Chandgana

Overview:

In June 2012, Prophecy Coal consolidated the Chandgana coal basin by agreeing to acquire the Tugalgatai licenses from Tethys Mining LLC. Prophecy’s existing Chandgana licenses host a measured resource of 650 million tonnes and an indicated resource of 540 million tonnes of thermal coal.  According to records reviewed by Prophecy, on March 15, 2011, Tethys applied to register a resource estimate of 2.33 billion tonnes of thermal coal for the Tugalgatai licenses with the Minerals Resource Council of Mongolia. The Tugalgatai resources registered by Tethys are not NI 43-101 compliant, however, Prophecy expects to conduct work in due course with a view of preparing its own NI 43-101 estimate of their contained resource.  Upon finalizing the acquisition of the Tugalgatai licenses, Prophecy will control one of the largest coal basins in all of Mongolia

In August 2012, Prophecy Coal debuts its subsidiary Prophecy Power Generation LLC, a wholly-owned Mongolian subsidiary focused on the power sector in Mongolia. Prophecy Power Generation LLC, formerly known as Eastern Energy Development LLC, was incorporated in 2010 with the specific business objective of supplying power to Mongolia through the construction of the Chandgana Thermal Power Plant. Prophecy Coal’s Chandgana LLC in parallel will develop the Chandgana coal project to ensure fuel supply to Prophecy Power.

Prophecy has determined the most effective approach to harness the potential energy of the massive coal resources contained in the Chandgana basin is to construct a thermal coal power plant near or adjacent to these coal licenses. Mongolia's economy has experienced significant growth over the past several years; a trend that is projected to continue well into the future. Many of Mongolia’s existing power plants are dated, having low-efficiency output and lacking in clean technologies. As a result, the country's domestic electrical power production has been unable to keep up with the rising demand, leaving a deficit that has been offset by costly imports of electricity from Russia. To help address this, in November 2011, the Mongolian government granted Prophecy Coal Corp. a license to construct the 600MW Chandgana power plant and continues to advance the project by commissioning studies, applying for approvals and exploring financing options. A Cooperation Covenant with the Mongolian Energy Authority (EA) was signed in May 2012 and a final draft of a power purchase agreement (PPA), personally delivered to the Mongolian Ministry of Mineral Resources and Energy in August, is now under review. Prophecy has also been in ongoing discussions with Engineering, Procurement and Construction (EPC) management firms and anticipates making a final selection in Q4 2012. The power plant will be a mine mouth power plant where the coal is supplied from a contiguous or nearby mine.

 


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Coal Supply:

The coal required to fuel the Chandgana TPP will be supplied from a mine located on a contiguous or nearby license. Two of the likely sources include Prophecy Coal’s 100% owned Chandgana coal resources which consist of three licenses. Chandgana Tal, located in the northeastern end of the basin includes two licenses and has a measured resource of 141 million tonnes. Khavtgai Uul contains one license and is located in the southwestern end of the basin with a measured and indicated resource of over 1,000 million tonnes (509mt measured and 539mt indicated). These resources are contiguous or near the power plant, are a mere 14 km apart, and are close to important infrastructure – towns, roads, and electric transmission lines. They are linked by paved highway to Mongolia's capital, Ulaanbaatar, and the Trans-Mongolian Railroad, giving direct rail access to China to the south and Russia to the north. Read more >>

The coal from any of the licenses can be mined using surface mining methods and then crushed and trucked directly to the power plant.


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Mine Highlights:

  • Measured and indicated resource of 1.19 billion tonnes (650 mt measured and 539 mt indicated).
  • Thick coal seams with an aggregate minable thickness of 30 - 60 meters.
  • Coal seams are shallow with depth ranging from 0 to 267 meters.
  • Coal is moderate grade with moderate ash and calorific value and low total sulphur.
  • Coal quality is well-suited to fuel the 600MW mine mouth power plant.
  • Low weighted average strip ratio of 2.0:1.
  • Resources are amenable to simple truck-shovel surface mining method.
  • Close proximity to infrastructure: 160 km from rail, 45 km north of the proposed Choibalsan Mongolian Railway extension, maximum 16 km from paved highway, and 150 km from 2x220 kV power line connecting to the main Mongolian electricity grid

Chandgana Coal Resource:

  Chandgana Coal Resources (Tonnes)
  Chandgana Tal Khavtgai Uul Chandgana (Total)
Measured 0.14 Billion 0.51 Billion 0.65 Billion
Indicated - 0.54 Billion 0.54 Billion
Total M&I; 0.14 Billion 1.05 Billion 1.19 Billion

  Chandgana Coal Quality
  Chandgana Tal Khavtgai Uul
Moisture 40.7 (ar) 36.5 (ar)
Ash 12.5 (ad) 10.1 (ar)
Heating Value 4,238 (ad) 3,636 (ar)
Total Sulfur 0.7 (ad) 0.6 (ar)
ar = as-received basis, ad = air dried basis

Chandgana consists of two properties-Chandgana Tal and Chandgana Khavtgai. Chandgana Tal consists of 141 mt of measured resource. Chandgana Khavtgai consists of 509 mt measured and 539 mt indicated resource. Chandgana Khavtgai's resource estimates are based on the September 2010 NI 43-101 Chandgana Khavtgai Technical Report by Kravits Geological Services, LLC. The report is authored by Christopher M. Kravits CPG, LPG of Kravits Geological Services, LLC., who is an independent Qualified Person under NI 43-101. And the Chandgana Tal resource estimate is also based on the September 2007 NI 43-101 Chandgana Tal Technical Report by Behre Dolbear & Company (USA), Inc..The report is authored by Mr. Gardar G. Dahl, Jr., CPG of Behre Dolbear & Company (USA), Inc., who is an independent Qualified Person under NI 43-101. Detailed Resource/Grade Table


Next Steps for the Power Plant:

  • Conclusion of the Power Purchase Agreement (PPA) with Mongolian Government (Q1 2013)
  • Selection of an EPC contractor for power plant construction (2012)
  • Obtain project financing (Q3 2012)
  • Start power plant construction (early 2013)

Technical Reports:

The Chandgana Tal resource estimate is based on the September 2007 NI 43-101 Chandgana Tal Technical Report by Behre Dolbear & Company (USA), Inc. The report is authored by Mr. Gardar G. Dahl, Jr., CPG of Behre Dolbear & Company (USA), Inc., who is an independent Qualified Person under NI 43-101. The Chandgana Khavtgai resource estimate is based on the September 2010 NI 43-101 Updated Chandgana Khavtgai Technical Report by Kravits Geological Services, LLC. This is an update of the report prepared inn 2008. The reports are authored by Christopher M. Kravits CPG, LPG of Kravits Geological Services, LLC., who is a Qualified Person under NI 43-101.


Maps and Cross Sections:



Photo Gallery:


News Release:

August 7, 2012 - Prophecy Coal Debuts Its Power Division

June 18, 2012 - Prophecy Coal Consolidates Chandgana Coal Basin by Agreeing to Acquire Tugalgatai Licenses from Tethys Mining LLC

May 28, 2012 - Prophecy Coal Enters Into Covenant With Mongolian Energy Authority On 600 MW Chandgana Power Project

January 24, 2012 - Prophecy Provides EPC, PPA, Project Financing Update on Chandgana Power Plant Project

January 17, 2012 - Prophecy Receives A Positive Feasibility Study for the Chandgana Mine-Mouth Power Plant Project in Central Mongolia (Diagrams Included)

November 21, 2011 - Prophecy Granted Landmark Chandgana Power Plant License (Maps Included)

September 15, 2011 - Mongolian Government Endorses Chandgana Power Plant Project

April 21, 2011 - Prophecy Submits Formal Request to Mongolian Government To Build Chandgana Power Plant

February 8, 2011 - Prophecy Obtains Full Mining License for its 141-million-tonne Chandgana Tal Coal Deposit, Mongolia (Map & Diagrams Included)

November 15, 2010 - Detailed Environmental Impact Assessment Approved for 600 MW pit-mouth powerplant by Prophecy's 1.2 billion tonne Chandgana coal project, Mongolia (Maps Included)

August 16, 2010 -Prophecy Reports Measured 524.3 Mt and Indicated 545.7 Mt Coal Resources at Chandgana Khavtgai, Mongolia (Drill Map Included)

June 21, 2010 - Drilling Completed at Prophecy's Chandgana-Khavtgai Coal Project, Updated NI 43-101 Resource Report is Expected by August (Drill Maps included)

Feasibility Study:

A previously disclosed power plant feasibility study has been withdrawn and should not be relied upon. The Company plans to replace the previous report with a scoping study (a preliminary economic assessment) of a combined coal mining and power plant operation at Chandgana Tal. That study is to be completed by one or more independent qualified persons as a technical report in accordance with the requirements of Canadian Securities Administrators National Instrument 43-101 (Standards of Disclosure for Mineral Projects). The replacement technical report is expected to be released in Q2 2012.


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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 website.

Qualified Person under NI 43-101
Christopher M. Kravits P.Geo., a consultant of the Company is the qualified persons responsible for the technical information on this website.

Cautionary Note Regarding Mineral Resources and Mineral Reserves
Readers should refer to the Company's current technical reports and other continuous disclosure documents filed by the Company available on Sedar at www.sedar.com for further information on the mineral resource estimates of the Company's projects, which are subject to the qualifications and notes set forth therein, as well as for additional information relating to the Company more generally. Mineral resources which are not mineral reserves, do not have demonstrated economic viability. Inferred mineral resources have insufficient confidence to allow the meaningful application of technical and economic parameters or to enable an evaluation of economic viability suitable for public disclosure. Neither the Company nor readers can assume that all or any part of an inferred mineral resource will be upgraded to indicated or measured mineral resources. Most projects at the inferred mineral resource stage do not ever achieve successful commercial production. Each stage of a project is contingent on the positive results of the previous stage and that there is a significant risk that the results may not support or justify moving to the next stage.

Click here for the forward-looking statements and the cautionary note.

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*Ulaan Ovoo: 174 million tonnes  of measured and 34 million tonnes of indicated coal. Ulaan Ovoo’s resource numbers are from the Behre Dolbear & Company (USA), Inc  report referenced in the Dec 2010, 43-101 Prefeasibility Study by Wardrop Engineering. Chandgana consists of two properties-Chandgana Tal and Chandgana Khavtgai. Chandgana Tal consists of 141 mt of measured resource. Chandgana Khavtgai consists of 509 mt measured and 539 mt indicated resource. Chandgana Khavtgai’s resource estimates are based on the September 2010 NI 43-101 Chandgana Khavtgai Technical Report by Kravits Geological Services, LLC. The report is authored by Christopher M. Kravits CPG, LPG of Kravits Geological Services, LLC., who was an independent Qualified Person under NI 43-101 at the time of report preparation. And the Chandgana Tal resource estimate is also based on the September 2007 NI 43-101 Chandgana Tal Technical Report by Behre Dolbear & Company (USA), Inc..The report is authored by Mr. Gardar G. Dahl, Jr., CPG of Behre Dolbear & Company (USA), Inc., who is an independent Qualified Person under NI 43-101.