Prophecy Development Corp. has been unable to secure the 300,000 tonnes of coal sales contracts required to restart production at the Ulaan Ovoo project in Mongolia. It will continue to maintain the project on standby and reassess its production decision again in mid-2016.
Since June 2015, Prophecy has surveyed existing customers and potential consumers regarding thermal coal sales from Ulaan Ovoo for the 2015-2016 northern winter.
The current Ulaan Ovoo stockpile consists of approximately 19,000 tonnes of 5000 kcal/kg GCV quality, and 60,000 tonnes of 3600 kcal/kg GCV quality coal. Prophecy expects to begin coal shipments from its stockpile to customers starting this month and complete the sale of its remaining coal stockpile by spring 2016.
Prophecy has written official letters to the Ministry of Road and Transportation, Ministry of Industry, Ministry of Energy, and the Selenge Province governor’s office requesting their support to pave the 136km road between the Ulaan Ovoo mine and Sukhbaatar railway station, as well as to build a 56km 35kv power line from nearby Tsagaannuur soum to bring power to Ulaan Ovoo.
Both infrastructure initiatives, if implemented, will significantly reduce the operating cost of Prophecy’s Ulaan Ovoo operation and increase the likelihood of sustainable mining operations at Ulaan Ovoo to serve both the domestic Mongolian market and international market via Russia.
Meanwhile, Prophecy is undertaking a non-brokered private placement with the aim of raising up to Can$1.25 million in cash and another Can$750,000 debt repayment.
Company management and directors will subscribe for a minimum of $450,000 and, subject to shareholder approval, the company’s creditor Linx Partners Ltd has agreed to settle a portion of the debt owed to it under an existing Credit Facility Agreement in the amount of $750,000 in exchange for units being issued to John Lee, the beneficial owner of Linx, and a director and officer of Prophecy.
The total cash proceeds will be used to develop Prophecy’s mineral projects and for general working capital purposes.
Prophecy is a Canadian public company listed on the Toronto Stock Exchange that is engaged in developing mining and energy projects in Mongolia, Bolivia and Canada.