Prophecy Coal Corporation (TSV: PCY, OTC-QX: PRPCF, Frankfurt: 1P2) is an internationally diversified thermal coal production company that in November 2010 saw its first coal project, Ulaan Ovoo commissioned for production. The company controls over 1.4 billion tonnes of open-pittable thermal coal in Mongolia (839 Mt Measured, 579 Mt Indicated) between 2 distinct deposits with power plant plans for its second deposit (Chandgana's) well under way. Additionally Prophecy Coal Corp holds the Okeover Copper project and the Titan, Vanadium Iron ore & Titanium projects in Canada.
Prophecy Coal Corp. (TSE:PCY) issued a statement late Thursday clarifying previous disclosures related to a feasibility study of a proposed mine-mouth power plant near its its Chandgana coal deposit in Mongolia.
It also said it commissioned a preliminary economic assessment for its Chandgana coal deposit.
In January, the company issued a statement describing the feasibility study for the proposed mine-mouth power plant, and said Thursday it reconfirms that the report pertains to the power plant only, and does not include an economic assessment of the Chandgana coal deposit under NI 43-101 compliant standards.
Given the report is linked to a specific coal deposit, a coal mine economic assessment under NI 43-101 is required before any disclosure can be made regarding the feasibility of a power plant project, as "economics of each is integral to the other", the company said.
As such, until an NI 43-101 economic assessment is prepared for the Chandgana coal deposit, which estimates a mine's capital costs and the operating economics of coal production for power plant use, "no meaningful feasibility study can be prepared in connection with the power plant," Prophecy said.
To address this, the coal producer has retained John T. Boyd Co. to prepare a NI 43-101 compliant preliminary economic assessment for the Chandgana deposit.
The report is expected to include a summary assessment of the Chandgana power plant economics, along with an assessment of the technical and economic viability of coal production at the deposit to verify the input prices assumed.
Accordingly, the company has fully retracted the power plant feasibility study disclosure until a Chandgana coal economic assessment is complete, Prophecy said.
Its January 17 release also made reference to a Chandgana mine costing study that was not compliant with NI 43-101.
"While no mine analysis from the study was disclosed, the company should not have referred to any study which was non-compliant with NI 43-101," it said.
The commissioned study will supersede the costing study, the company added.
In addition, the company clarified that its Ulaan Ovoo deposit hosts a measured resource of 174 million tonnes and has an indicated resource of 34 million tonnes, of which 20.7 million tonnes are classified as a reserve.
Meanwhile, the Chandgana coal property consists of three licenses: Chandgana Tal, which has a measured resource of 141 million tonnes and includes two licenses, and Khavtgai Uul – which contains one license and is located in the southwestern end of the basin – has a measured resource of 509 million tonnes and a 539 million tonne indicated resource.
In the past, the company said it has grouped its estimated coal resources on many occasions for the two Mongolian properties, contrary to NI 43-101.
These resources are nearly contiguous being only some 14 kilometres apart, and are close to important infrastructure - towns, roads, and electric transmission lines. They are linked by paved highway to Mongolia's capital, Ulaanbaatar, and the Trans-Mongolian Railroad.
The company’s share price rose 1.85 percent to reach 27.5 cents apiece on the Toronto Stock Exchange on Friday afternoon.