VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 8, 2012) - Prophecy Coal Corp. ("Prophecy" or the "Company") (TSX:PCY)(OTCQX:PRPCF)(FRANKFURT:1P2) is pleased to provide the following update on its open pit coal operation at its Ulaan Ovoo mine in Mongolia.
Since 2010, the Company has invested over $30 million at Ulaan Ovoo, including road and bridge building, mining fleet, mining camp, pre-stripping, and other infrastructure and community improvement. Since September 2011, Prophecy has sold and delivered some 188,915 tonnes of thermal coal, including 8,055 tonnes to Russia, 23,543 tonnes to private Mongolian companies, and 157,317 tonnes to Mongolian government owned power plants.
The Company has contracts to deliver an additional 228,388 tonnes in 2012, the majority of which is to be delivered to the Darhan and Erdenet power plants in Mongolia. In just over a year, Prophecy's Ulaan Ovoo mine has become the largest independent supplier of coal to Mongolian power plants, for the benefit of Mongolians.
There are currently approximately 130,000 tonnes of coal stockpiled at Ulaan Ovoo. Total sales target for 2012 is 300,000 tonnes of coal. For the rest of 2012, the Company expects a stabilized production cost and minimal capital expenditures at Ulaan Ovoo.
In the past months, the Company has experienced a steady increase in both demand and realized sale price for its coal. In 2012, the Company has received commitment and interest for a substantial quantity of Ulaan Ovoo coal from Russian buyers, however Prophecy is postponing sales to Russia pending the opening of the Zeltura border crossing and a revised export royalty scheme from the General Department of Taxation of Mongolia. Prophecy is currently paying export royalties based on a government-set benchmark coal price which is nearly 3 times higher than the Company's actual sale price. Prophecy is optimistic that progress will be made on both royalty and border opening fronts to improve the margin on sales.
John Lee, Chairman and CEO of Prophecy states: "Ulaan Ovoo produces highly desirable thermal coal of NAR 5,100 kcal/kg quality to fulfill the regional demand of the thermal coal market. The coal inventory levels at Mongolian power plants this past winter were down to only a few days, which created a national emergency. We are committed to delivering our quota to Mongolian power plants in 2012, while continuing to work with the Mongolian government on the 600 MW Chandgana Power Purchase Agreement to address the long-term energy needs of this rapidly developing country and at the same time, provide a stable return to our shareholders."
About Prophecy Coal
Prophecy Coal Corp. is a Canadian listed company aiming to build the first independent thermal power plant in Mongolia. The Company's Ulaan Ovoo deposit hosts a measured resource of 174 million tonnes and an indicated resource of 34 million tonnes, while its Chandgana deposit hosts a measured resource of 650 million tonnes and an indicated resource of 539 million tonnes. The proposed 600 MW Chandgana mine-mouth power plant has been permitted and the Company is currently in discussion with the Government on a Power Purchase Agreement. 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 of Prophecy Coal Corp.
John Lee, CEO/Chairman
Forward-Looking Statements: This news release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, including, without limitation, statements regarding the proposed power plant future exploration and development plans and objectives of the Company are forward-looking statements that involve various risks and uncertainties. Although Prophecy believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Forward-looking statements are based on a number of material factors and assumptions. Factors that could cause actual results to differ materially from those in forward-looking statements include the failure to achieve a long-term power contract, the price of energy and commodities, access to capital, general economic, regulatory, market or business conditions, and other risks detailed herein and from time to time in the filings made by the companies with securities regulators. Mineral exploration and development of mines is an inherently risky business and large infrastructure projects such as power plants require huge amounts of capital which may not be available to Prophecy on terms which will allow its shareholders to realize a reasonable return or on any terms at all. Accordingly the actual events may differ materially from those projected in the forward-looking statements. For more information on Prophecy and the risks and challenges of its business, investors should review filings that are available at www.sedar.com.
Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.