Wellgreen Project Preliminary Economic Assessment ... - OTCIQ.com

All work undertaken on the surface for claims and leases, is regulated under the
QMA through the Quartz Mining Land Use Regulation. The QMA does not provide
any mining claim holder with the exclusive right to use the surface of the land for any
activity except for mining, and it does not convey any tenure in the surface of the
land. Claims must be renewed on an annual basis by filing approved assessment
work to a value of Cdn$100 per claim. A Quartz Mining Lease provides the
leaseholder with the ability to hold claims for 21 years and a renewal clause. Annual
rental fees are required to keep a Quartz Mining Lease in good standing.
Prophecy Platinum’s interest in the Property also consists of one surface lease
issued by the Government of Canada and administered by the Government of
Yukon. The lease covers a 69.754 ha parcel of land located at approximately Mile
1111 of the Alaska Highway (the Mine Site). Various operators have conducted
historic exploration activities on this parcel of land since the 1950s, and exploration
activities have been carried out by Northern Platinum since the late 1990s. The
lease was held by Northern Platinum from the early 1990s until October 31, 2011.
Prior to expiration, the Mine Site lease was assigned to Prophecy Platinum, which
then applied for renewal of the lease. Prophecy Platinum is expecting to receive a
renewal notice concerning the Mine Site lease in due course.
With the knowledge and consent of the Government of Yukon, Prophecy Platinum
also occupies a 62.56 ha parcel of land approximately 1 km from the Mine Site and
adjacent to the Alaska Highway (the Mill Site). Northern Platinum held a leasehold
interest in this parcel from approximately the late 1990s until October 31, 2011. For
approximately one-year, the Mill Site was operated by an entity unrelated to
Prophecy Platinum in the early 1970s. Since the late 1990s, Northern Platinum has
used the Mill Site for its core shack and to access the Mine Site. Pursuant to the
requirements of the lease for the Mill Site, Northern Platinum finalized a Reclamation
Plan for the Mill Site, which was approved by the Government of Yukon in early
2010. Prophecy Platinum is cleaning up surface debris at the Mill Site and some
contaminated soils, pursuant to the Reclamation Plan and in accordance with the
terms of the Mill Site lease. Such clean-up activities began in 2009 and are ongoing
at a total cost ranging from Cdn$141,000 to Cdn$192,000. The Government of
Yukon asserts that in addition to this clean-up work, Prophecy Platinum must also
carry out reclamation activities in relation to the historic tailings impoundment, the
former mill infrastructure and related adverse impacts alleged by the Government of
Yukon to be occurring at the Mill Site (the Historic Liabilities). In August 2010,
Prophecy Platinum advised the Government of Yukon that it is not legally responsible
or liable for the Historic Liabilities. Prophecy Platinum and the Government of Yukon
are in discussions concerning responsibility and liability for the Historic Liabilities.
This will require a site assessment and futher consideration of legal responsibility
and liability for the Historic Liabilities, the outcome of which cannot be reasonably
determined at this stage.
Prophecy Platinum is working with the Government of Yukon toward concluding a
lease agreement by which it will obtain a leasehold interest in a portion of the Mill
Site, excluding the area containing the Historic Liabilities. Lease negotiations are in
Prophecy Platinum Corp. 4-4 1193460500-REP-R0001-02
Wellgreen Project Preliminary Economic Assessment,
Yukon, Canada