Prophecy Received US$100,000 of Advance Royalty Payment from Ulaan Ovoo Mine Lease, Lessee Eyeing Mine Start
Date: Oct 17, 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 the 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 quality 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.”
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.
