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Prophecy Power Conducting Final Review of EPC Tenders, Discussing Project Financing
Vancouver, British Columbia, October 15, 2012: Prophecy Coal Corp. (“Prophecy” or the “Company”) (TSX: PCY, OTCQX: PRPCF, Frankfurt: 1P2) is pleased to announce that its wholly-owned subsidiary, Prophecy Power Generation LLC (“Prophecy Power”), is conducting final evaluation of three tenders from Engineering, Procurement and Construction (EPC) firms to build its proposed 600 MW (150 MW x 4) Chandgana power plant project in Mongolia.
Prophecy Power’s Chandgana project is one of Mongolia’s leading 600MW mine-mouth, thermal power plant projects. The project is a first-mover for its size in that the construction license was awarded by the Mongolian government in late 2011. In December 2011, Prophecy Power prepared and issued a comprehensive Request For Proposal (RFP) with respect to Engineering, Procurement, and Construction of the Chandgana facility.
In the Spring of 2012, eight EPC firms accessed Prophecy Power’s project data room and conducted project site tours in Mongolia. Prophecy Power received six tenders by the submission deadline of May 1, 2012 in the first round. For the second round in July, Prophecy Power requested more detailed tenders which resulted in shortlisting three EPC contractors based on completeness of the tenders, construction capability, equipment quality, time to deployment, and price.
In August, Prophecy Power’s technical team, led by VP Sharma with over 30 years of experience with China Light and Power Group (“CLP”), met with those firms qualifying for the second round. The team discussed detailed owner technical specifications and requirement (OTSR), Mongolian customs, transport and insurance, tax, permit, labor policies, and project timeline in order to facilitate preparation of final tenders. This resulted in three full and complete tenders that were received in late September.
After the Chinese National Holidays, the Prophecy Power team, led by John Lee and Mr. Sharma, last week visited the EPC short-list tenderers in Asia and had a full week of discussion regarding the tender submissions. Mr. Lee particularly focused on the EPC tenderers’ financing proposals, such as full project-level non-recourse financing, recourse loans, and EPC supplier credits. The objective is to have at least partial financing in place to begin construction in 2013
Prophecy Power has spent two years and invested substantial capital to reach this mature project stage. The Chandgana construction license is secured, the Power Purchase Agreement (PPA) and tariff application have been submitted, the Coal Supply Terms are agreed, full EPC tenders are received, and Project Financing steps are initiated. Lastly, Prophecy Power has identified equity partners to jointly develop the Chandgana project, with further progress on a joint venture expected by year end.
The technical contents of this news release have been reviewed and approved by Christopher M. Kravits, P.Geo who is a Qualified Person as defined in NI 43-101. Mr. Kravits has 34 years of US and international relevant coal geology experience. He has been active in Mongolia since 2007.
About Prophecy Coal
Prophecy Coal Corp. is a Canadian listed company engaged in developing energy projects in Mongolia. The Company’s wholly-owned subsidiary Prophecy Power Generation LLC is advancing plans for a proposed 600 MW mine-mouth power plant, which has been permitted by the Mongolian government, adjacent to its Chandgana coal deposit. Chandgana Coal LLC, another Prophecy wholly-owned Mongolian subsidiary, is expected to supply 3.6 million tonnes of coal per year to Prophecy Power for 25 years. A Preliminary Economic Assessment report on the Chandgana coal project is expected to be released by year end. Chandgana Coal LLC controls over 1.2 billion tonnes of thermal coal in the measured and indicated categories, including two mining licenses containing 140 million tonnes of measured resource with a strip ratio of 0.5:1. Substantially all of the Company’s resources are not mineral reserves, hence they do not have demonstrated economic viability. The Company cautions the Chandgana project is in Mongolia and requires substantial capital to develop.
Further information on Prophecy Coal can be found at www.prophecycoal.com.
ON BEHALF OF THE BOARD OF DIRECTORS Prophecy Coal Corp.
Manager, Investor Relations
*Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Mineral resources that are not mineral reserves do not have demonstrated economic viability. Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.
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 potential mineralization, the estimation of mineral resources, the realization of mineral resource estimates, interpretation of prior exploration and potential exploration results, the timing and success of exploration activities generally, the timing and results of future resource estimates, permitting time lines, metal prices and currency exchange rates, availability of capital, government regulation of exploration operations, environmental risks, reclamation, title, and future 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 failure to obtain necessary approvals in respect of the Transaction, unsuccessful exploration results, changes in project parameters as plans continue to be refined, results of future resource estimates, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, risks associated with operating in foreign jurisdictions, uninsured risks, regulatory changes, defects in title, availability of personnel, materials and equipment on a timely basis, accidents or equipment breakdowns, delays in receiving government approvals, unanticipated environmental impacts on operations and costs to remedy same, and other exploration or other risks detailed herein and from time to time in the filings made by the companies with securities regulators. Readers are cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral exploration and development of mines is an inherently risky business. 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 their businesses, investors should review their annual filings that are available at www.sedar.com.
“Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.”
This press release does not constitute an offer to sell or a solicitation to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (“the U.S. Securities Act”) or any state securities law and may not be offered or sold in the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.