The PEA used an initial mine gate price of $US17.70 per tonne, a 30-year mine life and 100% equity financing to produce the pre-tax financial model.

Prophecy’s wholly owned subsidiary Chandgana Coal intends to mine coal from its Chandgana Tal coal licences in central Mongolia.

The coal would be supplied to the proposed 600 megawatt Chandgana mine-mouth power plant that is planned to be operated by Prophecy subsidiary Prophecy Power Generation.

The two Chandgana Tal mining licences contain an estimated 124 million tonnes of coal resources in the measured category.

The average in-place coal gross calorific value is 3306 kilocalories per kilogram.

After a short ramp-up the mine is expected to produce 3.5 million tonnes per annum through a 30-year life.

The aggregate coal seam thickness is as great as 50m and the overburden is relatively thin.

Prophecy expects an average strip ratio of 0.7:1 over the life of the mine.

It will be a surface mine located 2km from the proposed power plant.

The life of mine average total cash cost of sales is estimated to be $12.63/t, which includes fees for a contract miner with owner equipment.

The initial pre-production costs are estimated at $31 million, including a 10% contingency.

According to the pre-tax financial model, it should be paid back within four years.

There is potential to scale up the Chandgana power plant and source additional coal from Chandgana Coal’s nearby Khavtgai Uul coal deposit.

An independent study by Asian Development Bank suggests a Mongolian power supply deficit of 600MW by 2016 and 900MW by 2019.

The PEA was prepared by John T Boyd Co.

Prophecy has also announced it is postponing the purchase of coal assets from Thethys Mining until the Mineral Resources Authority of Mongolia accepts the transfer application.

The company originally announced that purchase on June 18.