Vancouver, British Columbia, May 25, 2012 - Prophecy Coal (TSX:PCY) (OTCQX:PRPCF) (Frankfurt:1P2) has signed an offtake agreement for coal from one of the company's coal projects in Mongolia. The company has entered into a coal sales contract with a local Mongolian direct reduced iron (DRI) manufacturing plant, for the sale of 22,100 tonnes of thermal coal from the company's Ulaan Ovoo mine.
InvestmentPitch.com has produced a "video news alert (http://www.youtube.com/watch?v=cvFaCqjTUG0)" which provides a summary of this news. If this link is not enabled, please visit www.InvestmentPitch.com (http://www.investmentpitch.com/) and enter "Prophecy Coal" in the search box.
The buyer has indicated that this initial purchase is to meet shortfalls from current suppliers and that it would eventually like to increase the supply from Prophecy to 300,000 tonnes on an annual basis. The buyer currently purchases in excess of 850,000 tonnes of coal annually from various local suppliers.
Prophecy's pricing is competitive to offers received from Russia, and sets a benchmark for Prophecy to continue offtake discussions with other local industries in a surging Mongolian economy.The Mongolian government forecasts 19% GDP growth for 2013.
Prophecy's high quality thermal coal (NAR 5100 kcal/kg) is ideal for the production of direct reduced iron, also known as sponge iron. DRI is produced from direct reduction of iron ore in the form of lumps, pellets or fines, by a reducing gas produced from burning coal. The coal must be lumpy and of high calorific value, however temperature does not have to reach blast furnace levels, hence coking coal is not required. The reducing gas from the coal is a mixture majority of hydrogen (H2) and carbon monoxide (CO) which acts as a reducing agent. This process of directly reducing the iron ore in solid form by reducing gases from coal technology has been developed to overcome some of the high costs and difficulties of conventional blast furnaces.
DRI product is one of the chief raw materials in steel-making, as it has higher qualities and advantages compared to scrap irons and pig irons. DRI products are in high demand and have been quoted in China at more than US$300 a tonne.
John Lee, Chairman and CEO of Prophecy stated, "As we move past the mine establishment phase at Ulaan Ovoo, we anticipate steadily decreasing operating cost and increasing sales quantity and price. Our goal is to make Ulaan Ovoo operations cash flow positive in the near term without relying on Russian or Chinese export markets."
The company continues to make progress on opening the Zeltura border crossing, approximately 10 kilometres from the Ulaan Ovoo mine, to facilitate export to Russia, which would then increase the total demand for Ulaan Ovoo coal past 1 million tonnes a year.
Prophecy's other Mongolian project, a proposed 600 mega watt mine-mouth power plant, adjacent to the company's Chandgana coal deposit, has been permitted by the Mongolian government. Negotiations on financing, power purchase agreement and construction management are underway.
Prophecy Coal trades at $0.25, and with approximately 225 million shares outstanding, is capitalized at $56 million.
For a more information on Prophecy Coal, and the company's other projects, please visit their website www.prophecycoal.com (http://www.prophecycoal.com), phone David Brook 800-358-5865 or email firstname.lastname@example.org (mailto:email@example.com).
InvestmentPitch.com is a multimedia company that provides a combined solution for creating and hosting financial video content, and distributing it across multiple platforms to investors and financial professionals. InvestmentPitch.com specializes in producing short three minute videos based on news releases and research reports.
Barry Morgan, CFO
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: InvestmentPitch via Thomson Reuters ONE