VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 06/24/13 -- Prophecy Coal Corp. ("Prophecy" or the "Company") (TSX: PCY) (OTCQX: PRPCF) (FRANKFURT: 1P2) is pleased to provide the following update of its Ulaan Ovoo mine.
Since production was suspended in July, 2012 (see the Company's August 9, 2012 news release), management has examined all aspects of the Ulaan Ovoo mine, from mining and transportation to marketing and sales, with the goal of lowering production costs and increasing coal sales upon the potential resumption of mining at Ulaan Ovoo.
The Company is actively discussing several potential coal sale and purchase agreements with the goal of resuming mining operations in Q3 2013 and the ramping up of production throughout 2014. Ulaan Ovoo coal is marketed specifically to power plants, heat/boiler plants, cement factories, metallurgical plants, direct reduced iron plants, and railway companies. Ulaan Ovoo coal (5,000 kcal/kg GCV, less than 1% Sulphur, less than 10% Ash, less than 3 % rocks) is well suited for all these applications.
Coal prices in the region have been largely shielded from global economic weakness. Current benchmark premium GAR 5,000 kcal/kg thermal coal pricing is exceeding $40/t in Mongolia and $50/t at several delivery points in the Russian Republic of Buryatia (Buryatia). These prices represent a material increase year over year. The Company is very encouraged by both the quantity requested by new and repeat customers, as well as current price trends.
The Company projects that Russian sales through Zeltura and Sukhbaatar border crossings will account for over 50% of the sales volume. In the past months, Prophecy has received written correspondence from Russian parties regarding the purchase of Ulaan Ovoo coal and/or the purchase of the Ulaan Ovoo mine itself.
The conditions for potential coal sales to Russia have improved in the following areas:
1. The Mongolian government has lowered the benchmark pricing used to calculate export royalties, while the average coal price has risen in Russia's Buryatia region.
2. Prophecy has had numerous meetings with Mongolian and Russian officials seeking the re-opening of the Zeltura border crossing between Mongolia and Russia. The Zultura crossing is less than 20km from Ulaan Ovoo, and the re-opening of the border would reduce transportation costs and potentially increase sales margins. The Company has received support from and continues to work with officials from both governments to re-open the Zeltura border crossing.
History of Ulaan Ovoo
Prophecy has successfully delivered over 300,000 tonnes of Ulaan Ovoo coal to 28 customers, with a track record of timely delivery and meeting or exceeding required coal quality specifications. Below is a brief chronologic history(i).
H1 2013: Sold 45kt from stockpile, 106kt stockpile remains, $55million invested to date.
H2 2012: Production curtailed in July due to low prices and lack of market penetration.
2012: Produced 165kt (H1), Sold 131kt (including 2.4kt to Russia)
2011: Produced 205kt, Sold 127kt (including 6kt to Russia)
H1 2011: Capex $40 million invested to date
(i)H1: First Half, H2: Second Half, kt: '000 tonnes
Since 2010, the Company has invested over $55 million at Ulaan Ovoo. This includes road and bridge construction, mining vehicles, mining camp, pre-stripping, and other infrastructure and community improvement.
This news release is to provide investors and shareholders with an update respecting the current status of and the Company's intentions regarding the Ulaan Ovoo project. The Company cautions that at this time there are no specific plans to resume mining operations at Ulaan Ovoo, and no Russian coal sales and purchase agreements are in place. Prophecy's board of directors and management will continue to assess the conditions for potential mine restart and will disseminate information on the signing of any material coal sales agreements and any decision to restart the Ulaan Ovoo mine if and when these events occur.
Visit www.prophecycoal.com for a map of the Company's Ulaan Ovoo mine.
Mr. Christopher Kravits, LPG, CPG, is a qualified person as defined under National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). Mr. Kravits is not considered independent of Prophecy given the large extent that his professional time is dedicated solely to, and his position as Manager of Mining with Prophecy Coal Corp. Mr. Kravits has reviewed and approved the technical and scientific disclosure within this news release.
About Prophecy Coal
Prophecy Coal Corp. is a Canadian company listed on the Toronto stock exchange engaged in developing energy projects in Mongolia. Prophecy's wholly-owned subsidiary Prophecy Power Generation LLC is advancing plans for a proposed 600 MW coal-fired mine-mouth power plant, which has been licensed by the Mongolian government, adjacent to its Chandgana coal deposit. Chandgana Coal LLC, another Prophecy wholly-owned Mongolian subsidiary, has contracted to supply 3.6 million tonnes of coal per year to Prophecy Power for 25 years. Chandgana Coal LLC controls a significant coal resource. This includes the two Chandgana tal mining licenses containing 124 million tonnes of measured resource with an average strip ratio of 0.7 to 1 and the Khavtgai uul license containing 509 million tonnes measured and 539 million tonnes indicated resource with a strip ratio of 2.2 to 1. Substantially all of Prophecy's resources are not mineral reserves; hence, they do not have demonstrated economic viability. Further information on Prophecy Coal can be found at www.prophecycoal.com.
PROPHECY COAL CORP
ON BEHALF OF THE BOARD
(i)Mineral resources that are not mineral reserves do not have demonstrated economic viability.
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 future growth, results of operations, performance, 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: all required third party contractual, regulatory and governmental approvals will be obtained for the development, construction and production of Prophecy's properties and the Chandgana Power Plant; there being no significant disruptions affecting operations, such as due to labour disruptions; currency exchange rates being approximately consistent with current levels; certain price assumptions for coal, prices for and availability of fuel, parts and equipment and other key supplies remain consistent with current levels; production forecasts meeting expectations; the accuracy of Prophecy's current mineral resource estimates; labour and materials costs increasing on a basis consistent with Prophecy's current expectations; and that any additional required financing will be available on reasonable terms. Prophecy cannot assure you that any of these assumptions will prove to be correct.
In light of the risks and uncertainties inherent in all forward-looking statements, the inclusion or incorporation by reference of forward-looking statements in this news release should not be considered as a representation by Prophecy or any other person that Prophecy's objectives or plans will be achieved. Forward-looking statements in this news release include, without limitation, statements regarding the permitting, feasibility, plans for development and production of Prophecy's Chandgana Power Plant, including finalizing of any power purchase agreement; the likelihood of securing project financing; estimated future coal production at the Ulaan Ovoo coal mineral property and the Chandgana coal mineral properties; and other information concerning possible or assumed future results of operations of Prophecy.
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 Ulaan Ovoo coal property; Prophecy not having a history of profitable mineral production; the uncertainty of mineral resource and mineral reserve estimates; the capital and operating costs required to bring Prophecy's projects into production and the resulting economic returns from its projects; foreign operations and political conditions, including the legal and political risks of operating in Mongolia, which is a developing jurisdiction; the availability and timeliness of various government approvals and licences; the feasibility, funding and development of the Chandgana Power Plant; title to Prophecy's mineral properties; environmental risks; the competitive nature of the mining business; lack of infrastructure; Prophecy's reliance on key personnel; uninsured risks; commodity price fluctuations; reliance on contractors; Prophecy's minority interest in Prophecy Platinum Ltd.; Prophecy's need for substantial additional funding and the risk of not securing such funding on reasonable terms or at all; foreign exchange risks; anti-corruption legislation; recent global financial conditions; the payment of dividends; and conflicts of interest.
These factors should be considered carefully, and readers should not place undue reliance on the 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 release or to reflect the occurrence of unanticipated events, except as expressly required by law.
Prophecy Coal Corp.
Bekzod Kasimov, Manager, Business Development
+976 - 99012672 or +1 604 - 569 3661
+1.888.513.6286 (Toll Free)
Most Popular Stories
- Tablets, Cars Drive AT&T Gains
- 2015 Mazda MX-5 Miata Is Fast and Eager
- Small Businesses Add 3 More Worries to Their List
- DOMA Tech Adding Jobs to Process VA Claims
- Apple Warns of China iCloud Attack
- IS Funded by Black Market Oil Sales, Racketeering
- Tech Firms Flock to LA's 'Silicon Beach'
- Job Hunting Is Hard Work
- Stocks Subdued After Gains Earlier in Week
- Ford, GM Expect to Report Strong Profits