Exhibit 99.1
Prophecy Received US$100,000 of Advance Royalty Payment from Ulaan
Ovoo Mine Lease, Lessee Eyeing Mine Start
Vancouver, British Columbia, October 16, 2018 – Prophecy
Development Corp. (“Prophecy” or the “Company”) (TSX:PCY, OTCQX:PRPCF,
Frankfurt:1P2N) is
pleased to announce that the Company has executed a lease agreement
(the “Lease”) with an arms-length private Mongolian
company (the “Lessee”) whereby the Lessee plans to perform
mining operations at Prophecy’s Ulaan Ovoo coal mine, and
will pay Prophecy US$2 (the “Production
Royalty”) for every tonne
of coal shipped from the Ulaan Ovoo site
premises.
Bekzod Kasimov, Prophecy’s VP, Business Development,
comments:
“This Lease signifies the potential restart of the Ulaan Ovoo
mine to supply quality thermal coal for much needed regional
consumption.
With nameplate production capacity of 2 million tonnes a year,
Ulaan Ovoo is a large coal field featuring a single, massive coal
seam of 40 to 80 metre thickness with outcrops and low strip ratio
carrying minimal technical risk.
Ulaan
Ovoo’s Production Royalty is expected to provide Prophecy
with a passive income stream while Prophecy continues to advance
the Gibellini vanadium project in Nevada as the Company’s top
priority.”
About the Lease:
The Lessee is an established company actively mining at
Mongolia’s largest coking coal deposit, Tavan Tolgoi. The
Lessee has paid Prophecy US$100,000 in cash, as a non-refundable
advance royalty payment and is preparing, at its own and sole
expense, to restart and operate the Ulaan Ovoo mine with its own
equipment, supplies, housing and crew. The Lessee will pay all
government taxes and royalties related to its proposed mining
operation.
The Lease is valid for 3 years with an annual advance royalty
payment (“ARP”) for the first year of $100,000 due upon
signing, payment of which is announced herein, $150,000 and
$200,000 due on the 1st and 2nd anniversary of the Lease,
respectively. The ARP can be credited towards the $2 per tonne
Production Royalty payments to be made to Prophecy as the Lessee
starts to sell Ulaan Ovoo coal. Many parties have expressed buyer
interest in Ulaan Ovoo’s coal. Prophecy will provide a
further update once the Lessee finalizes the mine start date and
sales plans for 2019.
The 3-year Lease can be extended upon mutual
agreement.
About Ulaan Ovoo:
Ulaan Ovoo is located in northern Mongolia, 17km from the Zeltura
border to Russia by dirt road, and 120km by road from
Mongolia’s Sukhbaatar railway station (which connects to the
Trans-Siberian railway network).
Ulaan Ovoo produced over 500,000 tonnes of coal from 2012 to 2014
which was sold to 28 separate Russian and Mongolian customers such
as Erdenet Copper Mining Corporation, UB Railway, and Khutul Cement
before it was put on standby in 2014.
The benchmark Newcastle thermal coal price has rebounded from a
2014 low of US$61 per tonne to a current price of $114 per tonne,
which are levels not seen since 2011.
Ulaan Ovoo features an average
strip ratio of 1.8 BCM waste/tonne of coal. The coal mined yielded 5,000 kcal/kg GCV, less
than 1% sulphur and 8% ash which is well-suited for power plants,
cement plants and heat boiler applications. Wardrop Engineering (Tetra Tech) estimated 174 Mt
of measured and 34 Mt of indicated coal resources in an NI 43-101
prefeasibility study in 2010.
Qualified Person
The technical contents of this news release have been prepared
under the supervision of Danniel Oosterman, VP, Exploration. Mr.
Oosterman is not independent of the Company in that he is employed
as a consultant to the Company and most of his income is derived
from the Company. Mr. Oosterman is a Qualified Person as defined in
NI 43-101.
About Prophecy
Prophecy is developing the Gibellini project – the only
large-scale, open-pit, heap-leach vanadium project of its kind in
North America. Located in Nevada, Gibellini has the largest NI
43-101 compliant measured and indicated primary vanadium resource
known in the USA and is currently undergoing EPCM and EIS
preparation. Prophecy also has mining projects in Mongolia and
Bolivia. Further information on Prophecy can be found at
www.prophecydev.com.
PROPHECY
DEVELOPMENT CORP.
ON
BEHALF OF THE BOARD
“John
Lee”
Chairman
For
more information about Prophecy, please contact Investor
Relations:
+1.888.513.6286
ir@prophecydev.com
www.prophecydev.com
Neither the Toronto
Stock Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this
release.
Cautionary Note Regarding Forward-Looking Statements
Certain
statements contained in this news release, 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 applicable
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 to be materially
different from future results, performance, or achievements
expressed or implied by such forward-looking statements. These
estimates and assumptions are inherently subject to significant
business, economic, competitive and other uncertainties and
contingencies, many of which, with respect to future events, are
subject to change and could cause actual results to differ
materially from those expressed or implied in any forward-looking
statements made by Prophecy. In making forward-looking statements
as may be included in this news release, Prophecy has made several
assumptions that it believes are appropriate, including, but not
limited to assumptions that: all required third party contractual,
regulatory and governmental approvals will be obtained for the
development, construction and production of Prophecy’s
properties and the Chandgana power plant; there being no
significant disruptions affecting operations, whether due to labour
disruptions or other causes; currency exchange rates being
approximately consistent with current levels; certain price
assumptions for vanadium, silver, coal and other metals, prices for
and availability of fuel, parts and equipment and other key
supplies remain consistent with current levels; production
forecasts meeting expectations; the accuracy of Prophecy’s
current mineral resource estimates; labour and materials costs
increasing on a basis consistent with Prophecy’s current
expectations; any additional required financing will be available
on reasonable terms; and market developments and trends in global
supply and demand for vanadium, energy, silver, coal and other
metals meeting expectations. Prophecy cannot assure you that any of
these assumptions will prove to be correct.
Numerous
factors could cause Prophecy’s actual results to differ
materially from those expressed or implied in the forward-looking
statements, including the following risks and uncertainties, which
are discussed in greater detail under the heading “Risk
Factors” in Prophecy’s most recent Management
Discussion and Analysis and Annual Information Form as filed on
SEDAR and posted on Prophecy’s website: Prophecy’s
history of net losses and lack of foreseeable positive cash flow;
exploration, development and production risks, including risks
related to the development of Prophecy’s mineral properties;
Prophecy not having a history of profitable mineral production;
commencing mine development without a feasibility study; the
uncertainty of mineral resource and mineral reserve estimates; the
capital and operating costs required to bring Prophecy’s
projects into production and the resulting economic returns from
its projects; foreign operations and political conditions,
including the legal and political risks of operating in Bolivia and
Mongolia, which are developing countries and being subject to their
local laws; the availability and timeliness of various government
approvals, permits and licenses; the feasibility, funding and
development of Prophecy’s projects; protecting title to
Prophecy’s mineral properties; environmental risks; the
competitive nature of the mining business; lack of infrastructure;
Prophecy’s reliance on key personnel; uninsured risks;
commodity price fluctuations; reliance on contractors;
Prophecy’s need for substantial additional funding and the
risk of not securing such funding on reasonable terms or at all;
foreign exchange risk; anti-corruption legislation; recent global
financial conditions; the payment of dividends; the inability of
insurance to cover all potential risks associated with mining
operations; conflicts of interest; and cyber-security risks related
to the Company’s reliance on information technology
systems.
These
factors should be considered carefully, and readers should not
place undue reliance on Prophecy’s forward-looking
statements. Prophecy believes that the expectations reflected in
the forward-looking statements contained in this news release and
the documents incorporated by reference herein are reasonable, but
no assurance can be given that these expectations will prove to be
correct. In addition, although Prophecy has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. Prophecy undertakes no obligation to release publicly any
future revisions to forward-looking statements to reflect events or
circumstances after the date of this news or to reflect the
occurrence of unanticipated events, except as expressly required by
law.