Prophecy Coal Corp. Announces Annual Results and Outlook for 2014
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Apr 8, 2014) -
Prophecy Coal Corp. ("Prophecy" or the "Company")
(TSX:PCY)(OTCQX:PRPCF)(FRANKFURT:1P2) is pleased to announce its
annual results for fiscal 2013 as disclosed in its annual Financial
Statements and Management's Discussion and Analysis with the
following highlights and outlook for 2014:
Ulan Ovoo
During the year, the Company sold approximately 125,000 tonnes
of coal with total sales revenue of approximately of $3.3 million.
In addition, the Company earned approximately $1.3 million in
revenue from leasing and renting out its excess equipment and staff
while mining operations were suspended during the year. As the
Company is in the pre-commercial production stages, proceeds from
the sale of coal are not recorded as revenue but rather are offset
against capitalized deferred exploration costs.
Since resuming operations, the Company has estimated its average
cash cost per tonne, including transportation and administration
expenses at approximately US $29.50 per tonne and has experienced
domestic average sales prices of approximately US $36 per tonne for
coal with GCV greater than 5,000 kcal/kg. On the other hand,
average sales prices for coal with GCV less than 5,000 kcal/kg was
US $20.50 per tonne. However, approximately sixty percent of the
Company's sales in 2013 consisted of sales of coal with GCV greater
than 5,000 kcal/kg, of which approximately eighty percent was sold
during the fourth quarter of 2013.
Furthermore, domestic market prices for coal with GCV greater
than 5,000 kcal/kg range from US $30 to US $50 per tonne, dependent
on quantity and point of delivery. In addition, the Company's
neighbouring market in the Russian regions realize sales prices for
coal with GCV of 4,500 kcal/kg to 5,000 kcal/kg ranging from 1,800
to 2,200 Roubles per tonne (US $50 to US $60 per tonne), dependant
on point of delivery.
Russia
In 2014, the Company sold and successfully delivered a coal
shipment from Sukhbaatar to a Russian customer. Management has also
recently visited a number of Russian coal end users with the goal
of establishing continuous shipments to Russia in 2014. The Zeltura
Road feasibility study ("the feasibility study") concerning the
road from the Ulaan Ovoo mine to the Zeltura border has just been
completed ahead of schedule and the study is currently under
management's review and will soon be submitted to the Mongolian
Ministry of Road and Transportation. Given that the mine is just
17km from the Zeltura border (as opposed to approximately 120km
from the mine to Sukhbaatar), re-opening of the Zeltura border
would reduce transportation costs and potentially further
facilitate increasing coal sales to Russia.
If the feasibility study is accepted by the Ministry of Road and
Transportation, road upgrades can begin and are expected to take up
to four months based on preliminary tenders received. The Company
will advise if and when the feasibility study is accepted.
Concurrently, the Company is working with the Ministry of
Finance on creating a customs clearing zone at the Ulaan Ovoo mine
to facilitate Russian exports. The Company is pleased with the
overall progress and appreciates the support from Mongolian and
Russian authorities.
2014 Outlook
Since resuming operations at Ulan Ovoo, management is primarily
working towards improving mining practices in the areas of safety,
cost containment and coal quality improvement. With these mandates
and since near surface oxidized coal was removed in 2011 and 2012,
the Company has been able to consistently mine higher grade thermal
coal with GCV greater than 5,000 kcal/kg. With consistent,
effective and efficient mining practices, management expects that
approximately ninety percent of the coal mined at Ulan Ovoo will be
greater than 5,000 kcal/kg in 2014 as was projected in the Wardrop
Pre-Feasibility Study. As such, the Company is transitioning to
supplying to a market for coal of GCV greater than 5,000 kcal/kg
which realizes premium pricing, both in the Company's domestic and
neighbouring market, Russia.
The Company has only commenced penetrating the premium thermal
coal market in this region and believes there is potential to
further expand sales with minimal competition in northern Mongolia
and its neighboring Russian region. Furthermore, during the year,
the company invested in a coal screener to enable the provision of
specific sizes of coal which realize premium pricing in all
markets. In addition, subsequent to year end, the Company also
invested in a coal dryer to support maintaining lower moisture
levels in order to consistently produce coal with GCV greater than
5,000 kcal/kg to also support capturing greater market share where
premium prices are realized. As such, the Company is focusing its
efforts on controlling its mining practices and marketing efforts
to become primarily a provider of coal greater than 5,000 GCV where
premium pricing can be obtained. Any remaining lower grades of coal
inventory will be used to produce briquettes for domestic home
heating. The price for a comparable briquette product is
approximately US $50 per tonne in Ulaanbaatar.
Chandgana
After extensive submissions and discussions, the Mongolian
Cabinet approved the Chandgana Power Plant Project as a concession
project in January 2014. Subject to negotiations, a concession
project may be entitled to stable tax rates, favorable VAT and
customs duties, as well as other forms of government subsidies,
endorsement and support; all of which can enhance bankability and
lead to better financing options for the project.
2014
Outlook
The Company actively
pursues the remaining agreements required to proceed with project
financing of the Chandgana Power Plant Project. Prophecy also
continues to actively consider the project financing options which
include either debt, equity or a combination thereof in addition to
joint ventures with international power project developers. While
the Company is pleased with the overall progress and appreciated
support from various Mongolian authorities, it cannot offer
certainty or a definitive time frame to conclude the Concession
Agreement with the Ministry of Economic Development, or the Power
Purchase Agreement with the Ministry of Energy.
About Prophecy
Coal
Prophecy Coal Corp. is a
Canadian listed company on the Toronto Stock Exchange engaged in
developing energy projects in Mongolia.
Further information
on Prophecy Coal can be found at www.prophecycoal.com.
PROPHECY COAL
CORP.
ON BEHALF OF THE
BOARD
JOHN LEE, Executive
Chairman
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 historical 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 and 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 achievements 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 subject 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: there
being no significant disruptions affecting operations, such as due
to labour disruptions; currency exchange rates being approximately
consistent with current levels; certain price assumptions for coal,
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 estimates; labour and materials costs increasing
on a basis consistent with Prophecy's current expectations; and
that any additional required financing will be available on
reasonable terms. Prophecy cannot assure you that any of these
assumptions will prove to be correct.
Numerous factors could cause Prophecy Coal'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's
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 cash flow; exploration, development
and production risks, including risks related to the development of
Prophecy Coal's Ulaan Ovoo coal property; Prophecy Coal not having
a history of profitable mineral production; commencing mine
development production without a feasibility study; the uncertainty
of mineral resource and mineral reserve estimates; the capital and
operating costs required to bring Prophecy Coal'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 Mongolia, which is a developing
country and being subject to its local laws; the availability and
timeliness of various government approvals and licences; the
feasibility, funding and development of the Chandgana Power Plant;
protecting title to Prophecy Coal's mineral properties;
environmental risks; the competitive nature of the mining business;
lack of infrastructure; Prophecy Coal's reliance on key personnel;
uninsured risks; commodity price fluctuations; reliance on
contractors; Prophecy Coal'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; and conflicts of interest.
These factors should be considered carefully, and readers should
not place undue reliance on the 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.
Investor Relations: Prophecy Coal Corp.Mirza
Rahimani+1.604.563.0699 or
+1.888.513.6286investorrelations@prophecycoal.comwww.prophecycoal.com