Prophecy’s Ulaan Ovoo Achieves Record Monthly Coal Production 37,800 tonnes in Mongolia
Prophecy’s Ulaan Ovoo Achieves Record Monthly Coal
Production 37,800 tonnes in Mongolia
Vancouver, British Columbia, July 9, 2019 – Prophecy Development Corp. (“Prophecy” or
the “Company”) (TSX:PCY, OTCQX:PRPCF, Frankfurt:1P2N) announces that the Company’s
Mongolian Ulaan Ovoo mine achieved record monthly coal production of 37,800 tonnes in June
of this year.
Ulaan Ovoo mine was commissioned in March 2019, however the operation was stopped in April
and May due to the late approval of 2019 environmental plan; this approval ha s been issued in
June 2019.
As reported in the Company news releases dated March 18, 2019 and October 16, 2018, the
Company executed a lease agreement (the “Lease”) with an arms -length privat e Mongolian
company (the “Lessee”) whereby the Lessee performs mining operations at Prophecy’s Ulaan
Ovoo coal mine, and will pay Prophecy $2 (the “Production Royalty”) for every tonne of coal
shipped from the Ulaan Ovoo site premises.
The Lease is valid for 3 years with an annual advance royalty payment for the first year of
$100,000 due upon signing (paid), as well as $150,000 and $250,000 due on the 1st and 2nd
anniversary of the Lease, respectively. The Lessee is responsible for all capital and operat ing
expenses, government taxes and royalties related to Ulaan Ovoo operation.
John Lee, Prophecy’s Executive Chairman, comments:
“Ulaan Ovoo thermal coal is gaining steady reputation for its premium quality and reliable delivery
in northern Mongolia. We anticipate strong 2019 sales with shipments to Mongolia, Russia, and
potentially China by rail. Barring any unforeseen circumstance which curtails production,
Prophecy’s Mongolia operation is expected to become net cashflow positive for the re mainder
2019 “
In addition, Prophecy is pleased to report a positive resolution issued from Mongolia city tax
tribunal regarding the Company’s VAT dispute with the Mongolia tax office. The resolution, which
is binding and final, affirmed Prophecy’s outsta nding VAT credit of 1.169 billion MNT (USD
439,470 based on today’s exchange rate of 2,660 MNT to 1 USD) resulted from past mining
equipment purchases.
The VAT credit can be used to offset Prophecy’s taxes and royalty payments; or be refunded in
cash by Mongolia’s Ministry of Finance within 12 to 24 months processing time.
Lastly, Prophecy reports that it successfully converted its Chandgana Khavtgai coal exploration
license to mining license in central Mongolia, approximately 300km east of the capital o f Ulaan
Baatar. Chandgana Khavtgai contains an estimated 43 -101 compliant resources of 509 million
tonnes of coal in Measured and further 539 million tonnes of coal in Indicated categories (from
NI-43-101 compliant “UPDATED TECHNICAL REPORT ON THE COAL RESOURCES OF THE
CHANDGANA KHAVTGAI COAL RESOURCE AREA, KHENTII AIMAG, MONGOLIA” issued on
September 8, 2010, available on SEDAR.COM). Limited Chandgana coal production and sales
were recorded in 2018 due to lack of rail access. Prophecy forecasts minimal C handgana coal
sales to local residents for the 2019 winter season.
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 conn ects 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.
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 low ash (8 to 11%) which is well -suited for
power plants, cement plants and heat boil er 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.
All prices are in USD
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 is currently undergoing EPCM
and p ermit development. Further information on Prophecy can be found at
www.prophecydev.com.
PROPHECY DEVELOPMENT CORP.
ON BEHALF OF THE BOARD
“John Lee”
Executive Chairman
For more information about Prophecy, please contact Investor Relations:
+1.604.569.3661 ext. 101
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
Some statements in this news release are about future events and performance. Such statements
are based on current estimates, predictions, expectations, or beliefs. The subjects of the
statements include, but are not limited to, (i) the PEA representing a viable development option
for the project; (ii) constr uction of a mine at the project and related actions; (iii) estimates of the
capital costs of constructing mine facilities, bringing the mine into production, and sustaining the
mine, together with estimates of the length of financing payback periods; (iv) the estimated
amount of future production, of both [raw material?] and metal recovered; and (vi) estimates of
the life of the mine and of the operating and total costs, cash flow, net present value, and
economic returns, including internal rate of return f rom an operating mine constructed at the
project. All forward-looking statements are based on Prophecy’s or its consultants’ current beliefs
and assumptions, which are in turn based on the information currently available to them. The
most significant assumptions are set forth above, but generally these assumptions include: (i) the
presence and continuity of vanadium mineralization at the project at the estimated grades; (ii) the
geotechnical and metallurgical characteristics of the rock conforming to the sa mpled results; (iii)
infrastructure construction costs and schedule; (iv) the availability of personnel, machinery, and
equipment at the estimated prices and within the estimated delivery times; (v) currency exchange
rates; (vi) vanadium sale prices; (vii) appropriate discount rates applied to the cash flows in the
economic analysis; (viii) tax rates applicable to the proposed mining operation; (ix) the availability
of acceptable financing on reasonable terms; (x) projected recovery rates and use of a proce ss
method, which although well-known and proven with other commodity types, such as copper, has
not been previously brought into production for a vanadium project; (xi) reasonable contingency
requirements; (xii) success in realizing proposed operations; an d (xiii) assumptions that the
project’s environmental approval and permitting is forthcoming from county, state, and federal
authorities. The economic analysis is partly based on Inferred Mineral Resources that are
considered too speculative geologically to have the economic considerations applied to them that
would enable them to be categorized as Mineral Reserves, and there is no certainty that the PEA
based on these Mineral Resources will be realized. Currently there are no Mineral Reserves on
the Gibellini property. Although the Company’s management and its consultants consider these
assumptions to be reasonable, given the information currently available to them, they could prove
to be incorrect. Many forward -looking statements are made assuming the corr ectness of other
forward-looking statements, such as statements of net present value and internal rates of return.
Those statements are based in turn on most of the other forward -looking statements and
assumptions made herein. The cost information is also prepared using current values, but the
time for incurring the costs is in the future and it is assumed costs will remain stable over the
relevant period.
These factors should be considered carefully, and readers should not place undue reliance on
forward-looking statements by Prophecy or its consultants. Prophecy and its consultants believe
that the expectations reflected in the forward -looking statements contained in this news release
and the documents incorporated by reference herein are reasonable, but n o assurance can be
given that these expectations will prove correct. In addition, although Prophecy and its consultants
have attempted to identify important factors that could cause actual actions, events, or results to
differ materially from those describ ed in forward-looking statements, there may be other factors
that cause actions, events, or results not to be as anticipated, estimated, or intended. Prophecy
and its consultants undertake no obligation to publicly release any future revisions of the forward-
looking statements that reflect events or circumstances that occur after the date of this news
release or reflect the occurrence of unanticipated events, except as expressly required by law.