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Prophecy Contracts Leighton For Q3 Coal Production At Ulaan Ovoo, Mongolia Source from www.prophecyresource.com, Dated: May 19, 2010  VANCOUVER, B.C. - May 11, 2010, : Prophecy Resource Corp. (TSX.V: PCY; OTC: PCYRF; Frankfurt: 1P2) announced today that it has entered into a Mine Services Agreement with Leighton Asia Limited for the infrastructure establishment, equipment leasing, and mining operation at the Ulaan Ovoo coal deposit in northern Mongolia.
Ulaan Ovoo site establishment will commence in July 2010 to ensure that the commissioning of the 250,000 tonnes starter pit will take place as planned as of August 2010 with 57,500 tonnes in the first month ramping up to 100,000 tonnes per month by December 2010. The initial equipment suite will comprise one Caterpillar 385 excavator (85 tonne bucket capacity) and three Caterpillar 773D (50 tonne) dump trucks.
Prophecy expects to incur total cash payments to Leighton of $3.8 million for this contract in 2010. Prophecy currently has over $7.5million in cash.
Leighton Asia Limited is a wholly owned subsidiary of the world’s largest contract miner, and Australia’s largest project development and contracting group, the Leighton Group. It is the operating entity for the Asia region covering Hong Kong, Macau, Indochina, Indonesia, Philippines, Guam, China and Mongolia.
Leighton Asia have been operating across Asia for 35 years in all facets of mining including mine development, operation and management, resource optimisation, mine planning, cost estimating, machine maintenance ,mine infrastructure, crushing, processing and materials handling. Its strength lies in the ability to develop competitive, innovative, practical solutions for its clients.
2011 Target Mine Plan
In the second half of 2010, Leighton will undertake further mine planning to extract 2.0 million tonnes of coal for calendar year 2011. The optimal mining equipment suite will be configured based on the 2010 starter pit experience and a detailed mine plan by Wardrop Engineering’s Preliminary Economic Assessment (PEA). Wardrop’s PEA is expected in June 2010. Amortisation of the capital outlay will be spread over a 6 year time window and included in the delivered cost per ton. It is expected that the increased production volume will cause a decrease in the total cash cost per tonne by approximately 20%.
Close of 2% Ulaan Ovoo NSR
Prophecy is also pleased to have extinguished the 2% Net Smelter Return (NSR) held by Dunview Services Limited, a private British Virgin Islands company. Prophecy paid Dunview US$130,000 in cash and 2,000,000 Prophecy shares, subject to a 4 months hold.
Ulaan Ovoo Mining License
The Mongolian government has granted the project a 30 year mining license that can be extended by an additional 40 years. The project has met Mongolian environmental approvals as per the Mongolian Ministry of Nature and the Environment which approved a Detailed Environmental Impact Assessment (DEIA) and Environmental Protection Plan (EPP). As the last step to commence mining, Prophecy filed for its Ulaan Ovoo operating permit in April including necessary license, mine plan, and environmental approvals. Prophecy is advised by its Mongolia counsel and the Minerals Resources and Petroleum Authority that current minerals licenses and operating permits are not affected by the President’s recent order to freeze exploration license grants. The company expects to obtain the permit by summer.
John Lee Chairman of Prophecy Resource Corp stated today that: "Leighton Asia is the world’s premier contract miner and we look forward to a long and fruitful partnership. We are moving at a rapid pace to commence coal production from Ulaan Ovoo this year in a responsible manner. We are also in excellent standing with the local and the national governments of Mongolia. The company is pleased to contribute to the local economy by supplying our coal to domestic coal-fired power plants and schools and hospitals in need. "
The material in this news release has been reviewed and approved by Danniel Oosterman P. Geo, a Prophecy geologist and also a Qualified Person as defined by NI 43-101. For more information about Prophecy, please contact Scott Parsons at +1.604.642.2625 ext. 106 or John Lee at +1.800.851.1528
ON BEHALF OF THE BOARD OF DIRECTORS
Prophecy Resource Corp.
"JOHN LEE"
John Lee
Chairman
About Ulaan Ovoo
Prophecy has 100% interest in the 208.8 million tonne Ulaan Ovoo project that features Bituminous (5,204 kcal/kg), low ash (12.46%), low sulphur (0.40%) thermal coal suitable for export markets. The deposit features single massive coal seam 45-80 m thick with an average strip ratio of 2:1 and requires no washing for the first 50 million tonnes of production. The project is located within 10 km of the Russian border, northern Mongolia and is 120km (75 miles) east of the Central Mongolian Railroad linking the project to the vast coal markets of Russia and Asia.  Truck Route Click to enlarge
About Prophecy
Prophecy controls over NI-43-101 compliant Measured and Indicated mineral resources of 232 million pounds of nickel, 1 billion tonnes of coal and 116 million pounds of copper as well as inferred resources of 82 million pounds of nickel, 500 million tonnes of coal, and 593 million pounds of copper. The Company's Ulaan Ovoo Coal Project, Mongolia is expected to be in production this year. Prophecy will hold properties with significant exposure to vanadium and titanium. All Prophecy's coal assets are located in Mongolia with its remaining assets located in Canada. The Company is currently reviewing additional opportunities for growth. Mineral resources that are not mineral reserves do not have demonstrated economic viability. 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. |
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Finance Minister of Mongolia ..Hommer Simpson Source from www.stockhouse.com, Dated: May 01, 2010  Finance Minister explains proposed graduated royalty rates The Government yesterday decided that a bill to amend the Law on Mineral Resources should be submitted to Parliament for approval. The draft proposes graduated royalty rates to replace the 68 percent windfall tax. Minister for Finance S.Bayartsogt explained the provisions in the draft to media and then answered questions. The draft was prepared after considering suggestions from the Mongolian National Mining Association and entrepreneurs and companies operating in the mining sector. Not all of these were accepted. What does the Government want? The Finance Ministry studied many types of taxes and then formulated the present draft. There will be a basic five percent royalty fees on every mineral commodity. This will be raised by one percent, up to a maximum of 5%, as commodity prices increase. When a ton of copper ore costs USD 5,000 or less, the royalty payable will be the basic 5 percent. When the price reaches USD 6,000, the royalty will become six percent. Rising gradually, the royalty will be 10% when prices exceed USD9,000. As for gold, the basic rate will apply until price per ounce is below USD 900. It becomes six percent when the price reaches USD1,000, seven percent at USD1,100, eight percent at USD1,200 and 10 percent if the price exceeds USD1,200. For zinc it will be 5 percent for below USD 2,000, 6 percent at USD2,500, 7 percent at USD 3,000, 8 percent at USD 3,500 and so on. Royalty on molybdenum will be 6 percent when the price per ton is USD40,000, 7 percent when USD45,000, 8 percent when USD50,000, 9 percent when USD55,000, and 10 percent when it crosses USD 55,000. Coal will be in two groups - raw and processed. In the case of the first, royalty will be 5 percent when the price is USD 25 per ton, six percent when USD35 per ton, 7 percent when USD 45, 8 percent when USD 55, 9 percent when USD65 and 10 percent if the prices exceeds USD65 per ton. As for coked coal, it will be 5 percent for price below USD100 per ton, 6 percent for USD130, 7 percent for USD160, 8 percent for USD190, 9 percent for USD210 and 10 percent if the price is above USD 210. He said the royalty graduation will not affect the Oyutolgoi mine. |
Mongolia says no more mining permits until new law * Halts issuance and transfer of mineral licenses
Source from www.reuters.com, Dated: April 28, 2010* President calls for new law on mineral licenses By Euan Rocha TORONTO, April 27 (Reuters) - Mongolia's president has ordered a halt to the issuance and transfer of mineral exploration licenses until the government can enact a stricter law on mining investment. The directive, issued by President Tsakhia Elbegdorj and posted on his website, may rekindle some of the uncertainty that for years surrounded mining investment in an Asian country known for its rich mineral deposits. Last year's passage of a long-awaited law allowing Rio Tinto (RIO.AX) (RIO.L) and Ivanhoe Mines (IVN.TO) to proceed with the $5 billion Oyu Tolgoi copper and gold mine had paved the way for foreign investment in the mining sector. However, the president in a new order, noted that almost half the exploration license holders neglect their duty to provide their annual exploration reports, while many are only using the permits as money-making tools and not investing in any active exploration. The freeze on new mining permits will remain in place, until a new law on mineral licenses is adopted by the government, according to the directive. here The announcement comes just days after Mongolia's Nuclear Energy Agency (NEA) invalidated the mining and exploration licenses of two subsidiaries of Canadian exploration company Khan Resources Inc (KRI.TO), citing violations. [ID:nSGE63C0HN] It was not immediately clear how long it would take to pass a new law, but the directive calls on the government to hold public discussions on the matter in June. "I order the government to regularly report to me on the status of the implementation and the ways it resolves the issues," said Elbegdorj. "It is important to urgently develop the law on mineral licenses and have it publicly discussed." The new directive could hinder Khan Resources' efforts to get its uranium mining and exploration licenses reinstated, as the presidential order also applies to any licenses that have been revoked. In December, Khan rejected an unsolicited bid from Russian state uranium miner ARMZ. But earlier this year, it agreed to be bought by a subsidiary of China National Nuclear Corp for C$56.5 million. [ID:nSGE6102JB] [ID:nSGE5BE0K4] A number of Canadian-listed companies including Ivanhoe Mines, SouthGobi Energy (SGQ.TO) and Entree Gold Inc (ETG.TO) have operations in Mongolia. Mongolia, which is potentially sitting on vast amounts of uranium, coking coal, copper and other minerals, has been actively working on driving growth by boosting foreign investment in the mining sector. Last year, Mongolia finally wrapped up a deal to develop one of the world's biggest untapped copper and gold deposits, signing off on Rio Tinto (RIO.AX) (RIO.L) and Ivanhoe's $5 billion Oyu Tolgoi project. Mongolia owns a 34 percent stake in the project. [ID:nN31206615] Elbegdorj said that while he remains focused on the development and protection of natural resources, his directive seeks to ensure that that the people of Mongolia remain the true owners of the countries mineral wealth. At this time, the presidential directive apparently won't affect the operations of those companies that have valid exploration permits. But it is unclear whether the government intends to review the validity of existing permits going forward. Mongolia has thus far issued 4,706 valid mineral licenses of which 3,610 are exploration permits and 1,096 are mining licenses. The directive noted that most of the permits currently held by companies and individuals operating in Mongolia are being held in violation of existing laws. Shares of Ivanhoe, SouthGobi, Entree Gold and Khan Resources were all trading lower on the Toronto Stock Exchange on Tuesday. (Reporting by Euan Rocha; Editing by Frank McGurty) |
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Khan Resources says Mongolia cancels units' licenses  * Nuclear agency invalidates mining, exploration licenses
Source from www.reuters.com, Dated: April 15, 2010* Khan to challenge decision in court * Shares sink 40 pct (Recasts; adds details, CEO comment, updates share movement) By Ashutosh Joshi BANGALORE, April 13 (Reuters) - Khan Resources Inc (KRI.TO) said Mongolia's Nuclear Energy Agency (NEA) invalidated the mining and exploration licenses of two of its units citing certain violations, sending its shares down 40 percent, their largest ever fall on a single day. The Canadian explorer, which has been facing trouble from the Mongolian authorities with regard to its uranium projects in the country, said it intends to challenge the decision through all legally available means, including international arbitration. Khan, which has agreed to be bought out by a unit of China National Nuclear Corp (CNNC), said the Mongolian agency invalidated the mining license of Central Asian Uranium Company LLC (CAUC) -- which holds a 58 percent share of the Dornod uranium deposit in Mongolia, where Russian and Mongolian state concerns each hold a 21 percent stake. Toronto, Ontario-based Khan, which in December rejected an offer from the Russian uranium concern AtomRedMetZoloto (ARMZ), also had the exploration license of its fully owned unit, Khan Mongolia, invalidated, with effect from Oct. 8. "The fact that we have found a Chinese partner has probably upset the Russians and we think the Russians are putting a lot of political pressure on the Mongolians," Khan Resources Chief Executive Martin Quick said by phone. The NEA Website said it had not renewed the licenses and had intimated Khan Resources and CNNC on its decision. Under Mongolia's nuclear energy law, the NEA has power to invalidate licenses, if companies holding such licenses fail to tell the regulator about changes in their ownership structures within a stipulated time, the NEA said in a statement. It was not immediately clear if Khan and CNNC had submitted to the NEA the details of the ongoing takeover deal, which is expected to be completed by the end of May. CEO Quick said the company was looking to change its ownership structure to comply with the law. He said the NEA canceled the licenses on the grounds that the company did not register its deposit reserves with a committee of the Mongolian government. "We've had our reserves submitted to them now for the last two years and have been waiting for them to meet and approve," Quick said. TROUBLED PROJECT Dornod, a deposit once explored by Soviet geologists, has uranium reserves of about 22,000 tons and this could significantly increase with further exploration. The project initially attracted participation from Khan Resources, ARMZ and Mongolia's MonAtom LLC. Khan Resources' efforts to renew its licenses for the project following the Mongolian government's decision to regulate uranium mining has been far from smooth, with its licenses being suspended and subsequently restored earlier this year. Khan Resources' shares, which have surged about 180 percent in the last six months, were down 35 percent, or 30 Canadian cents, at 55 Canadian cents Tuesday afternoon on the Toronto Stock Exchange. They touched a low of 51 Canadian cents earlier in the session. (Additional reporting by Arnika Thakur in Bangalore; Editing by Don Sebastian) |
Mining companies and tax authorities trade charges Source from english.news.mn, Dated: April 12, 2010 Participants at Thursday’s conference on methods to export mining products were agreed about the need to follow international practices. They also felt it would be better to negotiate prices than to stick to one initially quoted. Such intransigence may have negative effects.
Mining companies have to pay a five percent tax on the export value. Many complained that the tax authority often calculated the value arbitrarily, not taking into account several costs exempted in international practice, causing loss to exporting companies. They also criticized the Government for not amending the 88th protocol. At present, only the Central Customs Laboratory is authorized to analyze the ore to be exported, but the miners felt this can be done in the special laboratories in the Erdenet and Tsairtmeneral factories.
The tax authorities defended themselves strongly, saying mining companies operate only for profit and try to pay as little tax as possible. Some observers at the conference agreed with this and said the mine usage fees should not be seen as a tax. According to D.Chilkhaajav, expert from the General Authority for Professional Monitoring, the companies must pay the five percent fee, no matter what the cost of production was.
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