TORONTO (miningweekly.com) – Vancouver-based Prophecy Coal on Wednesday announced that it had agreed to buy two of TSX-V-listed Apogee Silver’s subsidiaries in order to acquire the Pulacayo-Paca silver/lead/zinc mine, in Bolivia.

Prophecy Coal has a diverse portfolio of projects including coal mining and thermal power generation assets in Mongolia, as well as vanadium, molybdenum and copper exploration projects in Canada. The transaction would open the door for it to become a high-grade silver producer in the not too distant future.

Under a binding letter of intent, Prophecy would pay Apogee $250 000 in cash and issue to Apogee 60-million Class B convertible nonvoting shares.

The Class B shares would become eligible for conversion by Apogee into an equal amount of listed shares of Prophecy over a two-year period in tranches, and under certain conditions.

Prophecy said it had agreed to assume certain liabilities, including all legal and tax liabilities, associated with the subsidiaries and the Pulacayo-Paca project.

In the event Apogee was to convert all of the Class B shares, Apogee would hold 19.2% of Prophecy.

The parties had agreed to enter into a definitive agreement by October 24, and complete the proposed transaction by December 29.

Prophecy Coal president and CEO John Lee said that despite concerns over the Bolivian government’s rhetoric towards foreign investment, the country’s economy had, in fact, been one of the most steady in South America during the past decade, with tame inflation, a stable currency, growing foreign reserves and foreign direct investment.

He noted that there was an airport at Uyuni, 20 km from Pulacayo by paved road.

Apogee Silver had spent more than $30-million on the project since 2006. The work included completing a feasibility study, 12 550 t of trial mining, 69 739 m of drilling (a highlight included 25 m grading 1 030 g/t silver), and full permitting for installing a 560 t/d mill.

There was water, power, a tailings site, a mill site, and even several previous tailing dumps which revealed promising grades. A railway and port were also easily accessible. He pointed out that trial mining silver grades were higher than those from comparable operators Silvercorp, Great Panther and Endeavor Silver.

The concentrates were clean, high grade (6 295 g/t silver) and sold to Trafigura.

“While Prophecy’s primary focus remains Mongolian energy and coal projects. Pulacayo is the most impressive silver project I have visited in the last ten years and we are very excited with this acquisition, which is expected to close in December,” Lee said in an emailed statement.