Canadian miner Prophecy Coal will purchase the Tugalgatai coal licences in Mongolia after securing a $10 million loan from Waterton Global Value. Tugalgatai is host to a large coal resource contiguous to Prophecy’s Chandgana licences which host a measured 650 million tonne measured coal deposit and a 540 million tonne inferred thermal coal deposit.
Former owner Tethys applied to the Minerals Resource Council of Mongolia to register a resource of 2.33 billion tonnes at the site, however this was not NI 43-101 compliant. Prophecy plans to continue exploration work at Tugalgatai to prepare its own NI 43-101 compliant resource estimate.
Prophecy’s chief executive officer John Lee says, “We appreciate Waterton Global’s continuing support. The proceeds will fully fund completion of the acquisition of Tugalgatai coal licences which are expected to significantly increase our coal resources.”
Waterton Global’s portfolio manager Cheryl Brandon says, “We look forward to working with Prophecy Coal to finance the company as they continue to expand in the Chandgana Coal Basin. The Waterton Global facility provides the required capital to complete the recently announced $10 million coal licence acquisition and implement the company's production growth strategy in the region.”
The loan conditions include an 8.5% royalty on future coal sales from both the Tugalgatai and Chandgana licences.
“By consolidating the Chandgana coal basin of approximately 300sqkm, Prophecy is looking for greater economies of scale to potentially produce low-cost electricity at Chandgana mine mouth power plant, and further develop coal to chemicals and coal gasification projects. It’s also possible to further increase the resource through exploration in this highly prospective basin,” says John Lee.
Detailed exploration at the site including drilling, geotechnical and topographic studies indicate a large and geologically simple coal occurrence within the Tugalgatai licences that is similar to the Chandgana licence. The coal seam is continuous across the Nyalga Basin and outcrops to the northwest, with the main coal seam measuring up to 30 metres in thickness.
Prophecy’s Ulaan Ovoo mine is in production and its proposed 600MW mine-mouth power plant adjacent to the Chandgana coal deposit has been permitted by the Mongolian government. Negotiations on financing, power purchase agreement and construction management are under way.