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Pulacayo (Silver-Zinc-Lead)

    Related Documents and Other Information

    pdf Pulacayo PUG (underground) detailed interval drill database (xls)
    pdf Pulacayo PUD (surface) detailed interval drill database (xls)
    pdf Pulacayo Drill Results (pdf)
    pdf Pulacayo Drill Maps and Cross Sections
    pdf Pulacayo Concentrate Assays 2013 Pilot Mining (1, 2, 3, 4)
    pdf Pulacayo Central Shaft Inspection Report (pdf)
    rar Pulacayo underground workings and Paca topo maps (dwg)
    pdf Tailing Metallurgical Report


    pdf Paca detailed interval drill database (xls)
    pdf Paca Drill Results (pdf)
    pdf Paca Open Pit Drill Maps and Cross Sections

    Overview

    The Pulacayo Project consists of seven concessions comprising approximately 3,550 hectares of mining concessions. There are two groups of concessions – one centered on the historical Pulacayo mine and town site consisting of four concessions comprising approximately 2,766 ha and the second located approximately 3.9 km directly south consisting of three concessions comprising approximately 784 hectares. Prophecy Developmemt Corp. (“Prophecy”) gained control of 100% of the property in January 2015 by acquiring all of the issued and outstanding shares of ASC Bolivia LDC, an indirectly held subsidiary of Apogee Silver Ltd. (“Apogee”) ASC Bolivia LDC controls the mining rights to the concessions through a separate joint venture agreement with the Pulacayo Mining Cooperative which holds the mining rights through an agreement with the state owned Mining Corporation of Bolivia (“COMIBOL”).

    The Project is fully permitted with secured social licenses for mining and processing. During December 2012, the Environmental Impact Assessment (“EIA”) for the Pulacayo project was submitted to Bolivia’s Ministry of Environment and Water and it was approved in October 2013. The submission was the result of over 30 months of technical studies and consultations, including a comprehensive water management plan, the feasibility study, archeological studies, flora and fauna studies, mine closure planning, social baseline studies, and results from two years of public consultations with local communities. The approval of the EIA allows for mine and concentrator construction and operation to a maximum production rate of 560tpd.


    Map 1: General location map


    Map 2: Pulacayo project location relative to other mining activity

    Location and Access

    The Pulacayo Project is located 18 km northeast of the town of Uyuni in the Department of Potosi in southwestern Bolivia. It is located 460 km south-southeast of the national capital of La Paz and 145 km straight line distance (207 road km) southwest of the city of Potosi, which is the administrative capital of the department Maps 1 and 2). Pulacayo is accessible by all season paved and gravel roads from La Paz via Oruro to Uyuni, and by a newly paved road from Potosi. The town of Uyuni has a newly developed asphalt airstrip which now accommodates daily scheduled air service from La Paz by two regional carriers. It also has commercial railway connections to the cities of Oruro, Potosi and Villazon, and links to the borders of Argentina and Chile. Railway connections to Chile link to major shipping ports at Antofagasta and Porto Mejillones.

    History

    The discovery of silver mineralization at Pulacayo dates back to the Spanish Colonial period (c1545). Although production details during this period are unknown, remnants of colonial town sites suggest a sizeable workforce was employed.

    The Pulacayo deposit was rediscovered in 1833 by Mariano Ramirez, and by 1857 the Huanchaca Mining Company of Bolivia was formed with the support of French investors. Revenue from the mine funded the first railway line in Bolivia which connected the town of Pulacayo to the port of Antofagasta, Chile in 1888. By 1891 annual silver production reached 5.7 million ounces and the mining operations at Pulacayo had become the second largest in Bolivia, exceeded only by those at nearby Cerro Rico de Potosi, which is arguably the largest silver deposit in the world.

    Production was predominantly from the rich Tajo vein system which extended over a strike length of 3.0 km and to a depth of 1000 meters. By 1923 much of the active mining levels had become flooded. Subsequently the mine was purchased by Mauricio Hochschild in 1927. The workings were dewatered and the Cuarto vein system was developed and exploited. It was during this period that the 2.8 km long San Leone Tunnel was developed to facilitate ore haulage and the first recorded exploration efforts in the area were undertaken. The mines were nationalized by the Bolivian Government in 1952 with operations turned over to COMIBOL (the newly established Bolivian National Mining Enterprise). Operations were suspended in 1959.

    The total production from the Pulacayo mine during this period as estimated by the National Geological and Mineral Service of Bolivia (SERGEOTECHMIN) is 678 million ounces of silver, 200,000 tons of zinc and 200,000 tons of lead (SERGEOTECHMIN Bulletin No. 30, 2002, after Mignon 1989). In 1962, the Cooperativa Minera Pulacayo was founded and leased the mine from COMIBOL. The cooperative continues to conduct rudimentary, small scale mining to the present day, exploiting narrow very high grade silver veins in the upper part of the mine, above the San Leone Tunnel level.

    Exploration and Drilling

    Apogee commenced exploration on the Pulacayo-Paca property in January 2006 subsequent to signing a joint venture option agreement with Apex Silver Limited whereby it could earn up to 60% of Apex Silver Limited’s interest in the concessions. Apogee has been the operator of all exploration initiatives since that time which have included detailed topographic surveys, detailed geological mapping and sampling on surface and in the historical underground workings, geophysical surveys, and extensive diamond drilling. Since 2006, Apogee has completed 244 diamond drill holes totaling 64,728 meters from both surface and underground platforms at Pulacayo, and 80 diamond drill holes totaling 14,814 metres at Paca.

    Diamond drilling at Pulacayo has been carried out in 5 phases since Apogee initiated work in January 2006. Phase I was conducted between January and June 2006 and comprised 9 holes totaling 1,826 metres including 4 holes which totaled 770 metres from underground in the historical mine workings. The objective of this phase was in part to corroborate some previous drilling by Apex Silver Limited but the program also successfully demonstrated the presence of significant amounts of disseminated, veinlet and stockwork mineralization over wide intervals between veins which had been exploited during the historical mining activities.

    Phase II was conducted during November and December of 2006 and included 10 holes totaling 2,322 metres. This program demonstrated that in addition to residual zones of disseminated, vein let and stockwork mineralization there also remained high grade mineralized shoots which had not been exploited by the previous mine operators.

    Phase III was carried on between November 2007 and September 2008 and included 98 holes totaling 24,340 metres. Included in this total were 30 holes totaling 5,911 metres which were drilled from underground in the historical mine workings. The culmination of these efforts was the disclosure of an initial independent estimate of mineral resources prepared in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves (the “CIM Standards”) referenced in NI 43-101 and disclosed in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) for Pulacayo prepared by Micon International Limited (“Micon”). (See the technical report titled “Technical Report for the Pulacayo Project, Potosí District, Quijarro Province, Pulacayo Township, Bolivia” dated December 2008 and filed under the SEDAR profile of Apogee at www.sedar.com).

    Phase IV was carried out between January 2010 and September 2011 and included 82 diamond drill holes totaling 29,986 metres. The objective of this program was to extend the known resources to the east and to greater depth with particular focus on a higher grade core area which had been identified in previous campaigns. This phase concluded with the release of an updated independent estimate of mineral resources prepared in accordance with the CIM Standards and disclosed in accordance with NI 43-101 for Pulacayo prepared by Mercator Geological Services Limited. (See the technical report titled “Mineral Resource Estimate Technical Report for the Pulacayo Ag-Pb-Zn Deposit Pulacayo Township, Potosi District, Quijarro Province, Bolivia” dated October 19, 2011 and filed under the SEDAR profile of Apogee at www.sedar.com).

    Phase V was carried out between September and December 2011 and included 45 diamond drill holes totaling 6,254 metres. This drilling program was undertaken to delineate the near surface silver oxide mineralization above the sulphide resources at Pulacayo. Mercator Geological Services prepared an initial independent resource estimate of the oxide mineralization at Pulacayo in accordance with the CIM Standards and disclosed in accordance to NI 43-101. (See the technical report titled ”Updated Mineral Resource Estimate Technical Report for the Pulacayo Silver-Lead-Zinc Deposit Pulacayo Township, Potosi District, Quijarro Province, Bolivia” dated September 28, 2012 and filed under the SEDAR Apogee profile at www.sedar.com).

    Apogee carried out an extensive drilling program at Paca between March and December of 2006 which included 80 diamond drill holes totaling 14,814 meters. This drilling campaign concluded with the release of an initial independent estimate of mineral resources prepared in accordance with the CIM Standards and disclosed in accordance to NI 43-101 for Paca by Micon. (See the technical report titled “Technical Report on the Mineral Resource Estimate for the Paca Project, Potosí District, Quijarro Province, Thols, Pampa, Huanchaca and Pulacayo Townships, Bolivia” dated March 2007 and filed under the SEDAR Apogee profile at www.sedar.com).

    Selected core drilling highlights are presented in Table 3.

    Table 3:

    hole Nº from – to (m) int (m) Ag (g/t) Pb (%) Zn % Vertical distance from
    shaft (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 4.0 1,184 0.8 2.3 -137.5
    PUD069 281.0 – 294.0 13.0 624 2.1 4.2 -46.0
    PUD109 293.6 – 298.4 4.8 3,607 3.8 4.1 -30.4
    PUD118 174.0 – 184.0 10.0 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 11.0 790 0.6 0.6 -116.6
    PUD170 237.0 – 239.0 2.0 3,163 0.1 0.9 -32.5

    Total 137 holes: 29 holes (21%) with Ag 1,000 to 10,000 g/t, 67 holes (49%) with Pb or Zn >5%

    Only minimal historical mining has occurred at Paca. The geology of the Paca deposit includes a core zone of feeder-style mineralization associated predominantly with brecciated andesite, plus additional zones of shallowly dipping mantos-style mineralization that are hosted by the surrounding volcano-sedimentary sequence. The Paca deposit remains open at depth and along strike at present. The Company believes that there is potential to expand the existing resource and to locate additional mineralization in the vicinity of the Paca deposit as well as in the vicinity of the nearby Pulacayo Mine (refer to Prophecy’s press release dated September 9, 2015 regarding sampling results from the Paca North, El Abra, Pacamayo and Pero priority targets).

    Selected core drilling highlights for the Paca deposit that were previously disclosed by Apogee are presented in Table 6 below. See Map 3 for the drill hole locations.

    Table 6: Selected core drilling highlights for the Paca deposit

    hole Nº from – to (m) int (m) Ag (g/t) Pb (%) Zn % Vertical distance from
    shaft (m)
    PUD003 11.0 – 28.0 17.0 260 0.9 0.1 -7.8
    PUD008 18.0 – 33.5 15.5 314 1.0 0.4 -12.7
    PUD029 12.0 – 22.3 10.3 436 0.04 0.03 -8.5
    PUD031 0.0 – 37.0 37.0 217 0.9 0.3 0.0
    PUD062 10.0 – 52.0 42.0 406 0.8 0.1 -7.1
    ESM-2 0.0 – 37.0 37.0 433 1.4 1.2 0.0

     

    Management Comment on Historic Tailings

    On February 2, 2015, Prophecy published assay results from ALS Minerals Ltda., for samples obtained during the reconnaissance sampling program of tailings piles materials. The tailings piles are the remaining materials from processing ore extracted from the Pulacayo mining district between approximately 1850 and 1950. The ore was processed by a mill located on site which has since been dismantled. A total of 299 samples from 12 tailings piles were obtained. Assay results from the tailings samples are presented in Table 9.

    Table 9: Tailings sampling results reported on February 2, 2015 by Prophecy

    Tailings Pile WxLxH (m) Average
    Ag g/t
    Average
    Au g/t
    Average
    In g/t
    Average
    Pb %
    Average
    Zn %
    Number of
    Samples
    Pulacayo 2 70x100x30 112 1.2 7.1 0.21 0.23 105
    Pero 1 90x30x12 302 0.2 3.4 1.00 0.31 36
    Pero 2 65x60x7 219 0.2 18.1 1.01 0.51 4
    Pulacayo 3 65x45x3 380 1.0 69.4 1.76 1.30 5

    Refer to Prophecy’s news release dated Feb 2, 2015 for additional information

    Management Comment On Milling and Processing

    Prophecy’s management has evaluated the options of on-site milling (at Pulacayo) vs. toll milling at Potosi.

    Potosi is located approximately 180km from the Pulacayo project and is connected by a recently paved highway which is in excellent condition. Potosi has a population of approximately 180,000 inhabitants and hosts the existing Cerro Rico deposit, with its centuries of silver-lead-zinc mining production that is still active to this day. There are approximately 100 privately owned, small-sized (i.e. 50 to 500 tonnes per day) facilities capable of toll milling and processing ore that produce zinc and lead concentrates sold to a number of active traders such as Trafigura Beheer BV, Glencore plc and Louis Dreyfus Commodities (Suisse) S.A. A number of those facilities have decreased their processing activities due to a lack of quality feed resulting from a combination of low metal prices and the government’s increasing safety restrictions on mining at Cerro Rico.

    Prophecy’s representatives visited over 30 milling facilities in Potosi and received a number of toll milling and custom milling offers.

    During over 18 months (2012 to 2013) of trial mining and toll-milling by Apogee, Pulacayo produced high grade silver-lead (6,000 g/t Ag) and silver-zinc flotation concentrates that were sold to Trafigura Beheer BV (see Apogee press release dated January 15, 2013). The Company is currently working towards securing concentrate off-take agreements at commercially competitive terms. The potential for future project financing from this business sector is also being investigated. The historical grade information is not considered reliable by the Company because it is three years old. It is presented here to assist the reader in considering the Pulacayo project. It is not known whether the mining and milling methods used during the trial would be similar to those used by the Company because the Company has not decided on mining and milling methods. The trial mining used the shrinkage stoping method and toll milling used crushing and milling followed by flotation. The historical grade information does not include any more recent information available to the issuer. The historical grade information cannot be upgraded as current grade information; rather new trial toll milling must be completed. The Company is not treating the historical grade as current.

    Management Comment On Mining

    Apogee, the former owner of the property, completed over 1,200m of tunneling (2.5m x 2.5m) at level 0 in its 2012-2013 trial mining run that produced 7,547 tonnes of ore grading 339 g/t Ag, 3.8% Pb and 3.1% Zn (refer to the Company’s news release dated December 5, 2014).

    Bolivia:

    Bolivian President, Evo Morales in December 2015 visited New York and several European cities accompanied by a large number of Bolivian officials and businessmen to promote Bolivia as an attractive foreign investment destination. Credit rating agencies recently upgraded Bolivia’s debt rating, highlighting its prudent fiscal discipline, stable currency in a growing economy, strengthened legal framework to protect private investment and reduced nationalization risk. The Company believes the Pulacayo project is an attractive silver mining project backed by a local community with a strong mining tradition in an increasingly foreign investment-friendly jurisdiction. Content below is extracted from an article published in The Financial Times on July 15, 2015

    “the credit rating agency Fitch upped the Andean country’s rating by one notch – to ‘BB’ from ‘BB-‘, with a stable outlook. The move comes a year after Standard & Poor’s upgraded Bolivia’s rating… Since Mr. Morales took office nine years ago, a combination of gas exports to neighbouring Argentina and Brazil — plus mineral shipments to Asia —, coupled with prudent macroeconomic and fiscal policies, and popular welfare programmes, have tripled the size of Bolivia’s economy to about $30bn.

    Despite Mr. Morales’s penchant for nationalizations and his sometimes fierce anti-capitalist rhetoric — and unlike other leftist allies, such as embattled Venezuela — Bolivia has taken prudent advantage of the now-fading commodities boom.

    Under Mr. Morales, GDP growth has averaged 5 per cent a year, poverty rates have almost halved, while a gas boom fueled a consumption boom. From Fitch:

    …Fitch forecasts that economic activity could keep pace at an average 4.4% in 2015-2017, driven by robust public investment in diversification and industrialization projects and eased domestic liquidity conditions.

    But as gas, which is set in relation to a basket of fuel oils that is sensitive to the international price of crude, accounts for about 46 per cent of Bolivia’s exports… Bolivia’s financial position has been bolstered by its foreign reserves standing at almost $15bn, Fitch does not seem to be too worried. As they said in a statement:

    Bolivia has improved the sustainability of its hydrocarbons production, the largest source of exports, fiscal revenue and domestic investment. Bolivia’s robust external buffers and ample fiscal policy space render its economy better-placed to absorb adverse shocks and adopt counter-cyclical policies than other commodity exporters in the ‘BB’ category.

    Regulatory uncertainty and nationalization risks have eased. Government and businesses agreed on reforms to the investment regime that facilitate private participation in sectors that are not subject to state control and recognize independent conciliation and arbitration for contractual disputes. The authorities ceased nationalizations in 2013 and have paid USD$690 million (2% of GDP) in compensation to multinational companies. (emphasis added)

    Pulacayo Background and District Potential

    Historic Pulacayo production was predominantly from the Tajo vein system which extends over a strike length of more than 3 km and to a depth of at least 1,000 metres (Figure 2). Total production from the Pulacayo mine during the period 1857 to 1959 is estimated by the National Geological and Mineral Service of Bolivia (SERGEOTECMIN) to be 678 million ounces of silver, 200,000 tons (181,400 tonnes) of zinc and 200,000 tons (181,400 tonnes) of lead (SERGEOTECMIN Bulletin No. 30, 2002). Prior resource drilling only covered approximately 20% of the Tajo vein system strike length. With new drilling, Prophecy feels that there is potential to discover additional resources along the Tajo structure. The Company is examining Pulacayo as a large-scale district silver project that includes a number of other silver occurrences and anomalies additional to the Tajo system. These include the Paca, Pacamayo, El Abra, Pero prospects that all occur within 10km of the Pulacayo site. The Company classifies these as having potential for discovery of future mineral resources through application of modern exploration techniques. The reader is directed to the Company’s press releases dated August 27, September 9, September 18, 2015 and its website for further project information.

    Highlights of reconnaissance exploration results from these areas are given in Table 10.

    Table 10

    El Abra 250m x 110m: Surface Outcrops

    Sample Interval (Chip
    Channel Sampling)
    Ag (g/t) Sb (%) Pb (%) Ag Eq
    (g/t)
    Sb Eq
    (%)
    EA-049 2 meter 5.6 2.54 1.56 502.7 3.63
    EA-51 2 meter 5.6 0.90 0.30 173.4 1.25
    EA-066 2 meter 21.5 0.59 0.73 149.8 1.08
    EA-065 2 meter 38.9 0.48 0.66 145.2 1.05
    EA-48 2 meter 3.2 0.49 0.44 103.4 0.75

     

    Pacamayo 2m x 26m: Underground Samples

    Sample Interval (Chip
    Channel Sampling)
    Ag (g/t) Sb (%) Pb (%) Zn (%) Cu (%) Ag Eq
    (g/t)
    MPU-77 1 meter 7,379.5 2.49 17.60 6.96 3.10 8,982.6
    MPU-69 0.60 meter 3,867.5 1.79 2.29 2.40 1.97 4,516.6
    MPU-70 0.60 meter 2,547.5 0.85 0.80 1.15 1.06 2,859.4
    MPU-74 1 meter 1,330.0 2.25 0.01 0.42 1.60 1,820.4
    MPU-75 1 meter 135.0 1.34 0.01 0.29 1.24 457.7

     

    Paca North 400m x 100m: Surface Outcrops

    Sample Interval (Chip
    Channel Sampling)
    Ag (g/t) Pb (%) Zn (%) Ag Eq
    (g/t)
    PC-011 2 meter 833.0 0.03 0.03 835.3
    PC-005 2 meter 377.0 1.64 0.05 434.8
    PC-016 2 meter 330.0 0.06 0.04 333.5
    PC-002 2 meter 226.0 2.16 0.08 303.1
    PC-017 2 meter 219.0 0.10 0.03 223.6

     

    Pero 400m x 300m: Surface Outcrops

    Sample Interval (Chip
    Channel Sampling)
    Ag (g/t) Sb (%) Pb (%) Ag Eq
    (g/t)
    Sb Eq
    (%)
    PR-067 1 meter 27.0 0.65 3.65 251.0 1.79
    PR-163 1 meter 118.0 0.22 2.13 227.7 1.62
    PR-121 1 meter 62.8 0.04 3.39 189.3 1.35
    PR-007 1 meter 28.6 0.03 4.32 187.7 1.34
    PR-032 1 meter 39.7 0.52 1.61 169.6 1.21

     

    Figure 2: Tajo vein system

    Qualified Persons and Update Date

    The technical content of this web site page and the related documents and other information listed herein were reviewed and approved by Christopher M. Kravits, CPG, LPG, who is a Qualified Person within the meaning of NI 43-101. Mr. Kravits is a consultant to the Company and serves as its Qualified Person and General Mining Manager.

    This web site page was last updated, reviewed and approved by Christopher M. Kravits March 10, 2016.

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