Prophecy Coal Corp has entered into a sale contract for 30,000 tonnes of coal per month from its Ulaan Ovoo mine to a buyer at gate. The buyer is a new customer with substantial presence in the region and this contract is separate from two other sales contracts signed in August.
Under the contract, coal will be picked up at the mine gate by the buyer. The first shipment is planned in November in keeping with the buyer’s request.
Operations at the Ulaan Ovoo mine in northern Mongolia have been curtailed since July 2012 but Prophecy has started pit dewatering, recalled leased mining equipment, hiring and procuring diesel/parts to bring the mine back into production in November.
Company officials sold and transported coal to customers in September, 2013. The coal was loaded from existing stockpiles at the site and trucked to Sukhbaatar railway siding, before being transported by rail to five customers. Full payments are collected as orders are filled on a first-come, first serve basis. Road and bridge conditions between the mine and Sukhbaatar are currently normal.
Prophecy has executed monthly sales contracts totaling 60,000 tonnes, including the latest gate contract. Fulfilling all offtake agreements is contingent on the restart, as quantity and quality of the existing stockpile are insufficient to supply demand beyond October 2013. Sales and delivery forecasts will be provided once Prophecy commences full mining and trucking operation.
According to the Mongolian Government’s General Working Plan and Resolution 120 passed on September 11, 2012, the Zeltura border status is officially ‘Under Renovation’, meaning it is neither open nor closed. In past months, Prophecy has been in discussion with various ministries and has offered assistance to renovate Zeltura infrastructure, including the customs clearing facility at the site, and road improvements between the site and Zeltura, which are all necessary to enable coal transport through Zeltura.
Road improvements, requiring feasibility and environmental impact assessment, are expected to be completed by year-end. The road improvement project is expected to take 2 to 4 months based on tenders received.