Prophecy
Coal Corp. is pleased to announce that the
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.

The EA is the agency which
implements governmental policy in the power and energy sector of
Mongolia. The Covenant provides required support for the construction and
operation of the Chandgana 600 MW (4 x 150 MW) mine-mouth power plant in
central Mongolia and its capacity to supply the necessary electricity to the
central and eastern region”s power grids by 2016.

The Covenant also covers the basic
rights and obligations of the Seller and Purchaser of the electric energy,
including the following highlights:

1. The Energy Authority shall
   monitor the Chandgana Power Plant construction process to ensure the power
   plant is constructed within Mongolian regulations, and approved technical
   and design specifications.

2. Prophecy shall construct and
   commission the Chandgana Power Plant according to the license issued by
   the competent government body, and do so within approved design and
   technical specifications.

3. Prophecy shall supply
   electricity from the Chandgana Power Plant to the Central and Eastern
   Energy Systems with 100 MW Net Electric Output starting from the 1^st
   quarter of 2016, up to 200 MW from the 3^rd quarter of 2016, 300
   MW from the 1^st quarter of 2017, and 400 MW from the 3^rd
   quarter of 2017. 

4. Prophecy shall link the Central
   and Eastern Energy Systems by connecting the Chandgana power plant with
   the Baganuur 220 kV sub-station by 220 kV two-circuit overhead
   transmission lines to the west and with the Undurkhaan 110 kV sub-station
   by 220 kV overhead transmission lines to the east.

5. 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.

6. 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) and Buyer
   (National Electricity Transmission Grid Company of Mongolia, NETGCO).

John Lee, Chairman and CEO of
Prophecy states: “We are very grateful for the support from various
Mongolian government agencies to help bring the Chandgana Power Plant project
online and on schedule. This landmark agreement forms the basis of our
continued discussion regarding a PPA.”

After lengthy legal, commercial, and
technical consultations with a designated working group of more than 20
government members, the Company has prepared and submitted the power purchase
agreement with full schedules to the Mongolian government for its review and
comment. The next step will be to reach an agreement on tariff, followed
by execution of the PPA.

Source: Marketwire