Prophecy Coal: 2011 in review, expects to secure project financing for Chandgana in 2012

Prophecy Coal (TSE:PCY) provided investors with a full year 2011 recap to its operational activities Wednesday.
Namely, the company focused on its operations at the Ulaan Ovoo mine, located 430 kilometres from the Mongolian capital city of Ulaanbataar, and about 17 kilometres from the Russian border.
The company advanced the Ulaan Ovoo project to production, having mined 230,000 tonnes of coal to date, and selling a total of 130,000 tonnes of coal.
In the fourth quarter of 2011, Prophecy signed several sales agreements for 90,000 tonnes of coal, with buyers from both Russia and Mongolia.
Prophecy expects Ulaan Ovoo to produce between 300,000 to 500,000 tonnes of coal in 2012, with increasing sales to Russia and at higher selling prices.
The company also said it expects the Russian border crossing at Zeltura, located about 10 kilometres from the mine, to open in 2012, which will reduce transportation costs.
While selling coal through the Russian eastern seaports has been complex and difficult, Prophecy said, it will further pursue this option in the second half of 2012, after it focuses first on its Chandgana Power Plant project.
In November, Prophecy received a construction license for its 600 megawatt (MW) power plant - the first in Mongolian history. The plant will be located at the mouth of the Chandgana Tal coal mine, which Prophecy secured a mining license for in 2011.
Construction for the plant is expected to start in 2013, with completion slated for 2016. Prophecy said it plans on securing up to 80 percent of the required capital through debt financing from Chinese policy banks. To raise the remaining capital in equity, the company said it will rely on the financial model from the completed Evonik-Steag power plant feasibility study.
Prophecy said it hopes to sign an equipment, procurement and construction (EPC) contract as well as a power purchase agreement (PPA) by mid-year 2012, and complete the financing of the Chandgana project by the end of 2012.
Also this year, Prophecy completed the spin-off of its Canadian assets to Prophecy Platinum (CVE:NKL), in which it holds 22.5 million shares, or 40.8 percent. It also graduated to trading on the Toronto Stock Exchange, from the more junior TSX-Venture market.
"With a substantial coal resource in Mongolia and 22.5 million shares of Prophecy Platinum, Prophecy Coal is currently trading below its book value," said the company in a statement.
"While market volatility in the past several months has discouraged some of our shareholders, the Company has remained focused on unlocking the tremendous value of our 1.2-billion-tonne Chandgana coal resource, which is approximately 350 km from China, the world's most populous country and second largest economy."
As of 12:30 pm EDT, Prophecy Coal shares traded up 3.75 percent to $0.415.