Junior identifies new mineralized area

After two seasons of exploration, Prophecy Platinum Corp. envisioned building a conventional, diesel truck-shovel open pit mine at its 64.5-square-kilometer (25 square miles) Wellgreen Project in southwestern Yukon Territory.

The junior released a preliminary economic assessment in 2012 that happily outlined plans for a 32,000-metric-tons-per-day operation with a 37-year of mine life. With initial capital expenditures of C$863 million and an average strip ratio of 2.57:1, the company anticipated producing a suite of highly marketable metals, including 1.959 billion pounds nickel, 2.058 billion pounds copper and 7.119 million ounces platinum + palladium + gold in concentrate.

The PEA is based on a mineral resource estimate, at a 22 percent nickel-equivalent cut-off, of 14.4 metric tons at 0.68 percent nickel, 0.62 percent copper, and 2.23 g/t platinum + palladium + gold grade in the indicated category and an inferred mineral resource of 446.6 metric tons at 0.31 percent nickel, 0.25 percent copper, and 0.87 grams-per-metric-ton platinum + palladium + gold.

A year later, the Wellgreen project's outlook has changed dramatically.

Prophecy Platinum recently began reporting initial results of its 2013 exploration program, which consisted of about 4,735 meters of new drilling in 29 drill holes for exploration and environmental monitoring, along with assaying 8,136 meters of core from about 21,784 meters of historical drill core that had previously only been selectively sampled.

Though relatively modest by historical standards, the field program conducted by the company this year was one of very few multimillion-dollar programs carried out in the Yukon in 2013.

That's because the junior was able to raise money in the current tough market and "get more bang for the buck," Prophecy Platinum President Greg Johnson told a reporter recently.

Prophecy Platinum raised nearly C$6 million in a private placement this summer and attracted three new investors as major shareholder Prophecy Coal Corp. sold 24 percent interest in the company. Prior to the transaction, Prophecy Coal was the largest single shareholder of Prophecy Platinum as a result of the 2011 spin out from Prophecy Resource Corp. Prophecy Coal currently holds a 4.3 percent stake, excluding shares held in reserve for former option and warrant holders of Prophecy Platinum. Prophecy Platinum shareholders also approved changing the name of the company to "Wellgreen Platinum Corp." at their annual meeting Dec. 17. The name change took effect Dec. 19.

"With the end of what has been a transformative and productive year approaching, the company has seen a significant restructuring of our shareholder base, a change in our board of directors, and renewed focus and technical progress on our flagship Wellgreen project," Johnson said. "With a number of important milestones anticipated in 2014, we believe this is the right time to make a change in our corporate identity as we move from an exploration stage company to a development stage company with a focus on platinum group metals and our core Wellgreen project, one of the largest undeveloped platinum and palladium resources in the world."

A different approach

Company geologists decided to re-examine previously unreleased drill core assays obtained by the Wellgreen project's previous operators in hopes of incorporating the results into a three-dimensional geological model for the polymetallic property.

What they found is transforming the project.

Historically, Wellgreen was evaluated as a narrow, high-grade underground mine targeting only semi-massive and massive sulphide mineralization. Drilling in the main Wellgreen deposit was stopped upon entering "footwall" sediments, which were assumed to be the northern boundary to mineralization. This drilling had defined the main Wellgreen deposit as a south-dipping tabular body about 2.5 kilometers (1.5 miles) long and some 100-300 meters wide, with some zones covering more than 500 meters of continuous mineralization and grading more than two g/t-m platinum-equivalent.

The historic drill holes were previously only selectively sampled for high-grade, massive sulphide zones amenable to an underground mining scenario. As much as 75 percent of the drill core that can be considered in an open pit bulk mineable scenario was never sampled.

The company initiated a re-logging and sampling program of up to 12,000 meters of historic drill holes in June. In this re-analysis, the technical team looked for broad zones of disseminated sulphide mineralization for platinum, palladium, rhodium and gold in addition to nickel, copper, cobalt and trace elements. The exercise succeeded in uncovering a previously overlooked broad mineralized area.

In September, the company reported significant high-grade intercepts in the newly interpreted mineralized areas, including: WS-154, which intersected five intervals totaling 501.2 meters grading 1.84 g/t platinum-equivalent (0.55 g/t platinum + palladium + gold with 0.26 percent nickel and 0.19 percent copper) for a total platinum-equivalent grade thickness of 922 g/t-meter; WS-160, which intersected two intervals totaling 443.6 meters grading 2.46 g/t platinum-equivalent (0.84 g/t platinum + palladium + gold with 0.31 percent nickel and 0.30 percent copper) and including 352.7 meters of 2.62 g/t platinum-equivalent (0.93 g/t platinum + palladium + gold with 0.31 percent nickel and 0.33 percent copper) for a total platinum-equivalent grade thickness of 1,094 g/t-m; WS-165 intersected two intervals totaling 194.1 meters grading 2.99 g/t platinum-equivalent (1.24 g/t platinum + palladium + gold with 0.26 percent nickel and 0.55 percent copper) and including 60.7 meters of 4.24 g/t platinum-equivalent (2.02 g/t platinum + palladium + gold with 0.24 percent nickel and 0.99 percent copper) for a total platinum-equivalent grade thickness of 581 g/t-m; WS- 193 intersected two intervals totaling 410.7 meters grading 1.77 g/t platinum-equivalent (0.46 g/t platinum + palladium + gold with 0.29 percent nickel and 0.10 percent copper) and including 357.7 meters of 1.84 g/t platinum-equivalent (0.49 g/t platinum + palladium + gold with 0.30 percent nickel and 0.11 percent copper) for a total platinum-equivalent grade thickness of 726 g/t-m.

These results indicate the potential for the Far East Zone to be laterally extensive with broad zones of significantly higher grades than the average of the Wellgreen deposit. Several of these holes contain platinum-equivalent grade thickness values of 1,000 g/t- m, which are some of the best intersections to date on the project.

"The Wellgreen deposit was discovered in the 1950s. We've compiled all of the results since then, and we're able to look at this in 3-D for the first time," Johnson said.

Broad mineralized zone

The newly identified mineralized area is now believed to extend the main Wellgreen deposit to the north.

Johnson said implications of these drill results potentially define a large block of new mineralization within the Wellgreen project's existing pit model.

"We realized that we had a new area of mineralization that demonstrates zones in excess of 300 meters in continuous mineralization," he said. "We are also encouraged with the presence of the wide zones of significantly higher grade, such as in hole 165, which intersected 60.7 meters of 2.01 g/t platinum + palladium + gold PGMs with 0.24 percent nickel and 0.99 percent copper for a total platinum-equivalent grade of 4.24 g/t. In our current drilling, we are testing the total width of this zone with a step-out to the east designed to intercept both the historic tabular Wellgreen deposit and to drill into this Far East Zone to the north," Johnson continued.

In November, the company reported assay results for the step-out, drill hole 215 in the Far East Zone, which intercepted 756 meters of continuous mineralization grading 1.92 g/t platinum-equivalent, or 0.46 percent nickel equivalent, including 461 meters of continuous mineralization grading 2.31 g/t platinum-equivalent (0.55 percent nickel equivalent which contains a 65.6-meter interval grading 4.19 g/t platinum-equivalent (1.00 percent nickel equivalent), comprised of 1.33 g/t platinum + palladium + gold with 0.56 percent nickel and 0.45 percent copper.

The company Dec. 16 reported further results that confirmed the extension of the mineralization by more than 325 meters to the east of the Far East cross section that included drill-hole 215.

"At three-quarters of a kilometer, or half a mile of continuous mineralization (or roughly the equivalent of seven football fields in a row), the width of PGM mineralization intercepted by hole 215 is the longest yet at Wellgreen," Johnson said. "The company is not aware of any other ultramafic PGM- containing deposits anywhere in the world with continuous mineralization over comparable widths. This is a massive intercept with a grade thickness value of 1,451 grams-per-metric-ton meters platinum-equivalent, which demonstrates the significant scale and potential of the Wellgreen system.

"While South African platinum mines are struggling because they typically mine mineralized seams just a few meters at great depths underground, the mineralization at our Wellgreen property is typically several hundred meters wide and begins at surface, making it amenable to open pit mining and the project is located in one of the Fraser Institutes' top-ranked mining jurisdictions in the world," Johnson said.

"Within the broad continuous zone of mineralization in hole 215 is a higher grade portion that includes a 65.6-metre wide zone grading 4.19 g/t platinum-equivalent (1.00 percent nickel-equivalent) and a second higher grade zone which correlates with the recently announced higher grade zones intercepted in holes 160 and 165 to the west.

We believe this material may be suitable for bulk underground extraction early in the anticipated mine plan in conjunction with the higher grade starter pits on the western end of the deposit to potentially increase the overall project economics and accelerate payback.

We are very pleased with these results and the potential that is being shown at the eastern end of the known Wellgreen deposit," he added.

In light of the new interpretation, Wellgreen Platinum is also reviewing and assessing additional historic drilling several hundred meters east of the Far East zone and believes that these holes may have intercepted the new zone of mineralization.

These newly interpreted cross sections are 225-325 meters east of hole 215 and indicate continuity of the mineralization in the Far East with additional broad zones of mineralization in four different drill holes ranging from 300 meters to 375 meters in width and grading roughly 2 g/t platinum-equivalent (0.48 percent nickel-equivalent). These drill holes are the easternmost in the deposit and, like drill-hole 215, also show higher grade zones of significant width at 3-5 g/t platinum-equivalent grades.

The company said investors should note that Wellgreen is a polymetallic deposit with mineralization that includes platinum group metals, gold, nickel, copper and cobalt. At current metal prices using anticipated metallurgical recoveries and proportionally allocated costs for each of the metals, the net economic contribution is anticipated to be largest for platinum, palladium and gold, followed by nickel and then by copper and cobalt.

"We are also excited to report that in our review of historical information, some of which has not previously been published, we have noted areas of strongly enriched rare platinum group metals rhodium osmium, iridium and ruthenium," Johnson said in November.

"These rare PGM zones occur within and adjacent to high sulphide zones with elevated concentrations of platinum, palladium and gold.

These rare PGMs are not common in magmatic PGM-nickel-copper deposits, but these results are consistent with historic mining data for the Wellgreen concentrates; a total of 171,652 metric tons were milled by Hudson Yukon Mining in 1972 and 1973 with grades based on smelter returns of 2.23 percent nickel, 1.39 percent copper, 1,300 parts-per-billion platinum, 920 ppb palladium, 171 ppb gold, 400 ppb rhodium, 420 ppb rubidium, 250 ppb iridium, 200 ppb osmium and 200 ppb rhenium.

The presence of these rare and valuable PGM metals has been shown to increase the total PGM content by 100-200 percent in some sulphide-rich samples and by 10-15 percent in adjacent and shoulder zones with high-sulphide contents.

Because of the potential positive economic impact of these rare PGMs, additional analyses of the full suite of PGMs in the higher sulfide intercepts and intervals are being conducted by the company."

Focus on new mineralized area

Wellgreen Platinum will focus future efforts on identifying the extent of this zone and the possibility of finding similar zones within the Wellgreen deposit. Concentrates that were historically mined and produced at Wellgreen and sold to Sumitomo in the 1970s reported significant recovery of rare PGMs along with platinum, palladium, gold, nickel and copper.

"We are developing a number of compelling targets for further work, as the deposit remains open down dip and to the south, as well as along trend further to the east. We believe that the Far East Zone provides an opportunity for improved economics for the overall deposit through a combination of shallow open pit mining and bulk underground mining targeting higher grade mineralized zones. These assay results are confirming the newly developed geologic model for the deposit and will be important for advancing the project to the next level of confidence on the resource estimate update and preliminary economic assessment planned for Q2 2014," Johnson said in December.

Based on the new interpretation of drill holes in the Far East zone, Wellgreen Platinum's technical team believes the historic footwall sediment package previously thought to define the northern boundary of the Wellgreen deposit does not extend to depth, but rather exhibits a wedge-like geometry.

This suggests that there is potential for a large area of additional PGM-nickel-copper mineralization in the pit model beneath and to the north of the sediment package. In addition, this newly recognized zone may connect the North Arm ultramafic body to the main Wellgreen deposit, potentially converting a large area which was modeled as unmineralized in the pit model to an area which has potential to become mineralized blocks. This could have the positive effect of reducing the life of mine strip ratio for the project.

The Far East zone also exhibits areas of significantly higher grades than the average of the Wellgreen deposit that may be amenable to selective mining of higher grade material early in the mine life. The zone also is completely open to the west, east and to the north. More exploration work is being conducted by Wellgreen Platinum in this area to gain a better understanding of its mineralization and the broader implications for the Wellgreen deposit as a whole.

The new approach to potential mining at Wellgreen will employ open pit and bulk underground mining methods that target both the disseminated sulphide mineralization and the high-grade mineralized zones it surrounds that were the focus of historic work.

The company is also continuing to evaluate historic exploration data from the Quill and Burwash areas, both of which have a potential strike length of more than two kilometers (1.24 miles) based on magnetic and soil geochemical anomalies.

The company has identified a series of high-priority targets in the Quill and Burwash areas, which are located outside of the current limits of the current mineral resource model to the east but demonstrate geomagnetic and surface geochemical signatures which are similar to those found at the main Wellgreen deposit.

Initial results indicate the possibility that these sites may be part of the same overall system, which exceeds 18 kilometers (11 miles) in length.

Other 2013 activities

The company completed the 2013 field program at Wellgreen with drilling concluded by the end November. It also completed drilling and instrumentation of 18 groundwater wells at nine separate sites at Wellgreen that will be monitored in parallel with the environmental baseline monitoring program initiated in the fourth quarter of 2012.

Metallurgical test work that is currently underway at Wellgreen is showing encouraging results which are improving on the results used in the 2012 PEA by optimizing the conventional metallurgical process and flowsheet, Johnson said.

The company anticipates reporting more results from both re-sampling and drilling programs in the coming weeks and months, along with the next phase of metallurgical optimization testwork. Tests, so far, demonstrate that separate nickel and copper sulphide concentrates can be produced at Wellgreen.

The company also has continued with its baseline environmental data collection to allow for the initiation of the Yukon environmental assessment process, beginning in 2014.

Studies also have been initiated to select optimal locations for mine infrastructure, which includes the camp, mill, water treatment plant and the tailings storage facility.

Engineering studies are under way to look at optimizing the project using a staged production approach that will reduce pre-production capital requirements and allow the company to consider additional project financing options. In parallel, Wellgreen Platinum will continue to evaluate various larger-scale production scenarios that will highlight the full potential of the Wellgreen project.

Looking ahead

Wellgreen Platinum is targeting 2015-2016 for permitting and construction of a mine at Wellgreen.

Wellgreen Platinum said the mineralized area in the Far East zone below the sediment wedge will be the focus of additional exploration to determine the orientation and potential size of the area.

Most mineable PGM deposits are concentrated in southern Africa and Russia, some of the more politically risky jurisdictions in the world, making production challenging and curbing supply. Couple this with growing demand for platinum and palladium in the manufacture of catalytic converters needed to curb pollution from automobiles, Johnson said current world market conditions could be described as a "perfect storm" of supply and demand.

"There's a real scarcity of supply of PGMs because of the challenging mining production in these countries," Johnson observed.

This bodes well for the Wellgreen deposit, which, by comparison, is located in a low political risk, mining-friendly jurisdiction with direct access to existing highways and port infrastructure.

"Wellgreen is quickly becoming one of the most significant undeveloped PGM deposits in the world in terms of width and continuity of PGM mineralization," he added.