Prophecy Received US$100,000 of Advance Royalty Payment from Ulaan Ovoo Mine Lease, Lessee Eyeing Mine Start
Prophecy Received US$100,000 of Advance Royalty Payment from
Ulaan Ovoo Mine Lease, Lessee Eyeing Mine Start
Vancouver, British Columbia, October 16, 2018 – Prophecy Development
Corp. (“Prophecy” or the “Company”) (TSX:PCY, OTCQX:PRPCF, Frankfurt:1P2N) is
pleased to announce that the Company has executed a lease agreement (the “Lease”) with
an arms -length private Mongolian company (the “Lessee”) whereby t he Lessee plans to
perform mining operations at Prophecy’s Ulaan Ovoo coal mine , and will pay Prophecy
US$2 (the “Production Royalty”) for every tonne of coal shipped from the Ulaan Ovoo site
premises.
Bekzod Kasimov, Prophecy’s VP, Business Development, comments:
“This Lease signifies the potential restart of the Ulaan Ovoo mine to supply qualit y thermal
coal for much needed regional consumption.
With nameplate production capacity of 2 million tonnes a year, Ulaan Ovoo is a large coal
field featuring a single, massive coal seam of 40 to 80 metre thickness with outcrops and
low strip ratio carrying minimal technical risk.
Ulaan Ovoo’s Production Royalty is expected to provide Prophecy with a passive income
stream while Prophecy continues to advance the Gibellini vanadium project in Nevada as
the Company’s top priority.”
About the Lease:
The Lessee is an established company actively mining at Mongolia’s largest coking coal
deposit, Tavan Tolgoi. The Lessee has paid Prophecy US$100,000 in cash , as a non-
refundable advance royalty payment and is preparing , at its own and sole expense, to
restart and operate the Ulaan Ovoo mine with its own equipment, supplies, housing and
crew. The Lessee will pay all government taxes and royalties related to its proposed mining
operation.
The Lease is valid for 3 years with an annual advance royalty payment (“ARP”) for the first
year of $100,000 due upon signing, payment of which is announced herein, $150,000 and
$200,000 due on the 1st and 2nd anniversary of the Lease, respectively . The ARP can be
credited towards the $2 per tonne Production Royalty payments to be made to Prophecy as
the Lessee starts to sell Ulaan Ovoo coal. Many parties have expressed buyer interest in
Ulaan Ovoo ’s coal. Prophecy will provide a further update once the Lessee finalizes the
mine start date and sales plans for 2019.
The 3-year Lease can be extended upon mutual agreement.
About Ulaan Ovoo:
Ulaan Ovoo is located in northern Mongolia, 17km from the Zeltura border to Russia by dirt
road, and 120km by road from Mongolia’s Sukhbaatar railway station (which connects to the
Trans-Siberian railway network).
Ulaan Ovoo produced over 500,000 tonnes of coal from 2012 to 2014 which was sold to 28
separate Russian and Mongolian customers such as Erdenet Copper Mining Corporation,
UB Railway, and Khutul Cement before it was put on standby in 2014.
The benchmark Newcastle thermal coal price has rebounded from a 2014 low of US$61 per
tonne to a current price of $114 per tonne, which are levels not seen since 2011.
Ulaan Ovoo features an average strip ratio of 1.8 BCM waste/tonne of coal. The coal mined
yielded 5,000 kcal/kg GCV, less than 1% sulphur and 8% ash which is well-suited for power
plants, cement plants and heat boiler applications. Wardrop Engineering (Tetra Tech)
estimated 174 Mt of measured and 34 Mt of indicated coal resources in an NI 43 -101
prefeasibility study in 2010.
Qualified Person
The technical contents of this news release have been prepared under the supervision of
Danniel Oosterman, VP, Exploration. Mr. Oosterman is not independent of the Company in
that he is employed as a consultant to the Company and most of his income is derived from
the Company. Mr. Oosterman is a Qualified Person as defined in NI 43-101.
About Prophecy
Prophecy is developing the Gibellini project – the only large -scale, open -pit, heap -leach
vanadium project of its kind in North America. Located in Nevada, Gibellini has the largest
NI 43-101 compliant measured and indicated primary vanadium resource known in the USA
and is currently undergoing EPCM and EIS preparation. Prophecy also has mining projects
in Mongolia and Bolivia. Further information on Prophecy can be found at
www.prophecydev.com.
PROPHECY DEVELOPMENT CORP.
ON BEHALF OF THE BOARD
“John Lee”
Chairman
For more information about Prophecy, please contact Investor Relations:
+1.888.513.6286
www.prophecydev.com
Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is
defined in the policies of the Toronto Stock Exchange) accepts responsibility for the
adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this news release, including statements which may contain
words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, or similar
expressions, and statements related to matters which are not historica l facts, are forward -
looking information within the meaning of applicable securities laws. Such forward -looking
statements, which reflect management’s expectations regarding Prophecy’s future growth,
results of operations, performance, business prospects a nd opportunities, are based on certain
factors and assumptions and involve known and unknown risks and uncertainties which may
cause the actual results, performance, or achievements to be materially different from future
results, performance, or achievemen ts expressed or implied by such forward -looking
statements. These estimates and assumptions are inherently subject to significant business,
economic, competitive and other uncertainties and contingencies, many of which, with respect
to future events, are s ubject to change and could cause actual results to differ materially from
those expressed or implied in any forward -looking statements made by Prophecy. In making
forward-looking statements as may be included in this news release, Prophecy has made
several assumptions that it believes are appropriate, including, but not limited to assumptions
that: all required third party contractual, regulatory and governmental approvals will be obtained
for the development, construction and production of Prophecy’s prope rties and the Chandgana
power plant; there being no significant disruptions affecting operations, whether due to labour
disruptions or other causes; currency exchange rates being approximately consistent with
current levels; certain price assumptions for v anadium, silver, coal and other metals, prices for
and availability of fuel, parts and equipment and other key supplies remain consistent with
current levels; production forecasts meeting expectations; the accuracy of Prophecy’s current
mineral resource es timates; labour and materials costs increasing on a basis consistent with
Prophecy’s current expectations; any additional required financing will be available on
reasonable terms; and market developments and trends in global supply and demand for
vanadium, energy, silver, coal and other metals meeting expectations. Prophecy cannot assure
you that any of these assumptions will prove to be correct.
Numerous factors could cause Prophecy’s actual results to differ materially from those
expressed or implied in the forward -looking statements, including the following risks and
uncertainties, which are discussed in greater detail under the heading “Risk Factors” in
Prophecy’s most recent Management Discussion and Analysis and Annual Information Form as
filed on SEDAR and posted on Prophecy’s website: Prophecy’s history of net losses and lack of
foreseeable positive cash flow; exploration, development and production risks, including risks
related to the development of Prophecy’s mineral properties; Prophecy not havi ng a history of
profitable mineral production; commencing mine development without a feasibility study; the
uncertainty of mineral resource and mineral reserve estimates; the capital and operating costs
required to bring Prophecy’s projects into production and the resulting economic returns from its
projects; foreign operations and political conditions, including the legal and political risks of
operating in Bolivia and Mongolia, which are developing countries and being subject to their
local laws; the avai lability and timeliness of various government approvals, permits and
licenses; the feasibility, funding and development of Prophecy’s projects; protecting title to
Prophecy’s mineral properties; environmental risks; the competitive nature of the mining
business; lack of infrastructure; Prophecy’s reliance on key personnel; uninsured risks;
commodity price fluctuations; reliance on contractors; Prophecy’s need for substantial additional
funding and the risk of not securing such funding on reasonable terms or at all; foreign
exchange risk; anti -corruption legislation; recent global financial conditions; the payment of
dividends; the inability of insurance to cover all potential risks associated with mining
operations; conflicts of interest; and cyber -security risks related to the Company’s reliance on
information technology systems.
These factors should be considered carefully, and readers should not place undue reliance on
Prophecy’s forward-looking statements. Prophecy believes that the expectations reflected in the
forward-looking statements contained in this news release and the documents incorporated by
reference herein are reasonable, but no assurance can be given that these expectations will
prove to be correct. In addition, although Prophecy has attempted to identify important factors
that could cause actual actions, events or results to differ materially from those described in
forward-looking statements, there may be other factors that cause actions, events or results not
to be as anticipated, estimated or intended. Prophecy undertakes no obligation to release
publicly any future revisions to forward -looking statements to reflect events or circumstances
after the date of this news or to reflect the occurrence of unanticipated events, except as
expressly required by law.