Ongoing metallurgical test work will focus on optimizing PGM, nickel and copper recovery, enhancing concentrate grades and determining the economic contribution of the rare PGMs that are present in the deposit. In addition, 2013 engineering studies will determine if the life of mine plan and economics can be further optimized by extracting higher grade portions of the resource early in the production schedule and utilizing a staged construction process that would defer pre-production capital requirements. These additional metallurgical and engineering studies will support an updated resource and economic assessment on the project planned for early 2014.
In parallel with exploration, metallurgical and engineering programs, the Company will continue to consult with the Kluane First Nation and the White River First Nation, as well as advance its 2012 Environmental Baseline data collection program.
The Company also believes that there may be a number of opportunities to decrease operating costs utilized in the technical report entitled "Wellgreen Project, Preliminary Economic Assessment, Yukon Canada" dated August 1, 2012 (the "2012 PEA") and prepared by Andrew Carter, C.Eng., Pacifico Corpuz, P. Eng., Philip Bridson, P.Eng., and Todd McCracken, P.Geo., of Tetra Tech Wardrop Inc. One of the underlying assumptions in the 2012 PEA was the use of diesel fuel for power generation. The 2013 engineering program will look at potential significant cost reduction associated with liquefied natural gas (LNG) power generation. The Company will also evaluate the potential for other power alternatives such as hydro-electric in cooperation with the Kluane First Nation. The 2012 PEA is available under the Company's profile on SEDAR at www.sedar.com.
Baseline environmental studies continue on the Wellgreen project, including collection of meteorological data, surface water flows, surface water quality and analysis of recent wildlife studies. These baseline studies are being conducted with the assistance of the Kluane First Nation as part of our cooperation and benefits agreement with them that we announced on August 2, 2012. Under this cooperation and benefits agreement we will seek ways to facilitate local economic and business development opportunities through the various stages of project implementation.
The Shakespeare project recorded operational cash flow of $11.2 million on the sale of metals from the project from the year ending January 2012. In January 2012, all operations at the Shakespeare project were temporarily suspended due to low metal prices. The project is currently on care and maintenance with all permits in good standing.
Prophecy Platinum is also currently completing a comprehensive review of the opportunities for cost reduction on the Shakespeare PGM-Nickel-Copper project in the Sudbury mining district of Ontario. Our review has focused on decreasing operating costs in three key areas: contract mining; concentrate haulage; and toll milling/smelting, with the objective of returning the project to sustainable economical production. This includes participation with the Sagamok Anishnawbek First Nation as per the criteria established in our Impact Benefit Agreement. With operating cost improvements, the Shakespeare project has the potential to generate meaningful cash flow for the Company with minimal additional capital investment. In operation, the project is projected to produce 25,000 ounces of PGM+Au, 8 million pounds of nickel and 10 million pounds of copper on an annual basis.
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