Prophecy Coal Corp. (TSE:PCY) issued a statement late Thursday clarifying previous disclosures related to a feasibility study of a proposed mine-mouth power plant near its its Chandgana coal deposit in Mongolia.
It also said it commissioned a preliminary economic assessment for its Chandgana coal deposit.
In January, the company issued a statement describing the feasibility
study for the proposed mine-mouth power plant, and said Thursday it
reconfirms that the report pertains to the power plant only, and does
not include an economic assessment of the Chandgana coal deposit under
NI 43-101 compliant standards.
Given the report is linked to a specific coal deposit, a coal mine
economic assessment under NI 43-101 is required before any disclosure
can be made regarding the feasibility of a power plant project, as
"economics of each is integral to the other", the company said.
As such, until an NI 43-101 economic assessment is prepared for the
Chandgana coal deposit, which estimates a mine's capital costs and the
operating economics of coal production for power plant use, "no
meaningful feasibility study can be prepared in connection with the
power plant," Prophecy said.
To address this, the coal producer has retained John T. Boyd Co. to
prepare a NI 43-101 compliant preliminary economic assessment for the
The report is expected to include a summary assessment of the
Chandgana power plant economics, along with an assessment of the
technical and economic viability of coal production at the deposit to
verify the input prices assumed.
Accordingly, the company has fully retracted the power plant
feasibility study disclosure until a Chandgana coal economic assessment
is complete, Prophecy said.
Its January 17 release also made reference to a Chandgana mine costing study that was not compliant with NI 43-101.
"While no mine analysis from the study was disclosed, the company
should not have referred to any study which was non-compliant with NI
43-101," it said.
The commissioned study will supersede the costing study, the company added.
In addition, the company clarified that its Ulaan Ovoo deposit hosts a
measured resource of 174 million tonnes and has an indicated resource
of 34 million tonnes, of which 20.7 million tonnes are classified as a
Meanwhile, the Chandgana coal property consists of three licenses:
Chandgana Tal, which has a measured resource of 141 million tonnes and
includes two licenses, and Khavtgai Uul – which contains one license and
is located in the southwestern end of the basin – has a measured
resource of 509 million tonnes and a 539 million tonne indicated
In the past, the company said it has grouped its estimated coal
resources on many occasions for the two Mongolian properties, contrary
to NI 43-101.
These resources are nearly contiguous being only some 14 kilometres
apart, and are close to important infrastructure - towns, roads, and
electric transmission lines. They are linked by paved highway to
Mongolia's capital, Ulaanbaatar, and the Trans-Mongolian Railroad.
The company’s share price rose 1.85 percent to reach 27.5 cents apiece on the Toronto Stock Exchange on Friday afternoon.