silver zinc lead district project - prophecydev.com · metal grades were interpolated within...

TSX : PCY | OTC: PRPCD | Frankfurt : 1P2NInvestor Presentation – November 23, 2016

Silver Zinc Lead District Project

http://www.prophecydev.com/


TSX : PCY | OTC: PRPCD | Frankfurt: 1P2N

Forward Looking StatementsThis 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 theCompany, projected capital and operating expenses, permitting approvals, timetable to permitting and production and the prospectivemineralization 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", "isexpected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of suchwords and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Therecan be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from thoseanticipated 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 ofthe mining industry. Although the Company has attempted to identify important factors that could cause actual results to differ materially from thosecontained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Thesestatements reflect the current internal projections, expectations or beliefs of Prophecy Development Corp. (“the Company” or “Prophecy”) and arebased on information currently available to the Company. The Company does not undertake to update any forward-looking information, except inaccordance with applicable securities laws.

The technical content of the Company’s presentation was reviewed and approved by Christopher M. Kravits CPG, LPG., who is a Qualified Personwithin the meaning of National Instrument 43-101. Mr. Kravits is a consultant to the Company and serves as its qualified person and general miningmanager.

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 byCanadian regulations, the United States Securities and Exchange Commission does not recognize these terms. “Inferred mineral resources” have agreat 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 aninferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form thebasis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicatedmineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of aninferred mineral resource exists, or is economically or legally mineable.

www.prophecydev.com1


Prophecy Development Corporate Highlights


TSX (Toronto Stock Exchange Main Board): PCY, OTC: PRPCD, Frankfurt: 1P2N

Formally known as Prophecy Resource Corp. and Prophecy Coal Corp.

www.prophecydev.com

[email protected] +1.604.569.3661

Head office in Vancouver, Canada with regional offices in Mongolia and Bolivia

Business: mineral exploration

silver/lead/zinc/antimony in Bolivia, coal in Mongolia, titanium/vanadium in Canada

Shares Outstanding 4.76 million (fully diluted 6.67 million) , 52week trading range $1.0 to $7.5 (current $3.8)

Shareholding:

John Lee: 23%, Apogee Silver Ltd: 12% , 5 others: 15%

Distribution: 40% Asia, 30% Europe, 30% N. America,


mailto:[email protected]


Management


John Lee, CFACEO and Chairman

John Lee is an entrepreneur with degrees in economics and engineering from Rice University.under John’s leadership, Prophecy raised over $100 million and acquired substantial silverassets in Bolivia and coal assets in Mongolia.

Damdinjav DavaajavMongolia Advisor

Mr. Damdinjav has over 20 years of power distribution and generation experience inMongolia. Mr. Damdinjav was Deputy Director of the energy department at Newcom Group.

Chris Kravits, CPG,LPGChief Geologist

Christopher M. Kravits, P.Geo. Holds a Master of Science in Geology, has been a professionalgeologist for over 38 years and is a Qualified Person within the meaning of NationalInstrument 43-101.

Irina PlavutskaCGA: Chief Financial Officer

Ms. Plavutska is a professional accountant with over 20 years of diverse internationalexperience in financial reporting, auditing, and accounting. She is a member of CertifiedGeneral Accountants Association of British Columbia.

Bekzod KasimovVice-President, Operations

Mr. Kasimov has served on the board of directors of several Mongolia-focused companiesand holds a Master of Science in Finance from the Stockholm School of Economics. Mr.Kasimov is fluent in English and Russian.

Tony S.K. WongB.A., J.D: General Counsel & Corporate Secretary

Mr. Wong is a lawyer who has practiced law throughout Canada for over 12 years. He servedas a senior securities regulator in British Columbia from 2005 to 2010


Potosi : World’s Premier Silver Address


*source: wikipedia, company websites, SERGEOTECMIN bulletin no. 30, 2002

Potosi Department, Bolivia, 30 million oz Ag produced in 2014

Pulacayo

Production started 1833

670+ mm oz Ag, 200,000t Pb, 200,000t Zn produced*

Prophecy acquired Pulacayo in January 2015

Prophecy to announce construction decision in 2016

Cerro Rico (200km NE Pulacayo)

Founded 1545, 1.8 billion oz Ag produced

2014 Coeur produced 6 mm oz Ag

San Cristobal (100km SW Pulacayo)

Third largest silver mine by reserve (500+ mm oz)

2014 Sumitomo produced 20+ mm oz Ag

San Vicente (150km SE Pulacayo)

2014 Pan American Silver produced 4 mm oz Ag


Bolivia Update


November 2016:Luncheon meeting with Mining Minister, who is coming to PDAC 2017

October 2016: Prophecy and Canadian Embassy meet Mining Minister

At a UK-Bolivia trade and investment forum in London this week (June 10, 2016), Félix César Navarro, minister of mining and metallurgy, talked of new safeguards for foreign investors looking to put cash into the country. New contracts governing exploration, mining and processing were currently going through Bolivia’s congress that would give foreign investors the legal security they need to invest in the country, he said. (report by Mining Journal)


Why Pulacayo? $30 mm, 8 yr work in progress


Resource with Permitted Operation

• Pulacayo Resource@ 500 AgEq Cutoff

• Paca Satellite Resource@ 300 AgEq Cutoff

• Mining and Milling Construction Permitted

Exploration Potential

• 90,000+ meters drilled for Pulacayo & Paca• Open pit, Underground, Tailings • Several exploration areas yet to be drilled• District Style Silver – Zinc – Lead play• Rare Antimony Surface Discoveries

Strong Local Community Relations

• 200 years mining tradition• Generational miners• Supportive of Prophecy’s operation• Pulacayo town within 1km from mine

Infrastructure in place

• Power and water onsite• 20km paved road to rail • Rail connects to Chilean Port• Trial Toll Mill Concentrate sold to Trafigura


Pulacayo Resource

Position of Planned MillPulacayoTown

Nap Pero Anomaly

Anomaly found during Plant condemnation drilling

El Abra Anomaly

Pacamayo Anomaly

Paca Resource

7km

Pulacayo mine access tunnel (dotted line)

Resource

Tailings

Open Pit + Underground + District Potential


Resource drilling only covered approximately 30% of the known Tajo vein system which is open beyond 3km strike length and 1km depth. Prior operator had developed much larger resource at lower cut-off.Drilling along strike and down dip could discover additional resources.


Paca Resource Estimate


Prepared in accordance with the CIM Definition Standards for Mineral Resources and Mineral Reserves referencedin National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). The effective date of theestimate is September 9, 2015. The mineral resource estimate was prepared by Mercator Geological ServicesLimited (“Mercator”) under supervision of Michael Cullen, P.Geo., who is an independent Qualified Person under NI43-101.

Paca Mineral Resource Statement – Effective September 9, 2015

Ag Eq. Cut-Off (g/t)

Category Tonnes** Ag (g/t) Zn (%) Pb (%)Ag Eq. (g/t)

Ag (MOz)

Zn (Mlbs)

Pb (Mlbs)

200 Inferred 2,540,000 256 1.10 1.03 342 20.9 61.6 57.7

300* Inferred 1,260,000 363 0.98 1.02 444 14.7 27.2 28.4

400 Inferred 650,000 462 0.90 1.00 538 9.7 12.9 14.3

500 Inferred 330,000 558 0.79 1.04 631 5.9 5.7 7.6

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Mineral resources are estimated in conformance the CIM Standards referenced in NI 43-101.Raw silver assays were capped at 1,050 g/t, raw lead assays were capped at 5% and raw zinc assays were capped at 5%.Silver equivalent Ag Eq. (g/t) = Ag (g/t) + (Pb% * (US$0.94/lb. Pb/14.583 Troy oz./lb./US$16.50 per Troy oz. Ag)*10,000) + (Zn% * (US$1.00/lb. Zn/14.583 Troy oz./lb./US$16.50 per Troy oz. Ag)*10,000; 100% metal recoveries are assumed based on lack of comprehensive metallurgical results.Metal prices used in the silver equivalent calculation are US$16.50/Troy oz. Ag, US$0.94/lb Pb and US$1.00/lb. Zn and reflect those used in the June 16, 2015 Pulacayo mineral resource estimate by Mercator.Metal grades were interpolated within wireframed, three dimensional solids using Geovia-Surpac Ver. 6.7 software and inverse distance squared interpolation methods. Block size is 5m (X) by 5m (Z) by 2.5m (Y). Historic mine void space was removed from the model prior to reporting of resources.The block density factor of 2.26 reflects the average value of 799 density measurements.The mineral resource is considered to have reasonable expectation for economic development using underground mining methods based on the deposit history, resource amount and metal grades, current metal pricing and comparison to broadly comparable deposits elsewhere.*The resource estimate cut-off value is 300 g/t Ag Eq. and resource estimate values are presented in bold type.**Tonnes are rounded to nearest 10,000

Notes:


Paca Drilling Highlights (18,160 meters drilled)


hole Nº from - to (m) int (m)Ag

(g/t)

Pb

(%)Zn %

Dist from

surface (m)

PND003 11.0 – 28.0 17.0 260 0.9 0.1 -7.8

PND008 18.0 – 33.5 15.5 314 1.0 0.4 -12.7

PND029 12.0 – 22.3 10.3 436 0.0 0.0 -8.5

PND031 0.0 – 37.0 37.0 217 0.9 0.3 0.0

PND062 10.0 – 52.0 42.0 406 0.8 0.1 -7.1

ESM2 0.0 – 38.0 38.0 411 1.4 1.2 0.0

PND008

PND062

ESM2

PND029

Paca Open Pit Resource Area


Paca : Near Surface Mineralization


Open

OpenOpen

Elevation Level

% of Total Resource Tonnes

at 300 g/t Ag Eq.

Within 75m of Surface 63.42%





Ag Eq (g/t)0-100 g/t100-200 g/t200-300 g/t300-400 g/t400-500 g/t500g/t+

12

7,750,500 mN 7,750,600 mN

Proposed drill hole trajectory

Target resource block OP1 (60m x 30m x 25m)

4100 m

4200 m

Paca – OP1



13


Target resource block

OP2(90m x 40m x 35m)

7,750,100 mN 7,750,300 mN

4100 m

4200 m

4300 m

Paca – OP2



14



7,750,200 mN

OP3(40m x 30m x 30m)

4100 m

4200 m

4300 m

Paca – OP3



15



OP4

7,750,700 mN 7,750,800 mN

(20m x 60m x 10m)

4100 m

4200 m

Paca – OP4




Pulacayo Underground Resource Estimate


Prepared in accordance with the CIM Definition Standards for Mineral Resources and Mineral Reserves referencedin National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). The effective date of theestimate is June 16th, 2015. The mineral resource estimate was prepared by Mercator Geological Services Limited(“Mercator”) under supervision of Michael Cullen, P.Geo., who is an independent Qualified Person under NI 43-101.

Pulacayo Mineral Resource Statement – Effective June 16th, 2015

Ag Eq. Cut-Off (g/t)

Category Tonnes** Ag (g/t) Zn (%) Pb (%)Ag Eq. (g/t)

Ag (MOz)

Zn (Mlbs)

Pb (Mlbs)

400Indicated 2,080,000 455 3.19 2.18 594 30.4 146.3 100

Inferred 480,000 406 3.93 2.08 572 6.3 41.6 22

500*Indicated 1,270,000 530 3.63 2.51 688 21.7 101.6 70.3

Inferred 350,000 419 4.58 2.47 620 4.7 35.3 19.1

600Indicated 750,000 608 4.02 2.91 785 14.7 66.5 48.1

Inferred 170,000 394 6.75 3.49 710 2.2 25.3 13.1


Mineral resources are estimated in conformance the CIM Standards referenced in NI 43-101.Raw silver assays were capped at 1,700 g/t, raw lead assays were capped at 15% and raw zinc assays were cappedat 15%.Silver equivalent Ag Eq. (g/t) = Ag (g/t)*89.2% + (Pb% *(US$0.94/ lb. Pb /14.583 Troy oz./lb./US$16.50 per Troy oz.Ag)*10,000*91.9%) + (Zn% *(US$1.00/lb. Zn/14.583 Troy oz./lb./US$16.50 per Troy oz. Ag)*10,000*82.9%).Metal prices used in the silver equivalent calculation are US$16.50/Troy oz. Ag, US$0.94/lb Pb and US$1.00/lb. Zn.Metal recoveries of 89.2% Ag 91.9% Pb 82.9% Zn used in the silver equivalent reflect historic metallurgical resultsdisclosed by Apogee Silver Ltd.Metal grades were interpolated within wireframed, three dimensional silver domain solids using Geovia-Surpac Ver.6.6.1 software and inverse distance squared interpolation methods. Block size is 10m(X) by 10m(Z) by 2m(Y).Historic mine void space was removed from the model prior to reporting of resources.Block density factors reflect three dimensional modeling of drill core density determinations.Mineral resources are considered to have reasonable expectation for economic development using undergroundmining methods based on the deposit history, resource amount and metal grades, current metal pricing andcomparison to broadly comparable deposits elsewhere.Rounding of figures may result in apparent differences between tonnes, grade and contained ounces.*Mineral resource statement cut-off value; resource statement values are presented in bolded form.**Tonnes are rounded to nearest 10,000.

Notes:


Pulacayo Drilling Highlights*


hole Nº from - to (m) int (m)Ag

(g/t)

Pb

(%)Zn %

Dist from

adit (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%) Ag 1,000 to 10,000 g/t

67 holes (49%) Pb or Zn >5%


- Resource area - Drill hole Ag Eq. 400 – 5000 g/t

- Planned stope

- Accessible Tunnel - Planned Tunnel Pulacayo Level 0 -Tunnel to rehabilitateTo access Rotchild Shaft

S1

S2S3

S5S4

UG1 (level 0)

UG4 (-90,-116)UG3 (-90,-116)

UG2 (-50,-90)

PUD 188

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UG1

7,744,600 mN7,744,500 mN

Pulacayo – UG1

Level 0 San Leon Tunnel

4150 m

4100 m

4050 m

4000 m

7,744,550 mN

(H38m x L117m x W93m)

1056 g/t Ag-15%Pb-2.7% Zn0.67m


740,100 mE

Rotschild Shaft

Central Shaft740,500 mE740,400 mE740,300 mE740,200 mE

7,744,600 mN

7,744,500 mN

100 meters

PUD 109

- Resource area

- Drill hole - Drill hole intercept Ag Eq. 400- 5000

- Planned stope

- Old Tunnel - Planned Tunnel Level -50 UG2

UG2 (-50)

S7S6

s8


413.4 g/t Ag-1.21%Pb-2% Zn67m

Including1030.87g/tAg-2.02%PB-1.67%Zn

25m


UG2

7,744,600 mN7,744,550 mN 7,744,650 mN 7,744,700 mN

413.9 g/t Ag-1.2%Pb-3.59% Zn30m

402.9g/tAg-0.86%Pb-3.58% Zn38m

Including647g/tAg-1.26%Pb-6.77%Zn

9m

(H62m x L158m x W57m)

Level 0 San Leon Tunnel4150 m

4100 m

4050 m

4000 m

Pulacayo – UG2

Level -50 40,903t 843/1.8/1.8

S8:12,449

740,000 740,200740,100

7,744,600

7,744,650

7,744,618

PUD1096(1030/1.7/2.0)

7,744,635

PUD1096(1030.87/1.7/2.0)

PUD1096(413.38/2.0/1.2)

c

UG2

7,744,622

S7:10,670

s6: 17,784


- Resource area

- Drill hole Ag Eq. 400 –5000 g/t

- Planned stope

- Old Tunnel - Planned Tunnel Level -90 UG2,3,4

S1 - Stope number

S13

100 meters

Rotschild Shaft

Central Shaft

PUD 69

PUD 45

PUD 111

PUD 64

PUD 107 PUDU 001

PUD 046PUD 084

PUD 107

PUD 138PUD 134

7,744,700 mN

7,744,600 mN

740,300 mE 740,400 mE740,200 mE740,100 mE

UG3 (-90)UG4 (-90)UG2 (-90)

S20

S19

S18

S17

S15

S16S14

S10S9

S11

S12S13



UG3

7,744,550 mN7,744,500 mN 7,744,600 mN 7,744,650 mN

PUD 051

355.4g/tAg-0.98%Pb-2.29% Zn12.09m

485g/tAg-3.17%Pb-2.93% Zn9m

543.2g/tAg-1.35%Pb-1.58% Zn15m

(H62m x L185m x W52m)


4100 m

4050 m

4000 m

Pulacayo – UG3


- Resource area

- Drill hole Ag Eq. 400 –5000 g/t

- Planned stope

- Old Tunnel - Planned Tunnel Level -116 UG3,4

S1 - Stope number

100 meters

Rotschild Shaft

Central Shaft

7,744,700 mN

7,744,600 mN

740,300 mE 740,400 mE740,200 mE740,100 mE

UG3 (-116)UG4 (-116)

S24

S21S22

S23PUD 118

PUD 074

PUD 051

PUD 054



UG4

7,744,600 mN7,744,550 mN 7,744,650 mN 7,744,700 mN

352.1g/tAg-1.29%Pb-2.82% Zn14.9m

Including2,030g/tAg-1.06%Pb-5.68%Zn

1m445.4g/tAg-0.82%Pb-1.32% Zn

32.6mIncluding10,000g/tAg-4.55%Pb-15.55%Zn

1m(H62m x L71m x W40m)


4100 m

4050 m

4000 m

Pulacayo – UG4


Pulacayo Underground Resource


4 to 8 meter thickness


Tailing Piles - Sampling Results (*In: Indium)


Tailings Piles Ag g/t Au g/t In* g/t Pb % Zn % # Sample

Pulacayo 2 112 1.2 7.1 0.21 0.23 105

Pero 1 302 0.2 3.4 1.00 0.31 36

Pero 2 219 0.2 18.1 1.01 0.51 4

Pulacayo 3 380 1.0 69.4 1.76 1.30 5

Tailings

Tailings


Ground on site High grade concentrate produced on site

Concentrate moved by rail to port

Typical Mining and Processing Work Flow


Paca North 400m x 100m: Surface Outcrops

Pero 400m x 300m: Surface Outcrops (*Sb: Antimony)

SampleInterval (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

SampleInterval (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


El Abra 250m x 110m: Outcrop Samples

Pacamayo 2m x 26m: Underground Samples


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


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


2006


(dirt road Uyuni to Pulacayo, now paved)


Today: Extensive Infrastructure and Development



Approved Mill Site Power on site

Approved Tailing Site Uyuni Rail Station to Port of Antofagasta

Core Storage

On-site and Nearby Infrastructure


Pulacayo Community and Cooperatives


Prophecy has great relationship with the Pulacayo community who are proud of its 200 years of mining tradition. The Pulacayo community and Prophecy share the common goal of bringing the Pulacayo mine into production and to restore Pulacayo town to full employment and prosperity.

February 2015


2015 H2

•Disclose per NI 43-101 (at 500g/t AgEq cut off) resource estimate at Pulacayo Underground

•Disclose per NI 43-101 (at 300g/t AgEq cut off) resource estimate at Paca Open Pit

2015 H2

• Evaluate concentrate off take agreements and project financing

• Evaluate mill purchase options for 500 tpd operation (annual mining rate > 140,000 tonnes)

2016-17

• Construction decision (minimize capex): equipment rental, toll milling

• Conclude off take contract and modest financing

Next StepsTarget Concentrate off taker, Equipment Supplier, and Equity to finance construction to production in 2016


Permitted, Favorable GradesDistrict PotentialInfrastructure Local Support

Silver, Zinc, Lead, Antimony Think Prophecy


Silver market is relatively small, 246 million oz coins and bars investment demand amount to only $4 billion at $16/oz, JPM recently started accumulating silver ETF (2015)

2013 Silver coins and bars demand increased 76% from 2012, robust investment demand at current price levels (@$15 to $20/oz)

TSX: PCY www.prophecydev.comS/O 4.7mm, 52week $1.0 to $7.5

[email protected]+1.604.569.3661

Shareholding (June 2016): 45% Closely Held, John Lee: 22%, Apogee Silver Ltd: 13% , 5 others: 10% Distribution: 40% Asia, 30% Europe, 30% N. America,


mailto:[email protected]


Appendix



Pulacayo Historic Resource Estimate*


Resource Type TonsAgg/t

Pb%

Zn%

AgOz

PbM.Lbs.

ZnM. Lbs.

Combined Open Pit and Underground Resources including Oxide and Sulphide ZonesOpen Pit Resources (Base case 42° Average Pit Wall Slope Angle)

Open Pit Indicated Oxide 1,500,000 95.9 0.96 0.13 4,626,000 NA NAOpen Pit Inferred Oxide 248,000 71.2 0.55 0.31 569,000 NA NAOpen Pit Indicated Sulphide 9,283,000 44.1 0.66 1.32 13,168,000 135.90 269.54Open Pit Inferred Sulphide 2,572,000 33.4 0.92 1.36 2,765,000 51.99 76.88Waste Rock 71,679,000 NA NA NA Strip Ratio 5.3 : 1

Underground Resources (All blocks below 4,159 m ASL with NSR>$58 USD)Underground Indicated Sulphide 6,197,000 213.6 0.86 1.74 42,547,000 117.5 237.72Underground Inferred Sulphide 943,000 193.1 0.43 1.61 5,853,000 8.94 43.47Total Indicated Oxide+Sulphide 16,980,000 110.5 0.74 1.49 60,341,000 253.4 507.26

Total Inferred Oxide+Sulphide 3,763,000 75.9 0.79 1.43 9,187,000 60.93 120.35The historic Pulacayo mineral resource estimate by Mercator that was prepared for Apogee has an effective date ofSeptember 28, 2012. The same estimate and associated model were subsequently used as the resource base of thePulacayo project feasibility study prepared by TWP Sudamerica Ltd., with an effective date of January 17, 2013.Results of both projects were disclosed previously by Apogee in accordance with NI 43-101 and are now historic innature*.


*The historical estimate is not considered reliable because it is three and a half years old. It is presented here toassist the reader when considering the current Pulacayo deposit resource estimate. Though some of the methodsand assumptions used in the historical estimate are still valid, others are not. The historical estimate assumed a 42°pit wall slope for the open pit resources. The key parameters included an NSR cut-off of US$13.20 for open pitsulfide resources and US$23.10 for open pit oxide resources, and US$58.00 for underground resources below 4159m ASL, metal prices of US$25.00/oz silver, US$0.89/lb lead, and US$1.00/lb zinc where lead and zinc do notcontribute to revenue in the oxide zone, and contributing 1.0 meter assay composites were capped at 1500 g/t Ag,15% Pb, and 15% Zn. The key methods included use of inverse distance squared algorithm to estimate grade,variography to assess grade distribution, and use of a proprietary NSR calculator. The historical estimate uses thesame resource categories described in Sections 1.2 and 1.3 of NI 43-101. The historical estimate does not includeany more recent estimates or data available to the issuer. The work needed to upgrade the historical estimate ascurrent mineral resources is to use current metal prices in the NSR calculation. A qualified person has not donesufficient work to classify the historical estimate as current mineral resources. The Company is not treating thehistorical estimate as current mineral resources.

Notes


Paca Historic Resource Estimate


Resource Class Tonnes*Ag

g/t

Pb

%

Zn

%

Ag

oz

Pb

Million lb

Zn

Million lb

Open Pit Inferred 18,416,100 43.04 0.68 1.16 25,484,000 276.08 470.96

*Rounded; strip ratio 3.1t to 1t for constraining pit shell. The historic Paca deposit mineral resource estimate byMicon was prepared for Apogee and has an effective date of January 16, 2007. The estimate was disclosedpreviously by Apogee in accordance with NI 43-101 and is now historic in nature. It is presented here to assist thereader in considering the current Paca deposit resource estimate. The historical estimate is not considered relevantor reliable because it is over nine years old. Though some methods and assumptions used are still valid others arenot. The historical estimate assumed the up-dip and down-dip limits of the mineralization domains to be the lesserof half of the distance to the next barren drill hole or 25 metres, not to cap grade values, and a 45° pit wall slope forthe open pit resources. The key parameters included a gross metal value cut-off of US$ 20 for mineralized areas andmetal prices of US$10.43/oz silver, US$0.55/lb lead, and US$1.30/lb zinc. The key methods included use of lengthweighted composite calculation, inverse distance squared algorithm to estimate grade, variography to assess gradedistribution, and a proprietary NSR calculator. The historical estimate uses the same resource categories describedin Sections 1.2 and 1.3 of NI 43-101. The historical estimate does not include any more recent estimates or dataavailable to the issuer. The work needed to upgrade the historical estimate as current mineral resources is to usecurrent metal prices. A qualified person has not done sufficient work to classify the historical estimate as currentmineral resources. The issuer is not treating the historical estimate as current mineral resources.


Ulan Ovoo Project Summary


Mongolia, Russia & China (via Manzhouli) Ulaan Ovoo Coal Seam

Ulan Ovoo Deposit Cross Section

Source: Prophecy Development Corp.


Ulaan Ovoo Project Summary


• Over 200 Mt M&I resource*, Thick single coal seam 40 meter+, open pit mining, low strip ratio;

• 5,000 kcal/kg, low ash 10% & low sulfur 1% (ARB);

• Customers – Mongolia, Russia, China (via Manzhouli);

• Strategically located just 17 km from the Russian border;

• Approximately 500,000 tonnes produced 2011 to 2014, mine currently on standby

• Low risk project, fully permitted, low mining cost, and great leverage to thermal coal price

* Wardrop Engineering (Tetra Tech) affirmed 174 Mt of measured and 34 Mt of indicated coal resources in 2010.


Russian Market for Ulaan Ovoo


Source: Prophecy Development Corp.

Blending PlantDemand: 2mt pa

Ulaan Uvoo

Gusinoozersk Power PlantDemand: 3 mt pa

120 km from Mongolian – Russian border

Ulan- Ude Power Plant 1 & 2Ulan-Ude city (boilers, residential)Demand: 2 mt pa220 km from Mongolian – Russian border

Kharanor Power PlantDemand: 0.5mt pa

~300kms

Tugnuiskiy Mine

Zeltura Border


Chandgana Project Summary


ChandganaPower Plant

Source: Turquoise Hill Resources, Prophecy Development Corp.


Chandgana Project Summary


• Advanced Greenfield Mine Mouth Power Project in Mongolia

• Phase 1 – 300MW, phase 2 – 300 MW

• Mongolia: Fast growing country in need of energy

• Mine mouth plant next to coal deposit (633mt Measured and 539mt Indicated*. GCV: 3,300 kcal/kg, low ash/sulphur)

• Central location near existing Mongolian power grid

• Coal mining and power plant construction licenses obtained

• EIA and Land Use Rights obtained

• Concession Agreement, PPA and Tariff application submitted

• EPC contracts finalized

Target Next Steps:

• Signing of the Concession Agreement and Power Purchase Agreement: 2016

• Project Financing (Debt + Equity): 2017

• Construction and COD: 2018 - 2021 *2010 Technical Report by Kravits Geological Services disclosed according to NI 43-101

2007 Technical Report by Behre Dolbear disclosed according to NI 43-101


Chandgana Power Project Location


Chandgana aerial view, 10 sq. km land

> 1 bt coal, featuring 40 m thick coal seam


Chandgana Power Project Benefits to Mongolia


• Contribute to pollution reduction - Various studies have linked Ulaanbaatar air pollution torespiratory death and women miscarriages. Chandgana power plant will eliminate the needof additional power plants in Ulaanbaatar and reduce dependence on Power Plant #3 and#4, which emit heavy nitrogen and sulphur oxides and harmful particulates due to their age.

• Save water, coal transportation and operational cost - Chandgana power plant will be builtnext to the Chandgana coal mine, 300 km east of Ulaanbaatar. This will avoid transporting 2to 4 millions tonnes of coal to congested city (more than 100 wagons per day). Water will beextracted from the mine and avoids sharing precious water resource (up to 6 million tonnesper year, 16,000 tonnes per day) within city of Ulaanbaatar. Water scarcity problem willemerge in 2015 in Ulaanbaatar, and intensify from 2020 onwards. Assuming each UBresident is consuming 20 liters of water a day, a new power plant will take water away fromabout 800,000 residents annually.




• Energy independence - Chandgana power plant project will reduce expensive power importfrom Russia and China, and achieve Mongolia energy independence. Mongolia is projected toimport over 450 MW from Russia and China before 2018. Prophecy proposed electricity tariffwill be lower than import with exemption from income tax, VAT, customs duty. The powerplant is planned to start supplying power to Mongolian system by 2021.

• Relief on power supply shortage - Chandgana power plant is planned to supply power toMongolian system from 2021. Mongolia GDP roughly doubles every 5 years from miningproduction. Currently installed capacity is 800MW and demand expects to double by 2020

• Stabilization of transmission grid - Prophecy will finance transmission line from Baganuur toChandgana in phase 1, and Chandgana to Choir in phase 2. The new lines will increase thenetwork stability and security of electricity supply in the Mongolian power grid.




• Good location - Chandgana is 300 km away from Ulaanbaatar, 150 km from Choir (further toSouth Gobi) and 120 km from Choibalsan. Therefore, it can potentially provide power toUlaanbaatar, South and East.

• Project readiness – Chandgana power plant project is 3 years under development and isready for construction with construction license, environmental impact assessment, land userights, and mining license. Over 10 EPC contractors expressed interest since 2012 and severalbinding EPC proposals have been received with competitive price and short constructiontime frame (36 months). Construction can start right after Concession Agreement, PPA, TariffAgreement and Financial Close.

• Extension to Coal to Gas and Coal to Liquid project – Chandgana is next to highway, hasplenty of land and estimated 3.5 billion tonnes of coal resource in the nearby basin. Oncepower project is operational, it is natural progression to develop coal to gas and coal to liquidprojects.

silver zinc lead district project - prophecydev.com · metal grades were interpolated within...

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