2. Disclaimer
The information contained in this presentation (“Presentation”) has been prepared by Prophecy Resources Corp. (“Company”) and is being communicated for general background informational purposes only. The
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become apparent either during, or at any time after this Presentation. This Presentation contains or incorporates by reference “forward-looking information” which means disclosure regarding possible events, conditions,
acquisitions, or results of operations that is based on assumptions about future conditions and courses of action and includes future oriented financial information with respect to prospective results of operations, financial
position or cash flows that is presented either as a forecast or a projection, and also includes, but is not limited to, statements with respect to the future financial and operating performance of the Company any of its
subsidiaries and other considerations as set out in more detail in the documents filed by the Company with the Toronto Stock Exchange. Often, but not always, forward-looking statements can be identified by the use of
words such as “plans”, “proposes”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or
state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Company and/or its current and proposed subsidiaries to be materially different from any future results, performance or achievements expressed or implied by
the forward-looking statements. Forward-looking statements contained herein are made as of the date of this Presentation and the Company disclaims any obligation to update any forward-looking statements, whether as
a result of new information, future events or results or otherwise. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein. In addition, investors are
cautioned that this presentation may contain information about mineral properties adjacent to or near the Company’s properties and in which the Company has no right or interest. Mineral deposits on such adjacent or near
properties are not indicative of the mineral deposits, if any, which may be found on the Company’s properties. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Neither the TSX
nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release. Certain statements contained in this Presentation, including
statements which may contain words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", or similar expressions, and statements related to matters which are not historical facts, are forward-looking
information within the meaning of securities laws. Such forward-looking statements, which reflect management’s expectations regarding Prophecy’s future growth, results of operations, performance, business prospects
and opportunities are based on certain factors and assumptions and involve known and unknown risks and uncertainties which may cause the actual results, performance, or achievements of the Company to be materially
different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Forward-looking statements in this Presentation include, without limitation, statements regarding
the development and production of the Company’s Chandgana Power Plant and other information concerning possible or assumed future results of operations of Prophecy. Material risks and uncertainties which could
cause actual results to differ materially from such forward-looking statements include, but are not limited to, exploration, development and production risks, risks related to the Company not having a history of mineral
production, risks related to the development of the Chandgana Power Plant, risks related to the uncertainty of mineral resource and mineral reserve estimates, the cyclical nature of the mining industry, risks related to the
availability of capital and financing on acceptable terms, commodity price fluctuations, currency exchange rate and interest rate risks, risks associated with operating in foreign jurisdictions, uninsured risks, regulatory
changes, defects in title, availability of personnel, materials and equipment on a timely basis, accidents or equipment breakdowns, delays in receiving government approvals, and unanticipated environmental impacts on
operations and costs to remedy same. Assumptions underlying our expectations regarding forward-looking statements or information contained in this Presentation include, among others, that all required third party
contractual, regulatory and governmental approvals will be obtained for the development, construction and production of the Company’s properties, there being no significant disruptions affecting operations, whether due to
labour disruptions, currency exchange rates being approximately consistent with current levels, certain price assumptions for coal, prices for and availability of diesel, parts and equipment and other key supplies remaining
consistent with current levels, production forecasts meeting expectations, the accuracy of the Company’s current mineral resource and reserve estimates, labour and materials costs increasing on a basis consistent with
the Company’s current expectations and that any additional required financing will be available on reasonable terms. Although Prophecy has attempted to identify important risks and factors that could cause actual actions,
events or results to differ materially from those described in forward-looking statements, there may be other factors and risks that cause actions, events or results not anticipated, estimated or intended. Accordingly, readers
should not place any undue reliance on forward-looking statements as such information may not be appropriate for other purposes. We disclaim any intention or obligation to update or revise any forward looking
statements, whether as a result of new information, future events or otherwise, except as required by law. Last updated January 02/02/ 2012
2
3. • Leading energy play, focus on developing energy solutions for Mongolia
• 1.4* billion tonnes of coal in two distinct properties in Mongolia
• Ulaan Ovoo ($30million+ invested): Largest independent coal supplier to
Mongolia
• Chandgana ($10million+ invested): 600MW Mine Mouth Power plant fully
permitted, 1st of its kind in Mongolia
• Strategic locations to supply power to neighboring China and Russia
• As of Feb 19th, 2012, 90% of Prophecy Coal’s market cap is attributed to its
equity share position in Prophecy Platinum Corp (TSX.V: NKL)
*Ulaan Ovoo: 174 million tonnes of measured and 34 million tonnes of indicated coal. Ulaan Ovoo’s resource numbers are from the Behre Dolbear & Company (USA), Inc report referenced in the Dec 2010, 43-101 Prefeasibility Study by Wardrop Engineering. Chandgana consists of two
properties-Chandgana Tal and Chandgana Khavtgai. Chandgana Tal consists of 141 mt of measured resource. Chandgana Khavtgai consists of 509 mt measured and 539 mt indicated resource. Chandgana Khavtgai’s resource estimates are based on the September 2010 NI 43-101 Chandgana
Khavtgai Technical Report by Kravits Geological Services, LLC. The report is authored by Christopher M. Kravits CPG, LPG of Kravits Geological Services, LLC., who is an independent Qualified Person under NI 43-101. And the Chandgana Tal resource estimate is also based on the September
2007 NI 43-101 Chandgana Tal Technical Report by Behre Dolbear & Company (USA), Inc..The report is authored by Mr. Gardar G. Dahl, Jr., CPG of Behre Dolbear & Company (USA), Inc., who is an independent Qualified Person under NI 43-101.
**As of 14/01/12 3
4. Shares 202 Million (basic); 237 million (diluted)
Market
~100 million CDN*
Capitalization
Ownership 50% Retail, 30% Institutional, 20% Management & Directors
$92 million in Prophecy Platinum (TSX.V-NKL) 22.5m
Investment
shares, Victory Nickel 36.6m shares, Compliance Energy
Portfolio
5m shares
Canadian Office: Vancouver, BC Canada
Locations
Mongolian Office: Ulaanbaatar, Mongolia
*As of 02/19/12 4
5. John Lee, CFA – Chairman / CEO
• Founder of Prophecy Coal Corp. and Prophecy Platinum Corp.
Paul Venter – VP Energy Operations & Director
• 30 years of experience with BHP and Eskom in the mining, power
generating, and transport industry
Ronnie Van Eeden – VP Mining Operations & Country Manager - Mongolia
• 34 years of experience in coal mining and related industries including
holding senior Eskom management positions
Jivko Savov - Director
• Deputy CEO of En+, company owned by Oleg Derispeska
• Former Chairman of Rusal, Chairman of EuroSibEnerg
Chuluunbaatar Baz - Director
• President of Monnis, with 1,000+ employees, top 10 company in Mongolia
Michael Deats - Director
• Former Managing Director of BP Coal South Africa, Ex-Director of Eskom
5
7. Mongolia is currently
importing power from
Ulaan Ovoo
Russia at a rate of
$0.08 per kw/h
Chandgana
PROXIMITY TO CHINA:
- CHINA: 350 KM
- BEIJING: 1,000 KM
Central Energy system (CES)
Eastern Energy system (EES)
7
New transmission lines
8. FAST GROWTH = RISING ENERGY DEMAND
• GDP growth 2011: 17%
• Compounded GDP growth since 2000: 123%
• Power supply capacity in 2000: ~750MW
• Power supply capacity in 2011: ~750MW
• Largest coal supplier to China in 2011 (30MT), elapsed Australia
• Tavan Tolgoi coking coal triple production by 2015 to 13MT/yr
• Oyu Tolgoi Cu-Au scheduled production in 2013, could boost GDP by 30%
*source: http://www.bloomberg.com/news/2012‐01‐05/mongolia‐s‐renewables‐belittle‐world‐s‐nuclear‐supply.html 8
9. Central Tower, UB Oyu Tolgoi, Mongolia Blue Sky Tower, UB
ShangriLa Hotel, UB Tavan Tolgoi, Mongolia
9
10. Ulaanbaatar
• “Second most air polluted city in the world”
- World Health Organization (WHO)
• Population quadrupled since 2000
(1.7 million)
• GDP per capita in 2011 USD$3,173
• Antiquated and poorly maintained power Ulaanbaatar
infrastructure
• Power and Coal shortage
(3 day stock pile currently)
Source: The World Bank (Dec 2009). Mongolia: Air Pollution in Ulaanbaatar –
Initial Assessment of Current Situation and Effects of Abatement Measures.
World Health Organization-Global Health Observatory Data Repository-‘Annual 10
mean concentration of PM10 in cities’
11. Power Supply / Demand and GDP Growth Forecast
1600 $16 Demand
1400 $14
1200 $12 744 MW
GDP, US$bn
Deficit
1000 $10
MW
800 $8
600 $6 Supply
400 $4 Russia Russia
EES EES
200 $2
CES CES
0
2010 2011 2012 2013 2014 2015
CES – Central Energy System 11
Source: Energy International Corporation, Eurasia
Capital’s Mongolia Outlook Report
EES – Eastern Energy System
13. Mongolia is currently
importing power from
Ulaan Ovoo
Russia at a rate of
$0.08 per kw/h
Chandgana
PROXIMITY TO CHINA:
- CHINA: 350 KM
- BEIJING: 1,000 KM
Central Energy system (CES)
Eastern Energy system (EES)
13
New transmission lines
14. Chandgana deposit & power plant site
100% Owned
Resource: 1.2 Billion Tonnes* (M&I) Thermal Coal
All Construction Permits Granted
0.5:1 Strip Ratio* Surface Mining License Granted
Power plant conceptual rendering
Mine-Mouth Power Plant Licensed
Feasibility Study Complete
150km From Grid
*Chandgana consists of two properties-Chandgana Tal and Chandgana Khavtgai. Chandgana Tal consists of 141 mt of measured resource. Chandgana Khavtgai consists of 509 mt measured and 539 mt indicated resource. Chandgana Khavtgai’s resource estimates are based
on the September 2010 NI 43-101 Chandgana Khavtgai Technical Report by Kravits Geological Services, LLC. The report is authored by Christopher M. Kravits CPG, LPG of Kravits Geological Services, LLC., who is an independent Qualified Person under NI 43-101. And the
Chandgana Tal resource estimate is also based on the September 2007 NI 43-101 Chandgana Tal Technical Report by Behre Dolbear & Company (USA), Inc..The report is authored by Mr. Gardar G. Dahl, Jr., CPG of Behre Dolbear & Company (USA), Inc., who is an
independent Qualified Person under NI 43-101.. Chandgana Tal has a strip ratio of 0.5:1 and Chandgana Khavtgai has a strip ratio of 2.2:1.
14
15. Chandgana Khavtgai
• Mining License Obtained for 140MT
Chandgana Tal
• 0.68% sulphur / 12.5% ash
• < 2 km from paved roads
Chandgana Tal
• < 150 km from power grid
• 100km2 Prospective Claims
Coal
20m Clay
40m Coal
15
16. - Helping to meet Mongolia’s Power Needs -
150km to grid
2 km 350km to China
Chandgana Power Plant Power
Coal Transmission
Proposed Installed capacity:
Phase I: 600 MW
(connect to CES, EES of Mongolia)
Phase II: 3600 MW
(connect to China) Central Energy system (CES)
Eastern Energy system (EES) 16
17. TPP & Lines
$744 Million NPV / IRR $364.7 Million / 21.9%
Capex
Plant Capacity 4 x 150MW
Debt / Equity 70 / 30
Coal Output 2.7 Mt p.a.
Interest rate /
10% / 12%
Discount Rate
Electricity Tariff $0.06 /kwh
Project life /
Coal Pricing $15.5 /t 30 year / 10 year
Loan Term
Opex + Debt IRR Sensitivity / + 6% IRR /
$0.023 + $0.025 /kwh
Payment Tariff + 0.01 /kwh
* FS January 2011 by Steag Germany - Power Plant only, not NI 43-101 17
18. * FS January 2011 by Steag Germany - Power Plant only, not NI 43-101
18
19. Initial 600MW capacity will be
dedicated toward domestic
consumption. Proposed
output increase to 3600MW
would enable Mongolia to
export power directly into
China via existing Ultra High
Voltage Lines.
Source: SSE, sxcoal, McQuarie Research 19
20. Total Electricity Consumption
6000
5000
4000
Billion
kWh 3000
2000
1000
0
2007 2008 2009 2010 2011 2012E
Source: China Electricity Council
20
22. Chandgana: Estimated time line
• TSX main board listing (Q4 2011)
• Power plant license (Q4 2011)
• Feasibility study (Q4 2011)
• Conclude PPA* (Q2 2012)
• Award EPC** Contract (Q2 2012)
• Project financing (Q4 2012)
• Start construction (2013)
• Power on (Q4 2015) Scale model of Chandgana power plant
*PPA – Power Purchase Agreement
**EPC – Engineering, Procurement & Construction 22
23. Power Plant Commence
License Granted Construction
600MW phase 1
Conclude PPA*
Power on
Award EPC** power on
Contract
Phase
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 II
Export to
2011 2012 2013 2014 2015 China
Conclude Project Financing
Feasibility Study
*PPA – Power Purchase Agreement
Released **EPC – Engineering, Procurement & Construction
All construction licenses received 23
25. 100% Owned – Status: Commissioned
Resource: 209 million tonnes* (M&I)
thermal coal – 20+ year mine life**
1.8: 1 Strip Ratio - Surface Mining
May 2011
Production:
2011: 200,000 tonnes
2012: 300,000-500,000 tonnes (est.)
Markets: Mongolia, Russia
$30million invested (mine + equipment)
July 2010
*Coal resources of 174 million tonnes measured and 34 million tonnes indicated from the NI 43-101 Behre Dolbear report prepared in 2007.
25
**Information based on Dec. 2010, 43-101 Prefeasibility Study by Wardrop Engineering.
26. Abundant High Quality Thermal Coal
• (ar) Min. 5,000 kcal/kg GCV*
• Max. 1% sulfur / 11.3% ash**
Low Cost Mining
• Single seam – 50m thickness
• 1.8:1 strip ratio
Equipment Received in April 2011
• Two sets CAT mining fleets: 500kt/annum
• 18 SCANIA coal haul trucks
* ar – as received / GCV – gross calorific value
**Information based on Dec. 2010, 43-101 Prefeasibility Study by Wardrop Engineering. 26
27. Location Advantage:
Ulaan to Russia: 15km
Ulaan Ovoo Chandgana to China: 350km
Chandgana to Beijing: 1,000km
Chandgana
Central Energy system (CES)
Eastern Energy system (EES)
27
New transmission lines
28. • Leading energy play, focus on developing energy solutions for Mongolia
• 1.4* billion tonnes of coal in two distinct properties in Mongolia
• Ulaan Ovoo ($30million+ invested): Largest independent coal supplier to
Mongolia
• Chandgana ($10million+ invested): 600MW Mine Mouth Power plant fully
permitted, 1st of its kind in Mongolia
• Strategic locations to supply power to neighboring China and Russia
• As of Feb 19th, 2012, 90% of Prophecy Coal’s market cap is attributed to its
equity share position in Prophecy Platinum Corp (TSX.V: NKL)
*Ulaan Ovoo: 174 million tonnes of measured and 34 million tonnes of indicated coal. Ulaan Ovoo’s resource numbers are from the Behre Dolbear & Company (USA), Inc report referenced in the Dec 2010, 43-101 Prefeasibility Study by Wardrop Engineering. Chandgana consists of two
properties-Chandgana Tal and Chandgana Khavtgai. Chandgana Tal consists of 141 mt of measured resource. Chandgana Khavtgai consists of 509 mt measured and 539 mt indicated resource. Chandgana Khavtgai’s resource estimates are based on the September 2010 NI 43-101 Chandgana
Khavtgai Technical Report by Kravits Geological Services, LLC. The report is authored by Christopher M. Kravits CPG, LPG of Kravits Geological Services, LLC., who is an independent Qualified Person under NI 43-101. And the Chandgana Tal resource estimate is also based on the September
2007 NI 43-101 Chandgana Tal Technical Report by Behre Dolbear & Company (USA), Inc..The report is authored by Mr. Gardar G. Dahl, Jr., CPG of Behre Dolbear & Company (USA), Inc., who is an independent Qualified Person under NI 43-101.
**As of 14/01/12 28
29. CANADIAN OFFICE MONGOLIAN OFFICE
342 Water Street – 2nd Floor 8/F Monnis Tower, Chinggis
Vancouver, BC Ave.
Canada V6B 1B6 1st Khoroo, Sukhbaatar District
Phone: 604-569-3661 Ulaanbaatar, Mongolia
Fax: 604-569-3617 Tel: +976.11.331669
Toll Free: 1-800-459-5583 Fax: +976.11.312721
info@prophecycoal.com info@prophecycoal.com
29
