Vancouver, British Columbia, November 21, 2011 - Prophecy Coal (TSX:PCY) (OTCQX:PNIKF) has announced that its wholly-owned Mongolian subsidiary, East Energy Development, has received the license certificate from the Mongolian Energy Regulatory Authority to construct the 600 megawatt Chandgana power plant.
In terms of size, this 600 megawatt thermal power plant license, covering 4 individual 150 megawatt plants, is the first ever issued by the Mongolian government.
Coal for this power plant will be supplied from Prophecy`s Chandgana Tal Deposit, for which the company has already obtained a full mining license. Tal contains 141 million tonnes of measured coal and is located just 9 kilomertres north of Prophecy`s Chandgana Khavtgai project, which contains 509 million tonnes in the measured category and other 539 million tonnes in the indicated category.
Chandgana is 60 kilometres from Underkhann, and a connection to the Eastern Energy System, and 150 kilometres to Baganuur and a connection to the Central Energy System, which serves many cities in Mongolia before reaching into Russia. Mongolia currently imports power from Russia at a rate of $0.08 per kilowatt hour.
Construction of transmission lines linking Underkhann and Baganuur through Chandgana is seen as a top priority for a much improved and efficient national Mongolian energy system.
John Lee, Chairman & CEO of Prophecy, stated "Prophecy has distinguished itself as the premier candidate to build the next Mongolian thermal power plant. There is an understanding among all stakeholders that Mongolia, being one of the world's fastest growing economies, needs additional power. With the IMF projecting a deficit of over 600 megawatts by 2016, this need has become critically urgent and can no longer be delayed."
The issuance of the license paves the way to conclude Engineering, Procurement and Construction contractor selection. The Power Purchase Agreement and Project Financing arrangement should be finalized in 2012, with the start of construction targeted for the first quarter of 2013.
John Lee further stated, "With the above timeline in mind, we will focus on the next phases of development in order to achieve our goal of starting-up the first unit by January 2016."
The company's other project is the Ulaan Ovoo Mine, which has a 20 million tonne reserve and a 209 million tonne resource of high quality thermal coal. 230,000 tonnes of coal have already been stockpiled on site.
Jay Taylor, publisher of J. Taylor's Gold, Energy & Tech Stocks newsletter, recently gave Prophecy Coal a buy recommendation. Jay Taylor believes that the company's very substantial coal holdings in Mongolia offer shareholders major upside potential
Prophecy Coal also holds a 45% interest in Prophecy Platinum, which was spun-off in June. The company's investment portfolio, which includes Prophecy Platinum, along with shares in 2 other publicly traded companies, contributes more than $0.35 to the value of Prophecy Coal's shares.
Prophecy Coal trades at $0.53, and with approximately 198 million shares outstanding, is capitalized at $105 million.
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