Issue link: http://resourceworld.uberflip.com/i/134727
MINI NG Prophecy Coal supplying and building a thermal power plant V ancouver, British Columbia-based, Prophecy Coal Corp. [PCY-TSX; PRPCF-OTCQX; 1P2-FSE] is an international mining and energy company developing a major new power plant and infrastructure project, the Chandgana Power Plant Project, an independent, coal-fired, mine mouth, power plant (IPP) in Mongolia. Prophecy Power Generation LLC, (PPG) a wholly-owned subsidiary of Prophecy Coal, was incorporated in 2010 to supply power to Mongolia through the construction of the power plant. Coal to supply the power plant would come from Prophecy Coal's existing Chandgana licenses which host a measured resource of 634 million tonnes and an indicated resource of 539 million tonnes of thermal coal. Prophecy Coal is in discussions to acquire the Tugalgatai coal licenses from Tethys Mining LLC which hosts a non NI 43-101 compliant resource estimate of 2.33 billion tonnes of thermal coal. Upon acquisition of these licenses, Prophecy would prepare a NI 43-101 resource estimate for Tugalgatai. The acquisition would give Prophecy Coal control of one of the largest coal basins in Mongolia. The company says, "Prophecy has determined the most effective approach to harness the potential energy of the massive coal resources contained in the Nyalga Basin is to construct a thermal power plant near or adjacent to these coal licenses." Prophecy Coal is integrating clean coal technology into its Chandgana power plant. Total projected capital expenditures for the Chandgana 600MW power plant capital are approximately $ 1.11 billion. On April 16, 2013, Prophecy Coal released an update on the Chandgana Power Plant Project announcing that PPG had "obtained water permits for the use of well water at site for the staff and construction camp facilities in Q1 2013, and tenders for 34 www.resourceworld.com by Kathrine Moore drilling well(s) and water treatment facilities are being initiated. This facilitates the start of mobilization work at site, targeted for Q3 2013 subject to signing the Power Purchase Agreement (PPA) with the Mongolian Government." The design work for the temporary electricity supply and tendering process has been initiated as PPG has obtained approval from a local electricity distribution authority to provide a temporary electricity supply required for construction work. Tenders have been received from engineering consulting firms to be selected by PPG to oversee the design work of the engineering, procurement and construction (EPC) contractor on PPG's behalf as well as tenders from engineering firms to oversee the power plant construction work to be carried out by the to-beselected EPC contractor on behalf of PPG. The tender process closed on April 30, 2013. Prophecy received an electricity tariff proposal for Chandgana Power Power Plant Project in May 2013 from the project's working group designated by the Mongolian Ministry of Energy, in line with Prophecy's final tariff proposal and the company is currently negotiating a power purchase agreement (PPA). Prophecy says that 2013, Q2 objectives include installing a drinking water well system, construction of temporary office and accommodation, construction of a water supply system, site fencing and construction of an access road subject to the signing of the PPA and forming a joint venture agreement with a strategic partner. Prophecy signed a Memorandum of Understanding in November 2012 with a strategic partner, one of the largest power groups in the world, to jointly develop the Chandgana Power Plant Project. Prophecy and the joint venture partner are advancing the due diligence towards a definitive investment agreement. The company received indicative terms and conditions from a major international bank for a proposed loan to finance up to 85% of the total value of the EPC contract. Separately, Prophecy has received a non-binding letter of intent respecting an equity investment of up to 20% in the Chandgana Power Plant Project. The letter of intent was received from a qualified EPC contractor who is on Prophecy's final list of EPC bidders. Also in Mongolia is Prophecy Coal's 100%-owned Ulaan Ovoo coal deposit, approximately 430 km by paved highway from the capital city Ulaanbataar. As well, Prophecy has three Canadian projects: the Okeover property (copper-molybdenum) in southwestern British Columbia; an 80% interest in the Titan vanadium-titanium-iron project in located in eastern Ontario; and the Kanichee Mine, an abandoned base and precious metals mine in the Temagami region of northeastern Ontario. n JUNE 2013