PROPHECY Development Corp continues to keep operations at its Ulaan Ovoo Thermal Coal Project in northern Mongolia on standby during the global coal downturn. Modest sales to local customers from existing stockpiles are continuing and Prophecy is expected to reassess its production decision during the current quarter.
A coal seam at Prophecy Development Corp’s Chandgana Tal property.
During the March quarter the mine shipped 760 tonnes of coal to local customers, realising sales revenue of US$24,090. This compared to sales of 26,400 tonnes during the same period in 2015 and sales revenue of $600,000. Prophecy intends to continue with the sale and loading of remaining stockpiled Ulaan Ovoo coal with the goal of completing this during the September quarter.
The company continues efforts to maximize value including evaluation of operating alternatives, infrastructure improvement, management changes, higher margin markets and other markets for Ulaan Ovoo coal, methods to upgrade coal quality and pursuit of financial arrangements including strategic partners or joint venture arrangements, or the sale of a portion or the entire project.
One of these options is to penetrate the urban residential market in Mongolia where there is total estimated consumption of around 700,000 to 900,000 tonnes a year in the cities of Ulaanbaatar, Erdenet and Darkhan, as well as further increasing coal sales to Russia.
The company is also pursuing diversion of the river at the project. This will ensure that it retains the licences and decreases the pumping requirement.
The required exploration for the Khujirt licence was completed during January 2016. The company decided to consider sale of the licence and approached parties that may be interested but a sale was not completed.
At Chandgana Tal project, Prophecy plans to continue normal licence maintenance work, including payment of fees and environmental work, while work on the Khavtgai Uul licence will include the required exploration report and other licence maintenance work needed to retain exploration rights.
The company also aims to pursue the remaining agreements, approvals and permits required to proceed with development of the Chandgana mine mouth power plant. It intends to conclude three major agreements with the government this year – the tariff agreement, power purchase agreement and concession agreement. It also continues to actively consider project financing options which include debt, equity or a combination thereof in addition to joint ventures with international power project developers.