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TSX: PCY
Prophecy Development Corp.
Company Presentation
January 2015
1
Cautionary Statement
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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 Chris Kravits P.Geo., who is a Qualified Person within
the meaning of National Instrument 43-101. Mr. Kravits has reviewed and approved the scientific and technical aspects of this presentation.
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.
2
TSX: PCY
The total production from the Pulacayo mine 1833 to 1959 estimated by the National
Geological and Mineral Service of Bolivia, was 678 million ounces of silver, 200,000 tons of
zinc and 200,000 tons of lead.
Mission
Bring Pulacayo Back to its Glory
Background
Since October 2009, Prophecy under John Lee has:
Acquired over several mineral properties** through mergers and acquisitions
Raised over $100 million through public listing
Upgraded to Toronto Stock Exchange main board in 2012
Prophecy with its spinoff company* peak market cap > $500 million in 2011
** Lynn Lake, Titan, Red Hill Energy (Ulaan Ovoo & Chandgana), Ursa Major (Shakespeare), Northern Platinum (Wellgreen), Pacific Coast Nickel (Burwash)
* Prophecy Platinum now called Wellgreen Platinum with Lynn Lake, Shakespeare, Wellgreen and Burwash
Latest Addition Pulacayo
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Pulacayo, Bolivia
Feasibility study published
Mine fully permitted
Trial mining phase completed
Paca, Bolivia (7km North of Pulacayo)
Open pit possibility
Resource growth potential
Pulacayo - Paca
Source: Prophecy Development Corp.
4
Prolific Silver Belt Production > 30 million oz/yr
*source: Wikipedia and
company websites
TSX: PCY
2013 annual silver production*:
San Cristobal (20 million oz) -> 100km South West of Pulacayo
San Bartolome (6 million oz) -> 200km North East of Pulacayo
San Vicente (4 million oz) -> 150 km South East of Pulacayo
20 km Paved Road to Pulacayo from Uyuni Airport TSX: PCY
Arrival 30min to Site; New Rail, Locomotive Ready TSX: PCY
Town of Pulacayo to Resource Adit via dotted line TSX: PCY
Paca Resource
Paca Resource
Anomaly found during
Plant condemnation
drilling
7km
Vast Potential for
Pacamayo Anomaly
Increasing Paca and Pulacayo resource,
Veta Quattro Anomaly
Pulacayo
Resource
Additional discoveries,
Nap Pero Anomaly
Pulacayo mine access
tunnel (dotted line)
Anomaly found during
Plant condemnation
drilling
Position of Planned
Concentrator & TSF
Pulacayo
town
District Style silver play,
Slide 16 of by Apogee Silver Ltd Presentation dated October 2013
8
Pulacayo Feasibility Resource Estimate
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Indicated and inferred resource
Over 69 million
oz of silver
defined with
only 20% of
the vein
explored
NI 43-101 Technical Report on Pulacayo property prepared by TWP Sudamerica, Mercator Geological Services and P&E Mining Consultants
for Apogee Silver Ltd and filed on SEDAR Mar. 1, 2013, refer to foot notes in appendix for further information
Paca Open Pit Resource Estimate
February 19, 2007
Micon International announced
Inferred Mineral Resource Estimate for Paca deposit of
18.42 million tonnes @ 43g/t Ag 1.16% Zn and 0.68% Pb.
August 3, 2011
Apogee announced metallurgical tests conducted on leachable
silver in oxide layer demonstrate recoveries up to 81%
NI 43-101 Technical Report on Paca property prepared by Micon International and filed on SEDAR Apr. 5, 2007.
See Technical Report Appendix for details on mineral resources.
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Pulacayo Resource Expansion Potential
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Approx. area of NI 43-101 UG mineral resources and reserves (63,000m drilling)
Approx. area of NI 43-101 Open Pit mineral resources
Bulk pre-production mining operations (2012/13)
Surface
Profile
1,000
m
3,000m Strike Depth
??
??
Drilled
Drilled
Still to be
drilled
?? *Legend in “decimarcos” 100g/t = 1dm
Slide 13 of by Apogee Silver Ltd Presentation dated October 2013
??
11
OB 6 and OB 8 Areas Visited before Main Shaft
Apogee news release dated July 10, 2013, April 19, 2013, January 15, 2013, July 16, 2012
INFORME DE MINA (PRUEBAS METALÚRGICAS PILOTO) GESTIONES 2012-2013
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TSX: PCY
Apogee news release dated July 10, 2013,
April 19, 2013, January 15, 2013, July 16, 2012
INFORME DE MINA (PRUEBAS METALÚRGICAS PILOTO)
GESTIONES 2012-2013
Highlight of OB 6 Area (not included in reserve)
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Sample High-grade Drill
July 22, 2008
25 meters grading 1,030 g/t silver including
4,903 g/t silver, 5.22% lead, 5.20% zinc over
3.4 metres at the Pulacayo deposit,
Apogee news release dated July 10, 2013, April 19, 2013, January 15, 2013, July 16, 2012
INFORME DE MINA (PRUEBAS METALÚRGICAS PILOTO) GESTIONES 2012-2013
OB6 area of
80mx20mx30m
~ 120,000 tonnes
Highlights of OB 6 and OB 8 Areas
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Highlights of OB 6 and OB 8 Areas (cont’d)
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High Grade Samples (50%+ Pb)
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Approved Mill Site
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Approved Tailing Site
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Historic Tailing Site (one of many to process)
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Core Storage (over 69,000 meters drilled)
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Power on Site
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Uyuni Rail Station to Port of Antofagasta (612 km) TSX: PCY
TSX: PCY
Trial Mining and Recovery Data
Development
m
Total Ore Ag
tons
g/t
Trial Mining Results
Pb
Zn
Stoping
%
%
tons
1,247
12,550
2.7
270
2.4
7,547
Ag
g/t
Pb
%
Zn
%
339
3.8
3.1
The ore was trucked 150 km to Potosi and processed at 3 locally-owned custom mills
with capacity between 50 to 150 tonnes per day (tpd). Results below
Lead Conc
Zinc Conc
Tailing
Concentrate Grade
Pb%
Zn%
47.95%
12.85%
8.47%
39.45%
0.58%
0.97%
Ag g/t
6,295 g/t
941 g/t
49.38 g/t
Recovery
Pb%
64.62%
9.97%
25.41%
Zn%
16.26%
43.57%
40.16%
Ag%
72.13%
8.41%
18.45%
Total silver recovery was 81.55%
Pulacayo Concentrate Grade: Silver 5,760g/t, Lead 54%, Zinc 40%
The concentrate was sold to Trafigura Group EIA permits 500 tpd mill
Goal: improve concentrate grades and recoveries to feasibility level with own onsite mill
Apogee news release dated July 10, 2013, April 19, 2013, January 15, 2013, July 16, 2012
INFORME DE MINA (PRUEBAS METALÚRGICAS PILOTO) GESTIONES 2012-2013
Mill Recovery and Conc Grade from Feasibility
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Recovery levels obtained in the feasibility study were
Metallurgical recovery (silver) 86.3%
Metallurgical recovery (lead) 85.6%
Metallurgical recovery (zinc) 85.8%
NI 43-101 Technical Report on Pulacayo property prepared by TWP Sudamerica, Mercator Geological Services and P&E Mining Consultants
for Apogee Silver Ltd and filed on SEDAR Mar. 1, 2013.
Production Profile and Cost from Feasibility
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NI 43-101 Technical Report on Pulacayo property prepared by TWP Sudamerica, Mercator Geological Services and P&E Mining Consultants
for Apogee Silver Ltd and filed on SEDAR Mar. 1, 2013, based on 1,000 tonnes per day
Next Steps
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Q1 2015 : Tender equipment, procurement and construction contracts
for 500 tpd operation (annual mining rate > 180,000 tonnes)
Q1 2015: Negotiate off take agreement with smelters
Q2 2015: Negotiate project financing with off taker and investors
Q3 2015: Begin construction (subject to financing)
Q2 2016: Start operation
2016 – 2018: Expand to 1,000 tpd (annual 360,000 tonnes, 12 years)*
results ~ annual zinc in concentrate > 6,000 tonnes
lead in concentrate > 4,000 tonnes
silver in concentrate > 2 million oz
*NI 43-101 Technical Report on Pulacayo property prepared by TWP Sudamerica, Mercator Geological Services and P&E Mining
Consultants for Apogee Silver Ltd and filed on SEDAR Mar. 1, 2013.
TSX: PCY
Underground Silver Producers
Symbol
Tonne Per Day (net)
Grade
Silver (g/t)
Au (g/t)
Lead (%)
Zinc (%)
October 31, 2014
~Market Cap (net cash)
Endeavour Silver
EDR
2800
SilverCorp
SVM
1400
Great Panther
GPR
800
218
1.5
227
169
2.3
3
1
$470 million
$240 million
Pulacayo**
500 (project)
270
2.7
2.4
$120 million
**Trial mining grade used; mill, mining operation and mining equipment not in place
INFORME DE MINA (PRUEBAS METALÚRGICAS PILOTO) GESTIONES 2012-2013
Pulacayo Highlights:
• Fully permitted with water and power
• Trial mining completed, high grade, clean concentrate sold to Trafigura
• High grade underground blocs developed, ready for mining
• 20km paved road to railway to port of Antofagasta
• Skilled labor with long mining tradition (150 years)
• Vast exploration potential, silver district play
Ulaan Ovoo Mine
TSX: PCY
Thermal Coal Mine in Northern Mongolia
• 120km to Sukbaatar Railway by road
• Serve Mongolian and Russian markets
• Potential export via Russian seaports
Source: Prophecy Development Corp.
29
TSX: PCY
Highlights
•
Over 200 Mt M&I resource*, open pit mining, low
strip ratio;
•
5,000 kcal/kg, low ash 10% & low sulfur 1%;
•
The mine supports 1 mn tonnes of coal production
a year;
•
Customers – Mongolia, Russia, China (via
Manzhouli);
•
Strategically located just 17 km from the Russian
border;
•
Invested over $60 mn in the mine development,
infrastructure and mine fleet;
Prophecy’s Equipment at the Mine
Item
Manufacturer
#
Excavator
CAT
4
Dump Trucks
CAT
6
Loader
CAT
4
Dozer
CAT
2
Trucks
Scania
18
Grader
CAT
2
Screener
Keestrack
1
Water Trucks
Nissan
3
Compressor
Ingersoll
1
Compacter
Bomag
1
Source: Prophecy Development Corp.
* - Wardrop Engineering (Tetra Tech) estimated 174 Mt of measured and 34 Mt of indicated coal resources in 2010.
30
Ulan Ovoo Coal Markets
Mongolia, Russia & China (via Manzhouli)
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Ulaan Ovoo Coal Seam
Source: Prophecy Development Corp.
31
Russian Market for Ulaan Ovoo
Blending Plant
Demand: 2mt pa
Gusinoozersk Power Plant
Demand: 3 mt pa
120 km from Mongolian – Russian border
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Ulan- Ude Power Plant 1 & 2
Ulan-Ude city (boilers, residential)
Demand: 2 mt pa
220 km from Mongolian – Russian border
Tugnuiskiy Mine
Zeltura Border
Kharanor Power Plant
Demand: 0.5mt pa
~300kms
Ulaan Uvoo
Source: Prophecy Development Corp.
32
Ulaan Ovoo Mine

Production forecast 2015: 300,000 – 400,000 tonnes

Coal export to Russia, Buryat Republic in 2014

Q4 2013: Production restart
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Diversified customers:
Russian and Mongolian power plants, heat/boiler plants, cement factories, metallurgical
plants, direct reduced iron plants, railway and residential markets in Ulaanbaatar, Erdenet
and Darkhan cities (over 1.6 million of residents, approx. 60% use coal to heat premises in
winter)
Potential to export via Russian eastern seaports
33
Ulan Ovoo Coal Mine
Prophecy’s Coal in wagons from
Sukhbaatar Siding
TSX: PCY
Ulaan Ovoo Coal Mining
Source: Prophecy Development Corp.
34
Ulan Ovoo Geology

Single thick coal seam

Outcrop is 50 m wide (max 200m)

Over 200 Mt M&I resource*

20+ years mine life

5,000 kcal/kg

Low ash 10% & sulfur 1%
TSX: PCY
Ulan Ovoo Deposit Cross Section
Source: Prophecy Development Corp.
* - Wardrop Engineering (Tetra Tech) estimated 174 Mt of measured and 34 Mt of indicated coal resources in 2010.
35
Chandgana Project Summary
•
TSX: PCY
Advanced Greenfield Mine Mouth Power
Project in Mongolia – 600 MW
•
Phase 1 – 300MW, phase 2 – 300 MW
•
Mongolia: Fast growing country in need
of energy
Source: Prophecy Development Corp.
•
Mine mouth plant next to coal deposit
•
1 bn tonnes* coal (633mt M and 539mt I)
•
Central location near existing Mongolian power grid
•
Coal mining and power plant construction licenses obtained
•
EIA and Land Use Rights obtained
•
Concession Areement, PPA and Tariff application submitted
•
EPC contracts finalized
*2010, NI 43-101 Technical Report by Kravits Geological Services
2007, NI 43-101 Technical Report by Behre Dolbear
36
Chandgana Project Location
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Chandgana
Power Plant
Source: SouthGobi Resources, Prophecy Development Corp.
37
Chandgana Power Project Location
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Chandgana aerial view, 100 sqkm land
> 1 bt coal, featuring 40m thick coal seam
outcrop
Source: Prophecy Development Corp.
Project sketch
drawing
38
Chandgana Power Project Benefits to Mongolia
•
•
TSX: PCY
Contribute to pollution reduction - Various studies have linked Ulaanbaatar air
pollution to respiratory death and women miscarriages. Chandgana power plant
will eliminate the need of additional power plants in Ulaanbaatar and reduce
dependence on power plant #3 and #4, which emit heavy nitrogen and sulphur
harmful participles in excess due to their age.
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 millions tonnes of coal to congested city (more than 100
wagons per day). Water will be extracted from the mine and avoids sharing
precious water resource (up to 6 million tonnes per year, 16,000 tonnes per day)
within city of Ulaanbaatar. Water Scarcity problem will emerge in 2015 in
Ulaanbaatar, and intensify from 2020 onwards. Assuming each UB resident I
consuming 20 liters of water a day, a new power plant will take water away from
about 800,000 residents annually.
39
Chandgana Power Project Benefits to Mongolia
•
•
•
TSX: PCY
Energy independence - Chandgana power plant project will reduce expensive
power import from Russia and China, and achieve Mongolia energy independence.
Mongolia is projected to import over 450 MW from Russia and China before 2018.
Prophecy proposed electricity tariff will be lower than import with exemption from
income tax, VAT, customs duty. The power plant is planned to start supplying power
to Mongolian system from 2018.
Relief on power supply shortage - Chandgana power plant is planned to supply
power to Mongolian system from 2018. Mongolia GDP roughly doubles every 5
years from mining production. Currently installed capacity is 800MW and demand
expects to double by 2020
Stabilization of transmission grid - Prophecy will finance transmission line from
Baganuur to Chandgana in phase 1, and Chandgana to Choir in phase 2. The new
lines will increase the network stability and security of electricity supply in the
Mongolian power grid.
40
Chandgana Power Project Benefits to Mongolia
•
•
•
TSX: PCY
Good location - 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, South and East.
Project readiness – Chandgana power plant project is 3 years under development
and is ready for construction with construction license, environmental impact
assessment, land use rights, mining license. Over 10 EPC contractors expressed
interest since 2012 and several binding EPC proposals have been received with
competitive price and short construction time frame (36 months). Construction can
start right after Concession Agreement, PPA, Tariff Agreement and Financial Close.
Extension to Coal to Gas and Coal to Liquid project – Chandgana is next to
highway, has plenty of land and estimated 3.5 billion tonnes of coal resource in the
nearby basin. Once power project is operational, it is natural progression to develop
coal to gas and coal to liquid projects.
41
Chandgana Power Plant - Milestones
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License / Approval
Power Plant Detailed Environmental Impact Assessment
Chandgana Coal Mining License
Power Transmission Line EIA Approval
600 MW Chandgana Power Plant Construction License
Chandgana Coal EIA Approval
Power Purchase Agreement
Firm EPC Bids
Chandgana Coal Preliminary Economic Assessment
Project Finance Debt Term Sheet
Geotechnical Study
Chandgana Power Plant Land Use Approval
Water & Power Supplies to Site During Construction Permits
Preliminary Mobilization Work
Electricity Tariff Proposal from the Working Group
Coal Supply Agreement
Application for Concession
Date
Nov 2010
Jan 2011
Aug 2011
Nov 2011
Nov 2011
Sep 2012
Sep 2012
Nov 2012
Jan 2013
Feb 2013
Mar 2013
Mar 2013
Apr 2013
May 2013
Jun 2013
Aug 2013
Project Qualified under Concession
Feb 2014
√ Approved
Invitation from Ministry of Economic Development to Negotiate on
Concession Agreement #7/2055
Oct 2014
√ Received
Source: Prophecy Development Corp.
Status
√ Received
√ Received
√ Received
√ Received
√ Received
Submitted
√ Received
√ Received
√ Received
√ Received
√ Received
√ Received
Started
√ Received
√ Received
Submitted
42
Chandgana Power Project Timeline
TSX: PCY
2010: Evironmental Impact Assessment approved, Mining License received
2011: 600MW Power Plant Construction License received, tendering process on EPC,
and discussion on PPA
2012: Mongolian election, Tariff and PPA application submission
2013: Received Land Use Rights and all major permits to start mobilization
2014: Project qualified as concession and received Invitation from Ministry of
Economic Development to negotiate on Concession Agreement
2015: Expects to finalize Concession Agreement, PPA, EPC and Project Financing
2015 - 2018: Construction, Operation (conditional on achieving 2015 targets)
43
Company Contact
TSX: PCY
Toronto Stock Exchange: PCY
Shares O/S: 311,878, 634
Phone: 1-604-569-3661
Fax: 1-604-569-3617
Toll Free: 1-800-373-0296
info@prophecydev.com
44
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Appendix
Footnotes to Pulacayo Resource Estimate
TSX: PCY
Modeling was performed using Gemcom Surpac® 6.3 modeling software with silver, lead and zinc grades
estimated independently by inverse distance squared (ID2) interpolation from 1.0 meter down hole assay
composites capped at 1500 g/t, 15 %, and 15 % respectively. Block size was 5 meters (x) by 3 meters (y) by 3
meters (z) with one unit of standard sub-blocking allowed. Block model results were checked using ordinary
Kriging and Nearest Neighbour interpolation methods.
A bulk density model was interpolated by ID2 methodology from 1.0 meter down hole bulk density
composites using the grade interpolation parameters for each metal.
Mineral Resource estimate values for the blocks occurring within the sulphide zone were determined by
means of a net smelter calculation using a 36 month trailing average silver price of $25.00 USD/oz and prices
of $0.89 USD/lb lead and $1.00 USD/lb zinc