Monday, December 24, 2012

Prophecy Platinum (PNIKF) Digging In For Long Haul

Prophecy Platinum (PNIKF / NKL.V) was spun off as a stock dividend to holders of Prophecy Coal, the subject of my most recent blog article.  Let's see what these folks are doing.

The CEO is a geologist, and he has run projects in the development stage and during full production.  Wow.  That's pretty much what I want to see at a junior miner.  The rest of the team has decent bench strength in the mining sector.

They have a convenient summary of their projects' 43-101 reports.  It's really nice to see a complete set of initial reports for an entire company's project portfolio, and I don't think I've seen that for any multi-project junior I've analyzed this year.  The Shakespeare project is the only one with probable reserves.  Given the low grades of gold and base metals at Shakespeare, I think it's safe to say the market prices of the platinum group metals (PGMs) will drive this company for the foreseeable future.  Platinum is over $1550/oz and palladium is around $680/oz, different from the prices used in the Shakespeare feasibility studies.  Those metal prices have been on a tear for several years.

Their Q2 for fiscal year 2013 ended on September 30.  Prophecy Platinum's current burn rate is about C$700k/month and they ended September with C$4.3M in cash on hand.  They can survive until the end of March 2013 but they will need to raise more capital.

Prophecy Platinum is still drilling and surveying its projects.  Their updated feasibility study for the Shakespeare project was published in 2008, and four years later they still haven't commenced production.  The study predicted that production would have begun by now and didn't anticipate delays of special equipment deliveries longer than three years.  These delays won't be resolved until they have 2P reserve data for their Wellgreen project (which already has some road infrastructure) and/or sufficient capital to build out the Shakespeare project.  I don't invest in companies that suffer interminably long delays.

Full disclosure:  No position in Prophecy Platinum at this time.