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Ulaan Ovoo (Coal Mongolia)
Prophecy’s 100% owned Ulaan Ovoo coal deposit is approximately 430 km by paved highway from the capital city of Mongolia, Ulaanbataar. It is also strategically located just 17 km from the Russian border and 120 km from both Mongolian and Russian rail links. 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.
In 2012 Prophecy entered into a contract with a local Mongolian direct reduced iron (DRI) manufacturing plant, for the sale of 22,100 tonnes of thermal coal from the Company’s Ulaan Ovoo mine and the buyer has indicated that it would eventually like to increase the supply from Prophecy to 300,000 tonnes on an annual basis.
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 became the largest independent supplier of coal to Mongolian power plants.
Since 2010, the Company has invested over $52 million at Ulaan Ovoo, including road and bridge building, mining fleet, mining camp, pre-stripping, and other infrastructure and community improvement. In July of 2012, Ulaan Ovoo coal mining operations have been temporarily suspended because the current stockpile of coal (187,000 tonnes) is sufficient to meet contractual supply obligations through the balance of 2012.
In 2012, the Company 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 Zheltura 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.
The Ulaan Ovoo project contains 209 million tonnes of measured and indicated coal resources (NI 43-101; 174 Mt of measured and 34 Mt of Indicated).
Surrounding the deposit are other prospective coal-bearing basins similar in size to Ulaan Ovoo. Prophecy has obtained four transferable licenses covering these basins. In June 2011, Prophecy acquired the rights to acquire 100% ownership of the 4,773-hectare Ilch Khujirt property (Ilch) located 17 km northeast of the Ulaan Ovoo coal mine. The Ilch property is contiguous to Prophecy’s existing 7,392 hectare Khujirt exploration license. Prophecy immediately started to evaluate the coal resource potential of the licenses. In 2011, Prophecy began exploratory drilling activities to better evaluate the coal resource potential of their licenses and the Ilch Khujirt property. Read more >>
- 208.8 million tonnes of measured & indicated coal resource (NI 43-101; 174 Mt of measured and 34 Mt of Indicated)
- Bituminous (5,040 kcal/kg), low ash (11.3%), low sulphur (0.40%) thermal coal suitable for export
- Single massive coal seam 45-80 m thick with an average strip ratio of 1.8:1
- First 8+ years of mining requires no coal washing
- Transferable 30-year mining license with a 40-year extension option
- Environmental approval and mining licenses granted by the Mongolian government
- Over 33,000 hectares of exploration licenses in surrounding sedimentary basins with potential for additional resources
- Secured railway loading capacity through Mongolia’s Sukhbaatar Railroad station
Ulaan Ovoo Coal Resource::
|Total M&I||208.8 Million|
Ulaan Ovoo resource estimate is from the NI 43-101 Behre Dolbear report prepared in 2007. Coal reserves estimate from the NI 43-101 report prepared by Wardrop Engineering in 2010. Detailed Resource/Grade Table
- Dec 2010, 43-101 Prefeasibility Study Update (File size: 5.0mb)
- May 2009, 43-101 Prefeasibility Study (File size: 9.0mb)
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