Prophecy Coal hopes to start building Mongolian power plant in 2013

Prophecy Coal expects to conclude a PPA with Mongolian authorities and sign an EPC contract in 2Q 2012 for its Chandgana Power Plant.

Once the Power Purchase Agreement and Engineering, Procurement, and Construction contract are in place, the company stated that it will be in a strong position to secure long term project financing for power plant construction that is expected to commence in the beginning of 2013.

Prophecy Coal is planning a two-phase development, where second phase will seek to add significant power capacity to supply electricity to Chinese market.

 In 2018, the company is planning to generate 3.2mn MWh of power and produce close to 4Mt of coal from its Chandgana and Ulaan Ovoo coal deposits generating healthy profit margins for the company. Coal from Chandaga will be sold to the power plant with roughly US$5/t margin, while Ulaan Ovoo’s coal will be shipped to Russian buyers through Zheltura border crossing, 15 km to the north from the mine, with about US$5-6/t margin.

The company received a power plant licence from the Mongolian Energy Regulatory Authority in November 2011 for the Chandgana Power Plant. In January 2012, Prophecy Coal Corp. announced a positive feasibility study for the Company’s 600 MW Chandgana Mine-Mouth Power Project in Central Mongolia. The feasibility study states that based on a 70%-30% debt to equity capital structure and discount rate of 12%, the project generates post-tax NPV of US$364.7million.

For the source of this story, click here.