Prophecy coal releases Q1-2011 results
VANCOUVER, BRITISH COLUMBIA–(Marketwire – June 23, 2011) – 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|
|Working capital (1)||26,462||35,812|
|(1)||Working capital = current assets less current liabilities|
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.