Tuesday, 7 August 2012

Prophecy Coal debuts power division to focus on power sector in Mongolia

Prophecy Coal Corp. (CVE:PCY) Tuesday unveiled its power division named Prophecy Power, a unit to focus on the power sector in Mongolia.

Prophecy 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.

Prophecy Coal’s 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.

The 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.

Since 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 Tolgoi project.

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 imports.

Chandgana, another unit of Prophecy Coal, will supply three million tonnes of coal a year to Prophecy Power for 25 years.

In 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.

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