HYOSUNG SET TO BUILD ELECTRICAL GRIDS

Vancouver, British Columbia (FSCwire) - Prophecy Development Corp. (“Prophecy” or the “Company”) (TSX:PCY, OTCQX:PRPCF, Frankfurt:1P2) is pleased to announce today, the signing of an Engineering, Procurement and Construction (“EPC”) Agreement, Equity Investment Agreement, and Share Purchase Agreement (collectively, the “Agreements”) with China-based Shandong Electrical Power Construction No.2 Company (“SEPCO2”) to invest in, and build the Company’s 600 MW Chandgana power plant (the “Chandgana Power Plant”) in Mongolia.

The Chandgana Power Plant Project, under the development of Prophecy’s wholly-owned Mongolian subsidiary, Prophecy Power Generation LLC (“PPG”) since 2011, has secured power plant land use rights and the construction license, and is included on the Mongolian Government concession list.

SEPCO2 was founded in 1952 and is wholly-owned by the Power Construction Corporation of China (“POWER CHINA”), a Global Fortune 500 company with 200,000 employees as of June 2015, specializing in engineering, construction, design consultation and equipment manufacturing in the global energy sector. SEPCO2 has 6,400 employees and has constructed power plants in 11 countries such as: Saudi Arabia, Zambia, India, Malaysia and Sudan.

The Agreements signing ceremony took place today at the Canadian Embassy in Mongolia’s capital city of Ulaanbaatar and was witnessed by Senior Trade Commissioner from Embassy of Canada to Mongolia.  Mr. Zhang Shitao, the President of SEPCO2, and Mr. John Lee, the Executive Chairman of Prophecy, executed the Agreements on behalf of SEPCO2, and Prophecy, respectively.

Project Summary and Update

The Chandgana Power Plant is strategically located in Khentii province, 150km east of Baganuur, to provide power to both Mongolia’s Eastern Energy Grid and Central Energy Grid.  The Chandgana Power Plant will be a coal-fired mine-mouth power plant where coal will be supplied from Prophecy’s wholly owned Mongolian subsidiary Chandgana Coal LLC’s adjacent open pit coal mine. 

The total capital investment necessary to complete the 600MW Chandgana Power Plant is expected to be approximately USD$1 billion.  The proposed investment for Phase 1 (150MW x2) is estimated to be USD$600 million, Phase 1 is to be completed within 3 years from the start of construction.  Prophecy has identified the main EPC contractor, and equity and debt investors that are ready to invest and start the project once a bankable Concession Agreement and Power Purchase Agreement including tariff are finalized with the already-established Mongolian government-appointed working group. 

Mongolia currently imports approximately 20% of its electric power from Russia and China. Prophecy is proposing to build a new, modern power plant to provide a stable 20-year power supply in Mongolia, with 100% private funding and with no up-front payment or subsidies from the Mongolia government. Prophecy is offering a fixed, long-term tariff that is lower than those of foreign import to assist Mongolia to save money, create employment and establish its energy independence.  The Chandgana Power Plant and Chandgana coal mine would be expected to employ over 600 full-time skilled local staff, cause the start of many new support businesses, and revitalize Khentii province.

Prophecy believes having a mine-mouth power plant (as opposed to having a power plant located in the city) is the solution to Mongolia’s power shortage, eliminates costly coal and ash transportation, preserves the capital city