Prophecy Coal Releases Q1-2011 Results
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 06/23/11 -- Prophecy Coal Corp. ('Prophecy' or the 'Company') (TSX VENTURE: PCY)(OTCQX: PRPCF)(FRANKFURT: 1P2) has filed today its interim financial results for the first quarter ended March 31, 2011. The interim condensed financial statements and accompanying Management's Discussion and Analysis ('MD&A') are available on the Company's website at www.prophecycoal.com and on SEDAR at www.sedar.com.
Highlights for the quarter include:
-- In January 2011, the Company and Pacific Coast Nickel Corp. ('PCNC')
entered into an agreement ('Arrangement') whereby PCNC will acquire
Prophecy's Nickel PGM projects (Lynn Lake and Wellgreen) by issuing 450
million common shares to the Company. The transaction closed on June 13,
2011 (see below).
-- In January 2011, the Company repaid its $5 million debt facility. The
Company is currently debt free.
-- In March 2011, the Company obtained from the Mongolian government a full
mining license for its 141 million tonne coal deposit on its Chandgana
Tal coal property in Mongolia.
-- The Company completed the quarter with $19.7 million in cash and net
working capital of $26.5 million.
Subsequent to quarter-end:
-- In April 2011, the Company submitted a formal request to the Ministry of
Natural Resources and Energy of Mongolia to build the Chandgana Power
Plant.
-- In May 2011, the Company announced the appointment of Mr. David Jan as
the Company's Chief Financial Officer.
-- In June 2011, the Arrangement with PCNC was concluded. After a stock
dividend to Prophecy shareholders and the placement of other shares in
escrow for current option and warrant holders, Prophecy will own 44.5%
of outstanding common shares and 42.5% of fully diluted common shares of
PCNC. Prophecy's Lynn Lake and Wellgreen nickel properties were sold to
PCNC. In connection with the Arrangement, shareholders of Prophecy also
approved a change of name to 'Prophecy Coal Corp.', and shareholders of
PCNC also approved a 10:1 share consolidation.
-- In June 2011, the Company announced it had secured port allocation at
the Port of Sovgavan, Russia of 300,000 tonnes per year, with the
potential to grow to 600,000 tonnes per year, for shipping coal from the
Ulaan Ovoo mine to potential offshore customers in China, South Korea
and Japan.
During the first quarter of 2011, Prophecy incurred a loss of $2,555,772 or $0.02 per share, compared to a net loss of $423,000 or $0.01 per share in the same quarter a year ago. The increase in net loss is primarily due to increased activities as a larger company after the acquisition of Prophecy Holdings Inc and Northern Platinum Ltd.
Selected financial information
C$ 000's As at March 31, 2011 As at December 31, 2010
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Working capital (1) 26,462 35,812
Total Assets 106,832 110,184
Total Equity 105,918 102,739
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(1) Working capital = current assets less current liabilities
Operational Highlights:
Ulaan Ovoo coal mine: Since the mine commenced operations November 2011, it has removed over 1.5 million bank-cubic-metres of waste in producing nearly 230,000 tonnes of thermal coal. The Company also trucked approximately 20,000 tonnes of coal to the stock yard at the Sukhbataar rail station, ready for export shipping. The Company is working with its mining contractor to optimize mine plans for 2011.
Chandgana Power Plant Project: the Company continues to make progress in the development of the Power Plant at Chandgana. During the first quarter of 2011, the Company received a mining license for 141 million tonnes of coal. Subsequent to quarter-end, Prophecy submitted a feasibility study to the Mongolian Ministry of Natural Resources and Energy for approval. The Company expects to receive approval for the power plant permit late in the third quarter 2011. Meanwhile, the Company has commissioned a bankable feasibility study and also commenced discussions with several international investment bankers for power plant financing.
John Lee, Chairman of Prophecy Coal, states, 'The Company continues to make progress on several fronts. Mining at Ulaan Ovoo is progressing well as are the discussions on the mine's coal off-take agreements. Meanwhile, we continue to make significant progress towards developing the Company's flagship operation, the Chandgana Power Plant. And lastly, the spinout of the Company's nickel and PGM assets allows Prophecy to become a company purely focused on its Mongolian coal assets. The company ends the quarter with over $100 million in total assets on the balance sheet.'
The Company also wishes to announce the resignation of John McGoran, P.Geo from the board of directors. With the spin-out of the Canadian nickel and PGM assets completed, Mr. McGoran has joined the board of Prophecy Platinum Corp (formerly PCNC). The Company would like to thank Mr. McGoran for his service and expects that his guidance will be a key element in the growth of Prophecy Platinum.
About Prophecy Coal
Prophecy Coal Corp. (formerly Prophecy Resource Corp) is a Mongolian coal company engaged in developing energy projects. The company controls over 1.4 billion tonnes of surface minable thermal coal resources on two coal properties in Mongolia. Prophecy Coal's Ulaan Ovoo thermal coal mine is in preproduction and its Chandgana mine mouth power plant is currently being permitted. Prophecy Coal also owns equity stakes in Prophecy Platinum Corp., Victory Nickel Inc. and Compliance Energy Corp. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Further information can be found at www.prophecycoal.com.
ON BEHALF OF THE BOARD OF DIRECTORS of Prophecy Coal 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 Coal Corp.
David Jan
Chief Financial Officer
1-800-358-5865
djan@prophecycoal.com
www.prophecycoal.com