Sometimes an old story made new again is the best story of all.
Such seems to be the case with Prophecy Development’s (PCY.TO; PRPCF.OTCQX) Pulacayo deposit “re-discovery.”
Pulacayo is indeed an old story: a high grade silver mine in Bolivia discovered in 1547, re-discovered for the first time in 1833, and which last ceased production in 1957 after having produced some 600 million ounces of silver.
With that kind of a back story, you can understand why a previous company spent over C$28 million drilling the project from 2005 to 2012. Fortunately for us, that former operator was forced to sell Pulacayo to Prophecy in 2015 when the silver price bottomed out.
While the previous operator was eager to sell the asset, get out of the silver market and move into the cannabis business, Prophecy was looking to the future. And the company saw a potentially world-class silver mine in front of it.
And when you look at the project — its size, grades and potential to grow — it’s easy to see why.
An Open-Pit With Underground Grades?
Prophecy immediately saw a tremendous opportunity that the previous operators had completely overlooked.
You see, the other company had drilled a small area of the known mineralization — only about 30% of the known strike length. Then they focused on going deep, with the idea of developing an underground project, exploiting the higher grades and then going back to drilling the rest of the strike length once they got some money in the bank.
Not a bad plan if you don’t have the money or the market to go big. And it was an understandable approach when you consider that Pulacayo boasted rich grades, as much as 500 g/t, at depth.
Plus, the mineralization went deep — drilling had proven that it extended as deep as 1,000 meters in places.
But here’s where Prophecy, and its entrepreneurial CEO John Lee, brought their vision into play.
You see, while there were indeed very high grades at depth, the Pulacayo target also featured consistent grades of about 100 g/t silver right up to the surface. So instead of focusing on going deep for higher grades, Prophecy immediately saw the potential for a low-cost, open-pit mining scenario.
And when you take that approach, not only do the mining costs fall, but the resource size rises. And in this case, considerably.
As you can see from this cross section, showing only one kilometer of the proven three-kilometer strike length of the target, the greenish-yellow mineralization blocks that denote about 200 g/t grades extend to very shallow depths.
Of course, you can also see the ultimate potential, as the very high grades approaching 500 g/t, noted by the deeper red colors, goes on and on to depth.
Also note the size of the proposed open pit in the following graphic — extending nearly a kilometer in length. We are truly talking elephant country here.
And that fact is proven by another legendary deposit...one of world’s biggest silver mines...in the same region.
Another Example Of Re-Discovery That Reaped Giant Rewards
You don’t have to look far to see another example of how re-imagining an historic project can spin out fortunes.
Just about 100 kilometers to the southwest in the same Potosi district of Bolivia, you’ll find San Cristobal, currently the world’s third largest active silver mine, controlled by Japan’s Sumitomo Corporation.
Still boasting about 450 million ounces in silver reserves, San Cristobal produces over 20 million ounces of silver every year, plus lots of zinc and lead.
But it wasn’t always that big. In the early 1900s, it was a small-scale, high-grade underground operation being exploited by locals. Then, in 1993, mining entrepreneur Tom Kaplan acquired the historic concession and transformed it into an open-pit operation before selling it to Sumitomo.
It’s no exaggeration to say that fortunes were made as this historic project was reimagined and brought back into modern-world production.