Prophecy Resource Corp. ("Prophecy" or the "Company") (TSX VENTURE:
PCY)(OTCQX: PRPCF)(FRANKFURT: 1P2) is pleased to provide the
following update on its open pit coal operation at its 100% owned,
Ulaan Ovoo mine in Mongolia:
Mining by Leighton Asia Limited
Year to date, under contract to Prophecy, Leighton has removed
1,289,300 bcm of topsoil and overburden thereby exposing 333,760
tons of in-situ coal of export-quality (5,200+ kcal/kg, 0.5%
Sulphur, 5% ash) coal ready to be mined. Prophecy is working with
Leighton to optimize mine plans for 2011 and 2012 at a fixed mining
cost.
5,000 tons of export quality coal ready at Sukhbaatar Railway
Siding April 1
Having secured a rail siding at Sukhbaatar covering an area of
23,770 sq meters, Prophecy has commenced the trucking of export
quality coal from Ulaan Ovoo to the Sukhbaatar railway siding that
is 120km from the mine by road. The coal has the following
qualities on an as-received (AR) basis:
Heating value: 5,200 kcal/kg
Total sulphur: 0.5%
Ash: 5%.
5,000 tons of export coal will be on stock ready for rail
loading by 1 April 2011. All export coal will be customs cleared at
Sukhbaatar station and then freighted by rail to the Russian
domestic market as well as to the Russian Eastern Sea Coal
Terminals for shipment to overseas customers.
Coal sales and production forecast
Since commissioning the Ulaan Ovoo mine in November 2010,
Prophecy has transported and sold 27,597 tons of 3,500 kcal/kg coal
to local power plants and companies in Mongolia. The Company was
pleased to support local communities this winter.
Further, regarding international sales, which will be the
principal driver to Prophecy's future margin and cash flow, the
Company anticipates exporting approximately 520,000 tons of coal in
2011 with the following production schedule:
March - 5,000 tons
April - 20,000 tons
May - 35,000 tons
June - 40,000 tons
July - 50,000 tons
August - 60,000 tons
September- 78,000 tons
October- 78,000 tons
November - 78,000 tons
December - 78,000 tons
Having experienced a slow start due to New Year and Lunar
Festivals, Prophecy expects to significantly ramp up production and
reach a target rate of 1 million tons per annum by the end of
2011.
Equipment Purchase Update
In January, Prophecy purchased its entire auxiliary equipment
and mining fleet on site. consisting of 1 (one) CAT 385C Excavator,
1 (one) CAT D8R Dozer, 3 (three) Cat 773D Dump trucks, 1 (one) CAT
160 H Grader, and 1 (one) CAT 928G Loader plus additional
miscellaneous equipment. This purchase has eliminated the high
costs associated with equipment leasing and rental.
In addition to the on-site equipment buyout, Prophecy has
ordered the following mining and transport units with delivery
dates between March and June of 2011.
1 (one) CAT 390 Excavator,
3 (three) CAT 773D Dump Trucks
1 (one) CAT D8R Dozer and
1 (one) CAT 160K Grader.
18 (eighteen) Scania 32m30t Tipper trucks,
2 (two) Liebher 580 Loaders and
2 (two) by Nissan Water Trucks. (for purpose of road maintenance)
The purchase of Scania trucks will enable Prophecy to more
efficiently schedule coal deliveries and eliminates costly contract
trucking. With the combined equipment purchases, Prophecy expects
to reach production rate of 1 million tonne per year exit 2011.
Coal Off take/ Sales Agreement
Prophecy is in active discussion with several International and
Russian coal customers. The priority is to export first shipment of
10,000-30,000 tons of quality 5,000+ kcal/kg coal through the
Sukhbaatar rail station into Russia. Successful execution of this
trial shipment will pave the way for rail coal deliveries to the
Russian Eastern Ports to fulfill potential off-takes agreements.
Meanwhile, Prophecy continues its non-exclusive discussion
regarding logistics services agreement with JUST group.
Ronnie van Eeden, VP of Prophecy Mining Operations commented
today that: "Prophecy has made great strides in the last 90 days
towards profitable production at Ulaan Ovoo. John Lee, Chairman of
Prophecy added: "Prophecy's objective is to reach positive
operating cash flow in Q2 of 2011 and increase production rate to1
million ton per annum at the end of 2011."
About Prophecy Resource
Prophecy Resource Corporation is an internationally diversified
company engaged in developing energy, nickel and platinum group
metals projects. The company controls over 1.4 billion tons of
surface minable thermal coal in Mongolia (839 Mt Measured, 579 Mt
Indicated). Prophecy's Ulaan Ovoo coal mine is fully commissioned.
In Canada Prophecy owns Wellgreen PGM Project in Yukon, Lynn Lake
Nickel Sulphide Project in Manitoba, and equity stakes in Victory
Nickel Inc. and Compliance Energy Corp. On February 17, Prophecy
Agreed to sell its PGM Nickel assets to Pacific Coast Nickel Corp.
for 450 million Pacific Coast Nickel shares. Mineral resources that
are not mineral reserves do not have demonstrated economic
viability.
Prophecy has commenced mining development activities on the
Ulaan Ovoo coal mine without having completed a feasibility study.
There are certain risks and uncertainty associated with commencing
production without a feasibility study. The deposit has not been
explored, developed and analyzed in sufficient detail to conclude a
feasibility study and may ultimately be determined to lack one or
more geological, engineering, legal, operating, economic, social,
environmental, and other relevant factors reasonably required to
serve as the basis for a final decision by a financial institution
to finance the development of the deposit for mineral production.
Additionally, the outcome of the feasibility study may not be
positive or optimal for the production scale being initiated.
ON BEHALF OF THE BOARD OF DIRECTORS of Prophecy Resource
Corp.
John Lee, Chairman
Forward Looking Statements: This news release includes certain
statements that may be deemed "forward-looking statements". All
statements in this release, other than statements of historical
facts, including, without limitation, statements regarding future
plans and objectives of the companies are forward-looking
statements that involve various risks and uncertainties. Although
Prophecy believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those in the
forward-looking statements. Forward-looking statements are based on
a number of material factors and assumptions. Factors that could
cause actual results to differ materially from those in
forward-looking statements include general economic, regulatory,
market or business conditions, and other risks detailed herein and
from time to time in the filings made by the companies with
securities regulators. Mineral exploration and development of mines
is an inherently risky business. Accordingly the actual events may
differ materially from those projected in the forward-looking
statements. For more information on Prophecy and the risks and
challenges of its business, investors should review filings that
are available at www.sedar.com.
This press release does not constitute an offer to sell or a
solicitation to buy any of the securities in the United States. The
securities have not been and will not be registered under the
United States Securities Act of 1933, as amended ("the U.S.
Securities Act") or any state securities law and may not be offered
or sold in the United States or to U.S. Persons unless registered
under the U.S. Securities Act and applicable state securities laws
or an exemption from such registration is available.
"Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release."
Contacts: Prophecy Resource Corp. Scott Parsons +1.604.642.2625
ext. 106 Prophecy Resource Corp. Paul McKenzie +1.604.642.2625 ext.
107 Prophecy Resource Corp. John Lee +1.800.851.1528
john@prophecyresource.com www.prophecyresource.com
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