Source: Mining Weekly

Prophecy Coal, the junior that graduated to the TSX main board last month, received the green light from the Mongolian government to build its 600-megawatt Chandgana coal-fired power plant in the east of the country.

The license was the first the government had issued for that size power plant, and sets the project up to become the first new privately owned-coal fired plant in the country when it starts sending out electricity in early 2016.  Growth in the mining sector may drive power consumption to nearly double by 2015.

“There is an understanding among all stakeholders that Mongolia, being one of the world's fastest growing economies, needs additional power,” Prophecy chairperson and Chief Executive Officer John Lee said.

The next steps for the company before production includes completing a feasibility study, which it anticipates by the end of the year, followed by a power purchase agreement in the first quarter of 2012. Prophecy then hopes to conclude project financing negotiations in the third quarter of next year and start building the Chandgana power plant and the mine that will feed it in the first quarter of 2013. The first 150 megawatt unit is planned to start producing power by January 2016. Prophecy's Chandgana Tal and Chandgana Khavtsgait coal deposits will supply coal for the plant.

The company expects capital costs to run between USD 600 million and USD 800 million, though the feasibility study would provide firm estimates.