2. Red Hill Energy (total spent $30million)
2005 Acquired Ulaan Ovoo ($10million)
2006 Expands Ulaan Ovoo to 208 mt – 174 mt measured and
34 mt indicated ($5million)
Acquired Chandgana Tal ($5million)
Expands Chandgana Tal to 140 mt measured ($3million)
2007 Discovers Chandgana Khavtgai ($2million)
2008 Expands Chandgana Khavtgai to 1 bt - 500 mt measured
and 500 mt indicated ($8million)
2010 Prophecy Coal Acquired Red Hill ($20million)
2
3. Prophecy Coal (total spent $60million)
2010 Filed Feasibility Study Ulaan Ovoo, Received Mine License
Drilled Chandgana Khavtgai (Khavtgai Uul)
Commissioned Ulaan Ovoo to production ($30million)
Drilled Chandgana, File Technical & Economic Studies ($8million)
Filed Environmental Impact Assessment (Power Plant)
2011 Received Chandgana Mine License
Received EIA (Power Plant)
Filed Power Plant Technical & Economic Studies
Received Power Plant Construction License
2012 Acquiring Tethys’ Vale claims ($10million)
Negotiate EPC and PPA 3
4. Prophecy 1.2 billion tonnes* & Tethys’ Vale historic
resource estimate of 2.3 billion tonnes**
*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 was an independent Qualified Person
under NI 43-101 at time of report. 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.. ** According to records reviewed by Prophecy, Tethys applied on March 15,
2011 to register a resource estimate of 2.33 billion tonnes of thermal coal for the Tugalgatai licenses with the Minerals Resource Council of Mongolia. This 2.33 billion tonnes is a
historical estimate under NI43-101. The resources registered by Tethys were not prepared in accordance with NI 43-101 and should not be relied upon. The assumptions,
parameters, and methods used to prepare the historical estimate are unknown. A qualified person has not done sufficient work to classify the historical estimate as a current
4
mineral resource; and Prophecy is not treating the historical estimate as a current mineral resource. The 2.3 billion is in the A, B and C categories of reserves estimated using the
Mongolian (similar to former Soviet) method. Because the methodology and assumptions of the Mongolian reserve estimation method are different than CIM, JORC and US the
reserves categories are not easily equated.
5. Resource: 1.2 Billion Tonnes* – 650 mt measured Chandgana deposit & power plant site
and 550 mt indicated, 3,300kcal/kg NAR,
Basin 300 sqkm, Target 3.5 to 5 Billion tonnes
Next to Paved Road, 120km from Rail
0.5:1 Strip Ratio*, Mining License Issued
600MW Construction License Issued (first IPP)
50km to East Grid and 150km to West Grid
350km From China, 1,110km Beijing.
*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
was 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.
5
6. 150km to grid
2 km 350km to China
Chandgana Power Plant Power
Coal Transmission
Proposed Installed capacity:
Program 1: 600 MW
(connect to CES, EES of Mongolia)
Program 2: 3,000 MW+
(connect to China) Central Energy system (CES)
Eastern Energy system (EES) 6
9. Central Tower, UB Oyu Tolgoi, Mongolia Blue Sky Tower, UB
ShangriLa Hotel, UB Tavan Tolgoi, Mongolia
9
10. Power Supply and GDP Growth Forecast
$16
1600
$14
1400
GDP, US$bn
1200 $12
1000 $10
MW
800 $8
600 $6 Supply
400 Russia
Russia
$4
EES
East Supply
200
$2 CES
Central Supply
0
2010 2011 2012 2013 2014 2015
Source: Energy International Corporation, Eurasia CES – Central Energy System
Capital’s Mongolia Outlook Report EES – Eastern Energy System 10
11. Power Demand Forcast by 2030
2500 2,321
2,030
2000
1,728
1,625
1,483 1,544
1500 1,394
MW
1,313
1000 862 934
762 819
500
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025 2030
*Source Asian Development Bank 11
14. In 2002:
Electricity and heat retail prices increased by 4.4% and 12.4-30.0% on average, respectively.
In 2005:
A growth in electricity and heat end user prices represented 8.5% and 19.3% on average, respectively.
In 2007:
Electricity price was increased by 4.4%.
Heat prices in Darkhan and Erdenet cities were increased by 20.1-26.4%.
In 2008:
Electricity price was increased by 27.8%.
Heat prices in Ulaanbaatar city were increased by 39.0%. Hot water use tariff for residential consumers in
an apartment was increased by 61.3-141.9%.
In 2009:
Electricity price was increased by 17.35%.
Heat prices in Ulaanbaatar, Darkhan and Erdenet cities were increased by 14.5%.
In 2010:
Electricity price and heat tariffs increased in WES, Dalanzadgad, Nalaikh, and Baganuur districts.
*Source ERA
14
17. • 50km to East Grid, 150km to West Central Grid
• Supply East, Central, South, Just in time to meet shortage
• Phase 1a (150MW x 2, T-lines) starts 2013, expected rollout
2016
• Phase 1b (150MW x 2) starts 2014, expected rollout 2017
• Capex Phase 1a: ~$700million, Phase 1b: ~$500million
• Debt(10yr) to Equity : 70 to 30
• Tariff (cost +), Lower than Russian import
• Approximate Tariff* breakdown:
Fuel 15%, O&M 10%, Debt & Interest 40%
Tax 11%, Equity 24%
*Full Financial worksheet available
17
18. • National Electricity Transmission Grid Co. of
Mongolia (NETGCO) is buyer
• NETGCO is owned by MOF, MMRE, and SPC
• EDNs collect customer tariff and deposit in escrow
• IPP collects from escrow
• PPA (ver 10), Meter at Plant Site
• Target tariff price indexed for Mongolia/US CPI
• Target sign date Q1, 2013
18
19. • RFP issued in Jan 2012, 6 Chinese EPC bids
• CFB, air cooled, Mine Mouth
• June 30, 3 shortlist, Design Specification Discussion
• October 1, Award EPC
• 2012: Leveling Site
• Q1, 2013: Foundation Concrete
• Q1, 2016: 2 x 150MW, Transmission lines
• Q1, 2017: total 4 x 150MW
• Capex: $1 billion to $1.2 billion
19
20. • From Chandgana Mine (Chandgana Coal LLC),
Licensed
• 3million tonne a year, 3,300 NAR, 0.8% Sulphur
• Mine Mouth Set up, 1.2 billion* tonnes resource
• Chandgana Coal LLC owned by Prophecy Coal Corp.
• $15.5/tonne delivered, annual CPI indexation
• Coal price flexible at start, additional return to
Power Plant Sponsor possible
*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 was an independent Qualified Person under NI 43-101 at time of report. 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 & 20
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..
21. • Government Tender Closed May 1, 2012
• GDF/Sojitz/Posco awarded right to negotiate
• 450 MW gross + heat, built in UB next to CHP3
• Various issues (concession law, land, coal supply, water)
• Construction > 48 months (Prophecy Estimation)
• Co-exist: CHP5 (UB, North), Chandgana (East, South, UB)
2012: 800MW (Russia supplies 150MW), 2017: 1500MW
GAP of 850MW By 2017 (Eliminate Russia supply)
CHP5 net 400MW, Chandgana net 500MW
21
22. Chandgana (IPP) CHP5 (Concession)
Ownership Prophecy Power Generation GDF Posco Sojitz Newcom
LLC (100%)
Coal Chandgana Coal LLC Baganuur, Shivee Ovoo
Site Chandgana Mine Mouth UB, by CHP3 (land issue)
Size Phase 1a: 150MWx2 150 MW x 3
1b: 150MWx4 total
Market East, South, UB UB, North
EPC Chinese EPC, Final by Oct Posco?
Status IPP Licensed – PPA stage Concession, Not licensed yet
Request Construction Spring 2013 ?
Operation Start Early 2016 (est 30 months) ? (Korean EPC is 5 yr) 22
23. Energy Authority of Mongolia ("EA") has entered into a Cooperation Covenant (the
"Covenant") with Prophecy to bring the 600 MW Chandgana Power Project online by 2016.
Prophecy shall construct and commission the Chandgana Power Plant according to the
license issued, with 100 MW Net Electric Output starting from the 1st quarter of 2016, up to
200 MW from the 3rd quarter of 2016, 300 MW from the 1st quarter of 2017, and 400 MW
from the 3rd quarter of 2017. Prophecy shall link the Central and Eastern Energy Systems
As the Mongolian government's implementation agency, the EA confirms the need to
purchase the Net Electric Output described in Clause 3 of the Covenant, to satisfy the
electricity energy demands of the central and eastern regions.
The obligations and liabilities of the Parties provided in the Covenant shall serve as the
guidelines, and basic terms and conditions of the “Power Purchase Agreement” (PPA) to be
further entered into between the Seller (Prophecy’s East Energy Development LLC) and
Buyer (National Electricity Transmission Grid Company of Mongolia, NETGCO).
May, 2012 23
24. Strategic Sponsor:
• Granted right to 51% power plant
Power Plant JV • Granted EPC (option) and O&M
Strategic • Fund Prophecy Operation to PPA
Sponsor 20% • Lead arranger of power plant financing
PE PE Sponsor participates in financing
Sponsor 51%
29%
Prophecy Prophecy retained 20% carried interest by
-contributing license and local knowledge
-finalize PPA, EPC,FUEL SUPPLY contracts
-expert team to move the project forward.
24
25. Debt Financing:
Exim, CDB, EPC Supplier
Project Financing
(~$1.2b*) Phase 1a (150MW x 2, 155km T-line to West)
$700 million x 70% = $490million
Debt 30% Phase 1b (total 150MWx4, 205km T-line East-West)
$500 million x 70% = $350million
Equity 70%
Equity Financing:
Strategic Sponsor, PE Sponsor
*EPC estimate, could be less
Will be firmed by Oct 31
Phase 1a (2013) : $700million x 30% = $210million
Phase 1b (2014) : $500million x 30% = $150million
25
26. Equity Commitment by year ($million)
2013 2014
Strategic Sponsor (IPP) (51%) $130 $95
Private Equity Sponsor (29%) $80 $55
Prophecy (20% carry) 0 0
Total $210 $150
Based in total EPC $1.2 billion, equity to debt of 30 / 70
Prophecy gets 20% free carry by contributing license and local knowledge, finalize PPA,
EPC,FUEL SUPPLY contracts, and expert team to move the project forward.
27. Coal JV
Power Sponsor Prophecy Strategic Sponsor buys 20% of Coal JV
(one time upfront payment)
20% Prophecy will develop Coal Mine
(total ~$70million)
Power Plant Sponsor will finance its 20%
80%
Guarantee supply to plant for 25 years
Starting price $15.5/t, possible to reduce
Coal price to accelerate plant payback
27
28. 2nd Phase
3,000+MW
Would enable
Mongolia to export
power directly into
Beijing
China
Source: SSE, sxcoal, McQuarie Research
28
29. • Commissioned in 2006 by China State Grid
• 3,600 MW (600MW x 6) built in Mongolia
• CAPEX and Tariff calculated
• Based on a coal deposit owned by Mongolian Gov’t
• The Feasibility Study is available upon request
Propose:
3,600 MW Feasibility Study (2012)
3,600 MW Export MOU (2013)
3,600 MW License (2013), Construction
(2014), Power on (2017)
29
31. 100% Owned – Status: Commissioned
Resource: 209 million tonnes*
1.8: 1 Strip Ratio – Single 50 meter
seam
May 2011
Production:
2011: 200,000 tonnes
2012: 300,000 tonnes (est.)
5,100 kcal/kg NAR, next to road, 10km
from Russian Border
$52 million invested
*Coal resources of 174 million tonnes measured and 34 million tonnes indicated from the NI 43-101 Behre Dolbear report prepared in 2007.
**Information based on Dec. 2010, 43-101 Prefeasibility Study by Wardrop Engineering. The qualified persons responsible for the preparation of this31
NI 43-101 Technical Report and PFS are Brian Saul, P. Eng. (Mining) and Dr. Steve Krajewski, P. Geo., MSME (Resource Estimate Review).
32. Ulan- Ude TPP 1 & 2
Demand: 1mt pa
Gusinoozersk TPP
Demand: 1mt pa Blending Plant~350kms
Demand: 2mt pa
Transmission Line
Ulaan Uvoo
Transmission Line to UB
32
33. Top Free-On-Rail Domestic Pricing = USD 38/t, up 50% YOY
Mine gate pricing = USD 25/t conditional on opening
Zeltura (Russian export)
Current production stopped
• Bridge repair (estimated to year end)
• Received support to transport through Zeltura
• Stockpiled 180,000t on site (for remainder 2012 sales)
34. Shares 227 million (basic); 263 million (diluted)
Market
~$42 million (52week high $200m, 52week low $42m)
Capitalization
Ownership 50% Retail, 30% Institutional, 20% Management & Directors
Marketable
$38million
Securities
Canadian Office: Vancouver, BC Canada
Locations
Mongolian Office: Ulaanbaatar, Mongolia
*As of 08/29/12 34
35. John Lee, CFA – Chairman / CEO
• Founder of Prophecy Coal Corp. and Prophecy Platinum Corp.
VP Sharma – Technical Advisor
• 40 years experience in the power. Joined CLP Group in 1978. Former Director-
Head of India, Managing Director of GPEC and CEO of CLP Power India, Regional
Business Manager CLP Power Asia.
Jivko Savov - Director
• Deputy CEO of En+, company owned by Oleg Derispeska
• Former Chairman of Rusal, Chairman of EuroSibEnerg
Joseph Li - General Manager, Corporate Secretary, Director
• Former Senior Auditor with the BC Ministry of Finance; oversaw successful spin-
out of Prophecy Platinum Corp. and acquistion of Shakespeare project.
Michael Deats - Director
• Former Managing Director of BP Coal South Africa, Ex-Director of Eskom
35
36. 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
36
37. 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
Presentation has not been independently verified and the information contained within is subject to updating, completion, revision, verification and further amendment. Neither the Company, nor its shareholders, directors,
officers, agents, employees, or advisors give, has given or has authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in
this Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as “Information”) and liability
therefore is expressly disclaimed. Information contained in this Presentation is the property of the Company. It is made available strictly for the purposes referred to above. Neither the communication of this Presentation
nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any transaction. This Presentation does not constitute, or form part of, any offer or invitation to sell or issue,
or any solicitation of any offer to subscribe for or purchase any securities in the Company, nor shall it, or the fact of its communication, form the basis of, or be relied upon in connection with, or act as any inducement to
enter into, any contract or commitment whatsoever with respect to such securities. The communication of this Presentation in or to persons in certain jurisdictions may be restricted by law and persons who may rceive
communication of this Presentation should inform themselves about, and observe, any such restrictions in advance of communication to them of this Presentation. In particular, this Presentation has not been approved by
an authorised person pursuant to Section 21 of the Financial Services and Markets Act 2000 (“FSMA”) and accordingly it is being delivered in the United Kingdom only to persons to whom this Presentation may be
delivered without contravening the financial promotion prohibition in Section 21 of the FSMA. Those persons are described in the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (“Order”)
and include persons who have professional experience in matters relating to investments and who fall within the category of person set out in Article 19 (investment professionals) of the Order. In addition, other than a
limited number of persons reasonably believed to be qualified institutional buyers (as defined in Rule 144A under the US Securities Act of 1933, as amended) or accredited investors (as defined in the National Instrument
45/106), neither this Presentation nor any copy of its may be transmitted into the United States of America or Canada or distributed directly or indirectly, in the United States of America or Canada, or to any resident thereof
except in compliance with the applicable securities laws. Any failure to comply with these restrictions may constitute a violation of applicable US or Canadian securities laws. By accepting communication of this
Presentation, the recipient represents and warrants that it is a person to whom this Presentation may be communicated without a violation of the laws of any relevant jurisdiction. This Presentation is not to be
communicated to any other person or used for any other purpose and any other person who receives communication of this Presentation should not rely or act upon it. In furnishing this Presentation, the Company does
not undertake or agree to any obligation to provide the attendee with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation that may
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.
37
38. Total Electricity Consumption
6000
5000
4000
Billion
kWh 3000
2000
1000
0
2007 2008 2009 2010 2011 2012E
Source: China Electricity Council
38
