlb)
YR 1 2,600 400 — 0.291 17.440 10.633
YR 2 2,400 600 — 0.278 16.690 10.480
YR 3 1,760 1,240 — 0.310 18.580 12.067
YR 4 650 2,350 — 0.372 22.320 15.217
YR 5 310 2,680 10 0.366 21.950 15.185
YR 6 2,240 750 10 0.315 18.920 11.928
YR 7 3,000 — — 0.316 18.980 11.394
YR 8 1,910 700 380 0.189 11.310 7.085
YR 9 690 1,220 1,090 0.216 12.940 8.023
YR 10 110 370 2,520 0.208 12.480 6.898
YR 11 450 360 2,180 0.182 10.910 6.103
YR 12 50 140 2,820 0.166 9.980 5.349
YR 13 390 10 2,600 0.183 10.970 5.839
YR 14 1,710 — — 0.195 6.670 4.096
Totals: 18,290 10,830 11,590 0.258 210.15 130.297
The processing method envisioned for the project will be to feed leach material from the mine via
loader to a hopper that feeds the crushing plant. The leach material will then be fed to the
agglomerator where sulfuric acid, flocculent and water will be ad ded to achieve adequate
agglomeration. The agglomerated leach material will be transported to a stacker on the leach pad,
which will stack the material to a height of 15 feet. Once the material is stacked, solution will be
added to the leach heap at a rate of 0.0025 gallons per minute per square foot. The solution will
be collected in a pond and this pregnant leach solution will be sent to the process building for
metal recovery where it will go through solvent extraction and stripping processes to produce the
vanadium pentoxide.
Vanadium Recoveries and Metallurgical Testing
Approximately 130.3 million pounds of V2O5 is expected to be produced from Gibellini and Louie
Hill leaching operations at an average recovery of 62% (oxide: 60%, transition: 70% and reduced:
52%). The heap leaching is performed at ambient temperature and atmospheric pressure without
pre-roasting or other beneficiation process. The pregnant leach solution is continuously collected
with leach material undergoing , on average, a 150-day heap-leaching cycle. The table below
summarizes the projected metallurgical recoveries used in the PEA for the three defined
oxidation-type domains.
Mill Feed Material Type Direct Leaching Recovery
Oxide 60%
Transition 70%
Reduced 52%
The direct heap leach vanadium recovery estimates used in the PEA were based on extensive
metallurgical testing work performed by SGS Lakefield Research Laboratories, Dawson Minerals
Laboratories, and McClelland Laboratories. Samples were selected from a range of depths within
the deposit, representative of the various types and styles of mineralization. Samples were
obtained to ensure that tests were performed on sufficient sample mass. The end results
demonstrated low acid consumption (less than 100 lb acid consumption per ton leached) and high
recovery through direct leaching. Notable test results included the following:
Acid Heap Leach Testing of a Gibellini Bulk Sample, McClelland Laboratories, September
4, 2013 -
A series of trenches were excavated and approximately 18 tons of material were sent to
McClelland Laboratories for pilot testing. The material was air dried and stage crushed to 2” where
a column sample was cut for 12” columns and then the leach material was crushed to – ½”. A
head sample was taken and material for bench marking columns, and a bottle roll test was also
taken. The results of the pilot plant testing are shown in the table below:
Crush Size 100%
Passing Test Type Time (Days) Head Grade
%V*
% Vanadium
Recovery
Acid
Consumption
lbs/st
50 mm (2”) Column, open
circuit 123 0.299 76.6% 88
12.5 mm (1/2”) Column, open 123 0.313 80.2% 72
circuit
12.5 mm (1/2”) Column, closed
circuit 199 0.284 68.3% 84
12.5 mm (1/2”) Column, closed
circuit 198 0.313 74.0% 96
12.5 mm (1/2”) Bottle Roll 4 0.286 67.1% 74
1.7 mm (-10m) Bottle Roll 4 0.286 66.3% 66
-75µ Bottle Roll 4 0.279 67.6% 62
-75µ Bottle Roll 30 0.298 74.2% 54
*to convert V to V2O5, multiply V by 1.7852.
Solvent Extraction (SX) Test Work -
The design parameters from this test work are:
• SX Extraction pH Range 1.8 to 2.0
• Di-2-Ethyl Hexyl Phosphoric Acid Concentration 0.45 M (~17.3% by weight) Cytec
• 923 Concentration 0.13 M (~5.4% by weight)
• The Organic Diluent is Orform SX-12 (high purity kerosene)
• SO2 addition of 1.0 to 1.5 g/l
• Strip Solution Sulfuric Acid Concentration 225 to 250 g/l SX
• Extraction Efficiency ~97%
• SX Strip Efficiency ~98%
Pilot Scale Solvent Extraction Testing on Vanadium Bearing Solutions from Two Gibellini
Project Column Leach Tests, McClelland Laboratories, September 16, 2013 -
Solvent extraction ( “SX”) processing was conducted to recover vanadium from sulfuric acid
pregnant leach solution (PLS) generated during pilot column testing on bulk leach samples from
the Gibellini project. Laboratory scale testing was conducted on select solutions generated during
the pilot SX processing, to optimize the SX processing conditions. Additional laboratory scale
testing was conducted on the loaded strip solutio n generated during the pilot SX testing, to
evaluate methods for upgrading and purifying it to levels that may be required for sale of a final
vanadium bearing product.