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An update on the Prophecy Coal Corp. (TSX:PCY,OTCQX:PRPCF,FWB:1P2) EPC (Engineering, Procurement, Construction), PPA (Power Purchase Agreement), and project financing in connection with its proposed Chandgana power plant project in Mongolia: 4 Chinese EPC companies have reviewed information and conducted project site visits in Mongolia, and Prophecy working closely with a working commission on the PPA.
As quoted in the press release:
In the past 90 days, 4 Chinese EPC companies have reviewed information in our project data room and conducted project site visits in Mongolia. In addition, there are several other international companies that have expressed written interest in bidding on the required EPC contracts. Prophecy has prepared and distributed an RFP (Request For Proposal), and expects to have key EPC proposals by March 31, 2012. As part of any successful proposal, an EPC firm is expected to bring in a lender for debt financing to contribute to the overall project financing. The Company expects to conclude EPC selection in Q2, 2012.
Since obtaining the power plant construction license in November 2011, Prophecy has been in close dialog with the Mongolian Ministry of Natural Resources and Energy regarding the drafting and signing of the Chandgana PPA. To date, there have been several meetings between Prophecy and officials in various departments within the Ministry. In January, a working commission on the PPA was constituted and endorsed by the Minister. Prophecy is working closely with the commission towards a fair and balanced PPA. The goal is to conclude the PPA and EPC selection at the same time.
Separately, Prophecy has met in Beijing with Chinese government-sponsored policy banks currently involved in Mongolian projects, as well as private equity firms engaged in international energy production projects. IPP (independent power plant) projects in Asia, offering stable yields, have garnered interest from institutional investors and Prophecy expects Chandgana to be similarly viewed. Whilst not a certainty, Prophecy is optimistic that upon signing a successful PPA, the Company can secure the necessary equity funding in 2012 to move the project towards construction in Q2, 2013.
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