Tag Archives: Prophecy Resource

26Dec 2011

Year-End Letter From CEO And Chairman Of Prophecy Coal

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VANCOUVER, BRITISH COLUMBIA, December 21, 2011 – Prophecy Coal Corp. (“Prophecy”) (TSX: PCY)(OTCQX: PRPCF)(Frankfurt: 1P2) (the “Company”) is pleased to present the following year-end letter from John Lee, CEO and Chairman of Prophecy:

Dear Investors,

I would like to first extend to you my wishes for a safe and happy holiday season.  It has been a very productive year at Prophecy Coal and I am pleased to share with you my positive outlook for 2012 and beyond.
2011 was highlighted by several accomplishments including:

  • Obtaining a landmark 600 MW Power Plant Construction License for our flagship Chandgana Project
  • Obtaining the Chandgana Tal Mining License
  • Successfully commissioning a new fleet of mining equipment at Ulaan Ovoo (“UO”)
  • Advancing UO to production with 230,000 tonnes of coal mined, and 130,000 tonnes sold.
  • Successfully completing first historical coal sales to Russia from Mongolia.
  • Completing the spin-off of Prophecy Coal’s core Canadian assets to Prophecy Platinum
  • Graduating to the TSX Toronto Exchange
  • Strengthening the board and management team

Operations Update:

Our new executive director, Ronnie van Eeden, has been living in Mongolia since April, 2011.  Drawing on coal-mining, operational experience gained at Eskom, one of the top 20 utilities in the world by generation capacity, Mr. van Eeden has increased efficiency and reduced overhead at our Ulaan Ovoo project.  To provide additional stability and support, our team in Mongolia has been further expanded to include an ex-pat operations manager and a US-trained coal geologist.  At the Christmas dinner for our Mongolian office last week, I counted over 30 staff in our new Ulaan Baatar office. It was clear to me that we have formed the critical mass of talent required to execute our objectives.

Ulaan Ovoo Mine Update:

In a period of just 12 months, Ulaan Ovoo has become a top coal supplier in Mongolia. In Q4 2011, the company sold 90,000 tonnes of coal to both Mongolian and Russian companies. We anticipate Ulaan Ovoo to produce 300,000 to 500,000 tonnes of coal in 2012, with increasing sales to Russia and at higher selling prices. We also expect the Russia border crossing at Zeltura (approximately 10 km from the mine) to open in 2012, which will reduce the transportation costs of our coal to Russia.  While selling coal through the Russian eastern seaports proved to be complex and difficult in 2011, we will further pursue this option in the latter part of 2012, after we focus first on the Chandgana project. On the strategic front, we have received interest from potential joint venture partners to assist in the development of Ulaan Ovoo, which speaks to the merit of the project.

Chandgana Power Plant Update:

In November, we received the first 600 MW power plant construction license in Mongolian history. The mine-mouth power plant will be supplied with coal from our Chandgana Tal coal deposit, for which we secured a mining license in 2011. These licenses were obtained as a result of Prophecy’s dedication and diligence for the past year. Our management team is also working through the holidays preparing and continuing to engage EPC (equipment, procurement & construction) contractors, investment bankers, banks, private partners, and the Mongolian government.

I am pleased to report that the feedback so far towards our Chandgana project from EPCs that visited the Chandgana site, and from Mongolia government, has been very positive.

Our goal is to sign an EPC contract and power purchase agreement (PPA) by mid-year 2012, and conclude project financing by the end of 2012.  We have retained Linklaters of London, a leading global law firm with PPA experience, to assist Prophecy with finalizing the PPA.  The PPA will provide long term, stable energy price and supply to Mongolia, as well as predictable cash flow to Prophecy’s shareholders in return for the hard assets the company has contributed and risks undertaken. Construction is expected to start in 2013 with completion in 2016.

A number of shareholders and investors have expressed concerns regarding Chandgana project capex and equity dilution. After extensive discussions with bankers, investors, and EPC contractors, we believe the capex is manageable, if we can demonstrate the project offers a robust return. The key is debt financing from Chinese policy banks which can finance up to 80% of the required capital. To raise the remaining capital in equity, our potential partners and investors will rely on the financial model from the Evonik-Steag power plant feasibility study. The study is complete and will be publicly disclosed once we have cross-checked the financial model.

With a substantial coal resource in Mongolia and 22.5 million shares of Prophecy Platinum, Prophecy Coal is currently trading below its book value. 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. With outlined, near term catalysts in 2012 and long term, bullish fundamentals for energy prices in Mongolia and China, we believe Prophecy Coal presents a very compelling investment case.

I wish you a prosperous 2012 and I look forward to sharing our Company’s progress and results with you in the months and years to come.

Click to see the Mongolia Retail Electricity Rate and Coal Price

Sincerely,

John Lee
CEO and Chairman
jlee@prophecycoal.com

**656.6 million tonnes Measured, 545.7 million tonnes Indicated (Chandgana Tal & Chandgana Khavtgai) (See press release August 16, 2010)

About Prophecy Coal

Prophecy Coal Corp. is a Canadian listed company engaged in developing energy projects in Mongolia. The company has over 1.4 billion tonnes of surface minable thermal coal resources on two coal properties in Mongolia. Prophecy Coal’s Ulaan Ovoo coal mine is in production and its Chandgana mine mouth power plant has been permitted. Prophecy Coal is the controlling shareholder of Prophecy Platinum Corp (TSX-V: NKL). Mineral resources that are not mineral reserves do not have demonstrated economic viability. Further information on Prophecy Coal can be found at www.prophecycoal.com
ON BEHALF OF THE BOARD OF DIRECTORS Prophecy Coal Corp.
“JOHN LEE”
John Lee
CEO/Chairman

For more information about Prophecy, please contact
Chris Ackerman
Manager, Investor Relations
1-800-459-5583
cackerman@prophecycoal.com
www.prophecycoal.com

Mineral resources that are not mineral reserves do not have demonstrated economic viability. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

28Jun 2011

Prophecy Coal Successfully commissioned new mining fleet at Ulaan Ovoo

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June 28, 2011, VANCOUVER, BRITISH COLUMBIA- (Coal Geology) -John Lee, Chairman : I am pleased to provide this mid-year review of Prophecy’s progress against goals set out in my 2010 year end letter http://www.prophecycoal.com/news_2010_dec24b.php.

2011 thus far was highlighted by several accomplishments namely:

- Successfully commissioned new mining fleet at Ulaan Ovoo (“UO”)
- Steadily advanced UO to commercial production with 230,000 tonnes of coal mined.
- Secured an allocation at a Russian Far East seaport
- Obtained Chandgana Tal Mining License
- Submitted Chandgana Power Plant Project feasibility with the Mongolia Government
- Completed the spin-off of Prophecy’s core Canadian assets to Prophecy Platinum
- Strengthened the board and management team:
- Jivko Savov, Prophecy director (Current Deputy CEO of En+)
- Chuluunbaatar Baz, Prophecy director (Head of Mongolia’s Monnis Group
- David Jan, Prophecy CFO (Formerly head of IR of Western Coal Corp)
- Ronnie Van Eeden, Head of Prophecy Mongolia, (Long standing with Eskom)

We invested over $25 million in the equipment and commissioning of Ulaan Ovoo. Commissioning a mine is a significant challenge for any company, particularly so for Prophecy as we are a new team. It took time to integrate our new staff in Mongolia, and commissioning a mine and overseeing 100+ Leighton staff consumed considerable time to deal various issues such as late equipment delivery, evolving mine plan, truck availability, local relations, stock piling, and diesel fueling. As the Chief Executive handling marketing, shareholder relations, government networking, ground operations, and negotiating logistics and off take, I became a bottleneck, which lead to delay in concluding off take and logistics arrangements.

Since May 1, I have reprioritized and sharpened my focus towards off take and logistics, away from marketing and IR. We are seeing tangible results. Sea port allocation is secured, and I expect rail allocation (from Mongolia Naushki border to Seaport) to materialize shortly.

As our experienced staff have had some time to settle in and learn one another’s strengths and weakness, Prophecy has been reorganized with greater emphasis on delegation and accountability. Ronnie who relocated his family to Mongolia in April, is in charge of advancing UO and Chandgana mines. Jivko and I are arranging Chandgana financing while Paul Venter and Michael Deats are providing technical support to UO and Chandgana projects. David Jan is leading our IR and communication efforts and we are currently recruiting coal traders to help us better market and sell UO coal.

At this point, I like to share with you our progress and excitement over at our flagship Chandgana project. In 2011, there has been monthly Mongolia site visit at UO and Chandgana. Particularly the Chandgana power plant (TPP) project has attracted interests from international bankers and investors.

Our power plant application is advancing within the Mongolian government, which has been keen to work with Prophecy to address the country’s critical energy shortage. Evonik industries of Germany have been engaged to complete TPP Project Bankable Feasibility Study (BFS) by Q3 2011, and a Hong Kong investment bank has been retained to advise on TPP Project planning and financing.
I here by attached the coal and electricity tariff charts of Mongolia and China.

Clearly, in China, one should focus on selling coal, and in Mongolia, it makes whole lot more sense to concentrate on supplying electricity. Energy price control leads to dwindling supply and under investment. Mongolia has had its awaking moment and it is deregulating the electricity industry to ensure steady supply to sustain growth, and boosting electricity tariff that is to surpass China’s tariff this year. It is every independent power plant operator’s ideal scenario to have steady low-cost coal supply and a government that supports free market electricity pricing and promotes foreign investment. We expect very robust economics for the Chandgana TPP when BFS is released in Q3.

With those thoughts, I like to stress Prophecy Coal’s identity as a coal producer, not a utility company. We incubate power plants which create demand for our coal, and we will find the right partner at the right time to fund the power plant. The same approach can be adopted for other value-added verticals such as coal to liquids, coal gasification, clean coal upgrade, which hopefully within years will mature into proven scalable technologies.

With this long term vision, we can see tremendous values being unlocked from our 1.2-billion-tonne* Chandgana coal resource, which is next door (350km) to the world’s second largest economy and most populous country.

Here are Prophecy’s objectives for remainder of 2011, which include:

- Commence shipments of Ulaan Ovoo coal to Asian customers via Russia’s eastern seaports
- Obtain full licensing to construct Chandgana Power Plant
- Tender Chandgana TPP project and select EPC contractor
- Study power plant feasibility at Ulaan Ovoo
- Upgrade of our Canadian listing

We are experiencing a slow and correction phase for publicly traded coal companies. As the biggest shareholder of Prophecy who purchased over 750,000 shares this year at substantially higher prices, I share your sentiments while appreciate your patience while we execute our business plan. Many Prophecy staff are working double or triple shifts and we are all thankful of your support. In time, share price will reflect the values we are creating for Prophecy investors and for Mongolia. Together, we will accomplish Prophecy’s goal of fulfilling Asia’s energy needs.

On Monday June 27, 2011 at 6pm German time (9am PST, 12pm EST), we’ll be holding an investor webcast. Due to the large number of participants, please click this link (https://eu42.spreed.com/checkin/jc/186213680) 5 minutes prior the conference to access the webcast.

Sincerely,

John Lee
Chairman and CEO

About Prophecy Coal

Prophecy Coal Corp. (formerly Prophecy Resource Corp) is a Mongolian coal company engaged in developing energy projects. The company controls over 1.4 billion tonnes of surface minable thermal coal resources on two coal properties in Mongolia. Prophecy Coal’s Ulaan Ovoo thermal coal mine is in preproduction and its Chandgana mine mouth power plant is currently being permitted. Prophecy Coal also owns equity stakes in Prophecy Platinum Corp., Victory Nickel Inc. and Compliance Energy Corp. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Further information can be found at www.prophecycoal.com.

ON BEHALF OF THE BOARD OF DIRECTORS of Prophecy Coal Corp.

John Lee, Chairman

For more information about Prophecy, please contact:
David Jan
Chief Financial Officer
1-800-358-5865
djan@prophecyresource.com

Mineral resources that are not mineral reserves do not have demonstrated economic viability. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

03Nov 2010

Prophecy Reports Multiple 1g/t Rhodium and 10g/t Platinum Group Metals Chip Samples

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November 3, 2010, Vancouver, British Columbia, (Coal Geology): Prophecy Resource Corp. (“Prophecy” or the “Company”) (TSX-V:PCY, OTCQX: PRPCF, Frankfurt: 1P2) reports that subject to TSXV disclosure regulations the company hereby retracts the gross metal value as reported in its prior press release (November 3, 2010). Cautionary statements have been added regarding disclosure of historical resources and geologic potential.

The East Zone of Prohecy’s 100% owned Wellgreen Project located in the Yukon,Canada has seen substantial historic development, with almost 4,300 metres of underground development on seven levels, three internal shafts and over 500 surface and underground drill holes.

800 previously unreported chip channel samples taken at 2 metre intervals along the underground workings were assayed for Platinum (Pt) and Palladium (Pd) at ALS Chemex Labs in Vancouver, B.C. Of these, 174 samples where Platinum or Palladium grades exceeded 1g/t were thereafter assayed for Gold (Au), Rhodium (Rh), Osmium (Os), Iridium (Ir), and Ruthenium (Ru). The 2007 sampling program was overseen by Rory Calhoun, P. Geo., now an employee of Prophecy. Concentrations of Rhodium, Osmium, Iridium, and Ruthenium were present in all of the follow-up samples. Assays where Rhodium exceeded 0.5g/t are listed in the following table:

The results are consistent with the 265-page 1997 Bulletin of the Geological Survey of Canada entitled “Geology and Metallogeny of the Kluane Mafic-Ultramafic Belt, Yukon Territory. Canada: Eastern Wrangellia – A New Ni-Cu-PGM Metallogenic Terrane” By: L.J. Hulbert. Dr. Hulbert commented on page 55:

“Rhodium is present in anomalous concentration compared to other Canadian Ni-Cu ores. In fact the only other Ni-Cu cores with comparable values are the near age equivalent Noril’sk ores in Russia. Average massive sulphides contain 400 ppb Rh (0.4g/t) where values in the 0.3 g/t – 1g/t range are not uncommon in the basal portion of the massive sulphide orebodies.”

With these highly encouraging results, Prophecy is assaying 470 drill core samples for all 6 Platinum Group Metals from drill programs by Northern Platinum Ltd. and Coronation Minerals Ltd. since 2006. Those core samples were previously assayed for Platinum and Palladium and yielded results over 1g/t of Platinum and Palladium combined.

John Lee, CEO of Prophecy comments: “The underground sampling demonstrates the widespread occurrence of all 6 Platinum Group Metals. Particularly noteworthy is the discovery of (previously unknown) widespread occurrences of rhodium. Platinum Group Metals are highly valuable and this encouraging discovery should significantly enhance the economics and appeal of Wellgreen.”

Prophecy also advises that it has started receiving results from Northern Platinum Ltd.’s summer drill program and Prophecy’s fall drill program; the company will release them once data is received in full.

More details about Wellgreen

The Wellgreen claims are 7km strike and over 22 square kilometers. Wellgreen is 15 km from the paved 2 lane Alaska Highway and 402 km from Alaska’s Haines deep sea port.  It is part of Kluane Ultramafic Nickel belt, which is second largest behind the Thompson Belt in Canada and remains vastly unexplored.

Since 1952 exploration at Wellgreen was almost entirely focused on high-grade underground massive sulphide nickel and copper deposits. In 1972 Hudbay Minerals Inc. milled 171,652 tons grading 2.23% Copper and 1.39% Nickel at Wellgreen and while Platinum Group Metals and other valuable minerals were present they were neither assayed for nor credited.

A historic (non NI 43-101 compliant) resource of 55 million tonnes grading 0.35% Cu, 0.36% Ni, 0.82 g/t Platinum and Palladium. (prefeasibility study by WGM April 21, 1989) was estimated at Wellgreen, which equates to over 1.4 million oz of Platinum Group Metals and 400 million pounds of Nickel in situ. A qualified person has not done sufficient work to classify the historical estimate as current mineral resources, the issuer is not treating the historical estimate as current mineral resources and the historical estimate should not be relied upon.

An independent NI 43-101 report prepared for Prophecy by Wardrop Engineering (“Wardrop”) dated July 2010 indicates that the potential of the Wellgreen property ranges between 77 to 254 million tonnes at 0.26 to 0.38% Nickel, 0.26% to 0.36% Copper, 0.55 to 0.85 g/t Platinum and Palladium, based on a strike length range of 4,000 to 7,000m and a width of 30 to 35m. The potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a mineral resource, and it is uncertain if further exploration will result in discovery of a mineral resource.

Past drill results from Coronation Minerals/Northern Platinum included:

2010 Wellgreen drill program from surface:

These results are very important as they demonstrate the high precious metal content of the continuous disseminated sulphide mineralization. Prophecy is targeting Wellgreen to be a large scale deposit that could be mined by open pit and large tonnages. Drill locations of Hole 177 and Hole 178 can be viewed at www.prophecyresource.com

Platinum Group Metal and Gold Pricing

The lesser known of the aforementioned Platinum Group Metals’, all of which can be by-products of nickel and copper mining, are summarized as follows:

Osmium is obtained commercially as a by-product from nickel and copper mining and processing; twice as strong as lead it is often alloyed with other metals and utilized in high-wear applications.

Rhodium usage is dominated by automotive catalyst applications where it is used together with platinum and palladium to control exhaust emissions in addition to many other applications.

Iridium is used in the manufacture of rayon and is used in long-life aircraft engine parts and other industrial applications in addition to medical applications.

Ruthenium is used primarily for wear-resistant electrical contacts and the production of thick-film resistors; it is also used in some platinum alloys.

Complete assays of the entire 800 samples and the 174 samples where Platinum or Palladium grades exceeds 1g/t can be downloaded.

The technical information in this news release has been reviewed and approved by Mel De Quadros, P. Eng. and Rory Calhoun, P. Geo., both Prophecy employees and Qualified Persons as defined by NI 43-101.

For more information about Prophecy, please contact Scott Parsons at +1.604.642.2625 ext. 106, Paul McKenzie at +1.604.642.2625 ext. 107 or John Lee at +1.800.851.1528.

About Prophecy Resource

Prophecy Resource Corporation is an internationally diversified company engaged in developing energy, nickel and platinum group metals projects. The company controls over 1.4 billion tons of open-pittable thermal coal in Mongolia (839 Mt Measured, 579 Mt Indicated). In Canada Prophecy owns Wellgreen PGM Project in Yukon, Lynn Lake Nickel Sulphide Project in Manitoba, and a 10% equity stake in Victory Nickel. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

16Oct 2010

Ulaan Ovoo Thermal Coal Mine-Removing overburden and pre-stripping work

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Ulaan Ovoo Thermal Coal Mine

October 16, 2010: Prophecy resources owns a 40-80 meters thick Bituminous coal seam at Ulaan Ovoo. The coal seam is estimated to be 208.8 million tonnes within the Ulaan Ovoo project area. The coal is suitable for the export market and has low ash (12.46%), low sulphur (0.40%) and  5,204 kcal/kg heat capacity . Over 2 million tonnes of overburden have already been removed to expose the  massive coal seam at surface. Watch the video from the Ulaan Ovoo project site showing pre-stripping work.

httpv://www.youtube.com/watch?v=AIMwihy3SDc

The Mongolian government has already  granted the project a fully transferable 30 year mining license that can be extended by an additional 40 years. The Ulaan Ovoo project has also met Mongolian environmental approvals as per the Mongolian Ministry of Nature and the Environment which approved a Detailed Environmental Impact Assessment (DEIA) and Environmental Protection Plan (EPP) specifically for Ulaan Ovoo.

Another clip of Prophecy Resource Corp’s Ulaan Ovoo thermal coal mine. The film was shot during the bulk sample operation for the pre-feasibility study.

httpv://www.youtube.com/watch?v=KFma24sUfeU