Prophecy Coal has achieved good progress on the preliminary mobilization, design and engineering schedule at its Chandgana Power Plant in central Mongolia.
During the next quarter, the company’s Mongolian subsidiary Prophecy Power Generation LLC (PPG) will focus on securing contractors to facilitate the start of mobilization work at the site, design work for the temporary electricity supply, fencing of the site and construction of the power plant as well as offices and accommodation and a drinking water supply for staff.
Prophecy is continuing ongoing discussions with the Ministry of Energy of Mongolia, its various working groups and the Energy Regulatory Commission on the Power Purchase Agreement (PPA) and the Tariff Application.
Despite all parties indicating a willingness and desire to conclude the PPA and Tariff Application, Prophecy says it is a time-consuming process, as it is a major power offtake agreement with an independent power supplier for the Mongolian energy sector.
All major permits required for construction of the power plant have been received and required studies have been completed, including land use rights, geotechnical study, environmental impact assessment study, raw water supply feasibility study and seismic study.
The Chandgana project has attracted several major independent power plant enterprises assessing a potential investment, with one interested party establishing an office in Mongolia in order to collaborate with Prophecy on the project’s technical and commercial aspects. Joint development discussions on the Power Project are actively ongoing with a number of IPP enterprises.
Prophecy has discussed direct power purchase contracts with potential customers in the mining industry who need substantial electricity in the South Gobi region.
The 600MW Chandgana mine-mouth thermal power plant will be built adjacent to the company’s Chandgana coal deposit in central Mongolia’s Khentii province. The power plant will be the largest facility of its type in the country.
Prophecy has received a loan from a major international bank to fund 85% of the development and construction of the plant. The loan is subject to approval from relevant authorities in Mongolia and China as well as the completion of due diligence on the project.
Prophecy’s chairman John Lee says the company will continue talks with relevant authorities to remain on schedule for the proposed construction start date by June with a signed PPA.
Meantime, Prophecy has closed the first tranche of a non-brokered private placement announced in February, raising $613,560. The placement of up to 60 million shares aims to raise proceeds of $8.4 million for the company to put towards development of the power plant. NewMargin Prophecy Coal is subscribing for 40 million shares.