Prophecy Coal Corp. (CVE:PCY) Tuesday unveiled its power division named Prophecy Power, a unit to focus on the power sector in Mongolia.
Power, formerly known as East Energy Corp., was incorporated in 2010 to
supply power to Mongolia all the way through the construction of the
Chandgana thermal power plant.
Chandgana will similarly develop the Chandgana coal project to secure
fuel supply to Prophecy Power, it said. The proposed 600 megawatt power
plant will be built next to Prophecy Coal’s Chandgana coal deposit located in Central Mongolia.
project will be implemented in two phases. Phase 1 will see two 150
megawatt and transmission lines built next year and completed by 2016.
Phase 2 construction will see two 150 megawatts being built in 2014 and
finished by 2017.
The unit acquired approval of its environmental impact assessment from the Ministry of Nature and Tourism in November 2010.
One year later, the Ministry of Natural Resources granted a construction license for the power plant.
obtaining the license, the company has been in on-going talks with the
Mongolian government to finalize power purchase agreements to secure the
country’s long-term energy supply.
Meanwhile, Prophecy Power
has been in talks with several private Mongolian companies regarding
bi-lateral power purchase contracts.
The proposed mining
projects – which include copper, molybdenum and iron ore, will
collectively need 200 megawatts of power by 2016, excluding the Oyu
Its remaining power supply from the Chandgana
power plant is expected to help meet energy demand created by on-going
expansion of Eastern and Northern Mongolia, and replace Russian power
Chandgana, another unit of Prophecy Coal, will supply three million tonnes of coal a year to Prophecy Power for 25 years.
the measured and indicated categories, Chandgana controls over 1.4
billion tonnes of thermal coal including a starter pit with 140 million
tonnes of measured resource.
Upon the acquisition of the Tethys
Mining claims with a historic resource estimate of 2.3 billion tonnes,
Chandgana will control one of largest coal basins in the world, with
ample supply for a power plant of 4,200 megawatts or bigger.
Prophecy paid $10 million upfront and an 8.5 per cent royalty on
future coal sales from both Chandgana and Tugalgatai licenses. The deal
is slated to close in the third quarter.