CORRECTION: Prophecy to Acquire Mountain of Gold Project in Madagascar

This press release replaces the press release disseminated August 25, 2017 at 7:35PM ET. The corrected press release is below:

VANCOUVER, BC / ACCESSWIRE / August 25, 2017 / Prophecy Development Corp. (“Prophecy” or the “Company”) (TSX: PCY, OTC PINK: PRPCF, FSE: 1P2N) has entered into a binding letter agreement (the “Letter Agreement”) with an arm’s-length party (the “Seller”) to acquire the Dabolava gold project located in the Republic of Madagascar (the “Dabolava Project”).

Transaction Summary

Under the Letter Agreement, Prophecy will acquire 6 mining claims covering 375 sq km and other assets, which together constitute the Dabolava Project, by paying Seller the following:

(a) upon transaction closing $1,000,000;
(b) on the 1-year anniversary of the closing date, $1,000,000;
(c) on the 2-year anniversary of the closing date, $1,000,000;
(d) on Prophecy obtaining its first Dabolava Project mining license, $2,000,000; and
(e) for every troy-ounce of gold reserve that is compliant with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”) from the Dabolava Project by the dates to be agreed to in a definitive agreement to be executed, a one-time payment of $2 per troy-ounce shall be paid to the Seller. This payment is subject to a minimum cumulative discovery of 1 million ounces.

Dabolava Project Summary

The Dabolava Project is located approximately 200 km west-southwest of Antananarivo, the capital of Madagascar and is accessed via 400 km of paved highways, a portion of which traverses the property. The Dabolava Project is located 140 km west of the town of Antsirabe that hosts an airport and residents with mining experience. Gold has been mined at the Dabolava Project since 1900 and continues to be mined on a very limited scale.

The Dabolava Project covers 375 sq km in 6 permits and consists of several mineralized areas, the most explored being Dabolava East, Takadora, Mountain of Gold and Anjoma. The exploration included airborne geophysical surveys covering 553 sq km, approximately 27 sq km of ground magnetometer survey, 40.4 line km of IP surveys, and 11,349 soil samples. The work was carried out from 2004 to 2008 by Pan African Mining Corp. (PAF) with Sprott Asset Management as a shareholder. PAF only completed 11,863 meters of diamond drilling (97 diamond drill holes) mostly focused on the Dabolava East area before it was acquired by the Seller in 2008, which is a major coal mining company for approximately $157 million in cash. The Dabolava Project has been placed on care and maintenance since late 2008.

In the Dabolava East, Takadora and Mountain of Gold mineralized areas, the gold occurs in silicified dilational features within a broad ductile shear zone that cuts a tonalite-granodiorite orthogneiss host rock. The zones of mineralized dilational features range from 1 to 15 m in drilled width.

Ajoma is a metasediment-hosted bulk-tonnage prospect, where the gold is associated with a post-metamorphism hydrothermal stock work where small quartz veinlets contain disseminated gold between the metamorphic foliations.

Dabolava East (300meter by 300meter)

The Dabolava East mineralized area is approximately 300m x 300 m based on mapping and soil samples. Numerous gold mineralization intersections from 33 diamond drill holes (5,204 m of total drilling) indicated a zone of 1 and 15 m wide (drilled width) between 30 to 70 m depth from surface. The known vertical extension is approximately 50 m and is open at depth and to the surface. Prophecy intends to commission a preliminary economic assessment on Dabolava East and potentially fast track Dabolava East through the permitting process.

Drilling highlights:

Click here to view table

These assay results were previously disclosed by PAF in its May 11, 2005, November 6, 2006, April 25, 2007 and September 11, 2007 news releases. There are no known drilling, sampling, recovery or other factors that could materially affect the accuracy or reliability of the data. Drilling, sampling, and assay methods and information are described in the news releases and considered acceptable. The laboratory was independent of PAF at the time the assays were performed. Drilling, sampling and initial sample preparation was performed and overseen by qualified persons as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”).

Takodara (1,500 meter x 200 meter)

The Takodara mineralized area is approximately 1,500 m x 200 m in size based on mapping and soil samples. Gold mineralization was encountered in 15 diamond drill holes (2,029 m total drilling) from 40 to 60 m depth. The vertical extent of the mineralization to surface and at depth have not yet been tested. Drill holes DE-D-001, DE-D-003, DE-07-033 and DE-D-08-063 were drilled approximately 150 meters apart along the strike, with no other drill holes in between. Prophecy intends to conduct infill drilling and expansion drilling to test the length and depth of the mineralization.

Click here to view table

The assay results for drill holes DE-D-001, DE-D-003 and DE-D-07-033 were previously disclosed by PAF in its May 11, 2005 and September 11, 2007 news releases. There are no known drilling, sampling, recovery or other factors that could materially affect the accuracy or reliability of the data. Drilling, sampling, and assay methods and information are described in the news releases and considered acceptable. The laboratory was independent of PAF at the time the assays were performed. Drilling, sampling and initial sample preparation was performed and overseen by qualified persons as defined in NI 43-101.

Mountain of Gold (8,500 meter x 2,000 meter)

The Mountain of Gold mineralized area is approximately 8,500 m x 2,000 m in size based on mapping and soil samples. Gold mineralization was found in 20 diamond drill holes (1,191 m) that tested the southeast corner of the area from 10 to 40 m at depth from surface. The vertical extent of mineralization to the surface and to depth is unknown and 95% of the mineralized area has yet to be drilled.

Given the large area of Mountain of Gold, Prophecy intends to review the geophysical, soil sampling, trenching and old workings information to model the mineralization internally to prioritize a number of well qualified drill locations.

Drilling highlights:

Click here to view table

Sampling highlights:

Click here to view table

There are no known drilling, sampling, recovery or other factors that could materially affect the accuracy or reliability of the data. The drilling, sampling, and assay methods are considered acceptable by Prophecy. The laboratory was independent of PAF at the time the assays were performed. Drilling, sampling and initial sample preparation was performed and overseen by qualified persons as defined in NI 43-101.

Anjoma (2,000 m x 250 m)

For the metasediment-hosted prospects, the gold is associated with a post-metamorphism hydrothermal stock work where small quartz veinlets contain disseminated gold between the metamorphic foliations.

The Anjoma bulk-tonnage prospect has estimated dimensions of 2,000 m long and 250 m wide based on 95 soil samples. Depth is unknown.

Prophecy intends to review the geophysical and rock sample data then drill test Anjoma as a potential bulk-tonnage disseminated near-surface gold prospect.

Anjoma rock sample assay highlights:

(1) Coordinates are in UTM system (meters) Zone 38K WGS84 projection
Click here to view table

A description of sampling and analytical methods is not known. The following description is based on review of internal reports. Samples were obtained using a hand pick by chipping rock randomly over the sampled area to obtain a representative sample of approximately 2 kg size. Samples were placed in plastic bags and identification information placed on the bag. A chain of custody was used to document sample possession. There is not sufficient information to determine whether sampling factors exist that could materially affect the accuracy or reliability of the data. The raw samples were initially prepared by crushing to -2 mm and splitting a representative sample for assay at Pan African’s laboratory located in Antananarivo, Madagascar. Assays were performed by the ALS Chemex, Johannesburg South Africa laboratory using fire assay with an atomic adsorption spectroscopy (“AAS”) finish (some with inductively coupled plasma (“ICP”) finish) for gold and aqua regia digestion with inductively coupled plasma-atomic emission spectroscopy (“ICP-AES”) finish for a 34-element suite. The laboratory was independent of PAF at the time the assays were performed. Drilling, sampling and initial sample preparation was performed and overseen by qualified persons as defined in NI 43-101.

Further Details Regarding the Proposed Transaction

The proposed transaction is subject to Prophecy being satisfied with the results of its due diligence inquiries into the Dabolava project.

The Seller and Prophecy have agreed to replace the Letter Agreement by entering into a more comprehensive definitive agreement by November 30, 2017.

The Letter Agreement includes a break-fee provision and a commitment by the Seller to not solicit, pursue or negotiate alternative offers with other parties for the Dabolava Project.

John Lee, Prophecy’s Executive Chairman comments:

“Prior work on Dabolava had shown over 10 km of gold-bearing trends highlighted by quartz gold drill intercepts of over 100g/t Au. Both Dabolava’s size and grade are on similar to Terrax Minerals recent Yellowknife City Gold Discovery.

In addition to Dabolava East, Takadora, Mountain of Gold and Anjoma, the large 375 sq km land package contains several other prospective areas with extensive artisanal historic mine workings that warrant consideration for exploration.

While the project development is at an early stage, there are promising signs that Prophecy is embarking on a very unique district-scale gold project that draws very few modern and historical comparisons.”

Qualified Persons

The technical content of this news release was 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 is not independent of the Company in that most of his income is derived from the Company. Mr. Kravits serves as its Qualified Person and General Mining Manager.

About Prophecy

Prophecy Development Corp. is a Canadian public company listed on the Toronto Stock Exchange that is engaged in developing mining and energy projects in Mongolia, Bolivia and Canada. Further information on Prophecy can be found at www.prophecydev.com.

PROPHECY DEVELOPMENT CORP.

ON BEHALF OF THE BOARD

“JOHN LEE”
Executive Chairman

For more information about Prophecy, please contact Investor Relations:

+1.888.513.6286
ir@prophecydev.com
www.prophecydev.com

Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this news release, including statements which may contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” or similar expressions, and statements related to matters which are not historical facts, are forward-looking information within the meaning of applicable securities laws. Such forward-looking statements, which reflect management’s expectations regarding Prophecy’s business prospects and opportunities, are based on certain factors and assumptions and involve known and unknown risks and uncertainties which may cause the actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements. These estimates and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies, many of which, with respect to future events, are subject to change and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by Prophecy. In making forward-looking statements as may be included in this news release, Prophecy has made several assumptions that it believes are appropriate, including, but not limited to assumptions that it will complete its due diligence on the Dabolava Project to its satisfaction; that it, together with the Seller, will negotiate and enter into a binding definitive agreement with respect to Prophecy’s acquisition of the Dabolava Project by the aforementioned deadline; that all other conditions precedent to the acquisition are successfully satisfied or waived; that it will complete its acquisition of the Dabolava Project. Prophecy cannot assure you that any of these assumptions will prove to be correct.

Numerous factors could cause Prophecy’s actual results to differ materially from those expressed or implied in the forward-looking statements, including the following risks and uncertainties, which are discussed in greater detail under the heading “Risk Factors” in Prophecy’s most recent Management Discussion and Analysis and Annual Information Form as filed on SEDAR and posted on Prophecy’s website: Prophecy’s history of net losses and lack of foreseeable cash flow; exploration, development and production risks, including risks related to the development of Prophecy’s mineral properties; the suitability of the Dabolova Project considering Prophecy’s economic condition and otherwise.

These factors should be considered carefully, and readers should not place undue reliance on Prophecy’s forward-looking statements. Prophecy believes that the expectations reflected in the forward-looking statements contained in this news release and the documents incorporated by reference herein are reasonable, but no assurance can be given that these expectations will prove to be correct. In addition, although Prophecy has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Prophecy undertakes no obligation to release publicly any future revisions to forward-looking statements to reflect events or circumstances after the date of this news or to reflect the occurrence of unanticipated events, except as expressly required by law.

SOURCE: Prophecy Development Corp.

ReleaseID: 473828