(EnergyAsia, June 1 2012, Friday) — Canada’s Prophecy Coal Corp said it has signed a cooperation covenant with the Energy Authority of Mongolia, targeting to start up the 600 MW Chandgana power project by 2016.

The covenant provides support for the construction and operation of the plant comprising four units of 150 MW capacity each in central Mongolia. Apart from coal mines, the plant is slated to supply electricity to the power grids of Mongolia’s central and eastern region’s power grids.

The covenant also covers the basic rights and obligations of the seller and buyer.

John Lee, Prophecy’s chairman and CEO, said:

“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 power purchase agreement.”

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.

Based in Vancouver, British Columbia, Prophecy Coal Corp is engaged in developing energy projects in Mongolia including the producing Ulaan Ovoo mine and the planned 600 MW mine-mouth power plant adjacent to the Chandgana coal deposit.