Prophecy Coal has signed a deal securing the tariff for the next 25 years at its Chandgana coal mine mouth power plant in central Mongolia. The agreement has been signed off by the Mongolian Ministry of Energy and outlines an initial tariff for the first year of the project to be followed by a weighted average tariff for the remaining 24 years. This is in line with the tariff rates put forward by Prophecy Power Generation (PPG) in February to the Project Working Group.
The working group was constituted in 2012 and consists of 11 members including officials and experts from the Ministry of Energy, the Energy Regulatory Commission, National Electricity Transmission Grid Company and private companies operating in the energy sector of Mongolia.
Prophecy’s executive chairman John Lee says the deal is a significant step in advancing the project. “This is the catalyst that could lead the company to expedite the finalization of its PPA and advance final selection of an Engineering, Procurement and Construction turnkey contractor for the Power Project.
“Prophecy would like to thank all members of the working group for their professional dedication in advancing the Chandgana Power Project, and congratulate them for achieving this major tariff agreement milestone. With all major construction, environmental, mining, land use licences and/or permits already in place, Prophecy looks forward to involving all stakeholders in building possibly the country’s first major thermal IPP project,” says John Lee.
The Canadian-listed company is advancing plans for a proposed 600MW mine-mouth power plant, which has been permitted by the Mongolian government, adjacent to its Chandgana coal deposit.
Prophecy’s wholly-owned Mongolian subsidiary, Chandgana Coal LLC, is expected to annually supply 3.5 million tonnes of coal to Prophecy Power for 25 years. Chandgana Coal controls more than 1.2 billion tonnes of thermal coal in the measured and indicated categories, including two mining licences containing 141 million tonnes of measured resource.
The Chandgana property comprises the Chandgana Tal and Khavtgai Uul licences. These resources are close to important infrastructure including towns, roads and electric transmission lines, and are linked by paved highway to Mongolia’s capital, Ulaanbaatar, and the Trans-Mongolian Railroad.