Chandgana Coal-Fired Power Plant Project 600 MW (4X150 MW) The Chandgana Coal-Fired Power Plant Project includes building of a 600 MW (4X150 MW) coal fired mine-mouth power plant. Phase one will be 300 MW (2 x 150MW). The power plant will be located 7km from highway and 2km from the Chandgana Tal coal deposit (owned by Prophecy Development Corp.) in Central Mongolia. The power plant license is currently held by Prophecy Power Generation, a Mongolian subsidiary of Prophecy Development Corp. Power Plant Location Chandgana Power Plant The project is expected to deliver a number of measurable benefits to Mongolia: • Contribute to pollution reduction - Various studies have linked Ulaanbaatar air pollution to respiratory death and women miscarriages. Chandgana power plant will eliminate the need of additional power plants in Ulaanbaatar and reduce dependence on power plant #3 and #4, which emit heavy nitrogen and sulphur harmful participles in excess due to their age. • Save water, coal transportation and operational cost - Chandgana power plant will be built next to the Chandgana coal mine, 300 km east of Ulaanbaatar. This will avoid transporting 2 to 4 millions tonnes of coal to congested city (more than 100 wagons per day). Water will be extracted from the mine and avoids sharing precious water resource (up to 6 million tonnes 1 per year, 16,000 tonnes per day) within city of Ulaanbaatar. Water Scarcity problem will emerge in 2015 in Ulaanbaatar, and intensify from 2020 onwards. Assuming each UB resident I consuming 20 liters of water a day, a new power plant will take water away from about 800,000 residents annually. • Energy independence - Chandgana power plant project will reduce expensive power import from Russia and China, and achieve Mongolia energy independence. Mongolia is projected to import over 450 MW from Russia and China before 2018. Prophecy proposed electricity tariff will be lower than import with exemption from income tax, VAT, customs duty. The power plant is planned to start supplying power to Mongolian system from 2018. • Relief on power supply shortage - Chandgana power plant is planned to supply power to Mongolian system from 2018. Mongolia GDP roughly doubles every 5 years from mining production. Currently installed capacity is 800MW and demand expects to double by 2020 • Stabilization of transmission grid - Prophecy will finance transmission line from Baganuur to Chandgana in phase 1, and Chandgana to Choir in phase 2. The new lines will increase the network stability and security of electricity supply in the Mongolian power grid. • Good location - Chandgana is 300 km away from Ulaanbaatar, 150 km from Choir (further to South Gobi) and 120 km from Choibalsan. Therefore, it can potentially provide power to Ulaanbaatar, South and East. • Project readiness – Chandgana power plant project is 3 years under development and is ready for construction with construction license, environmental impact assessment, land use rights, mining license. Over 10 EPC contractors expressed interest since 2012 and several binding EPC proposals have been received with competitive price and short construction time frame (36 months). Construction can start right after Concession Agreement, PPA, Tariff Agreement and Financial Close. • Extension to Coal to Gas and Coal to Liquid project – Chandgana is next to highway, has plenty of land and estimated 3.5 billion tonnes of coal resource in the nearby basin. Once power project is operational, it is natural progression to develop coal to gas and coal to liquid projects. • Private sector investment and boost employment – the development of the project will be funded by the private sector and will serve to boost foreign direct investments to Mongolia and Khentii province. Once in operation Chandgana power plant and mine is expected to hire over 600 full time skilled local staff, become biggest revenue and skill employment generator in Khentii and doubles Khentii’s GDP from current MNT86 billion to over MNT 160 billion. 2 Chandgana Power Plant Milestones License / Approval Date Status Power Plant Detailed Environmental Impact Assessment Nov 2010 √ Received Chandgana Coal Mining License Jan 2011 √ Received Power Transmission Line EIA Approval Aug 2011 √ Received 600 MW Chandgana Power Plant Construction License Nov 2011 √ Received Chandgana Coal EIA Approval Nov 2011 √ Received Power Purchase Agreement Sep 2012 Submitted Firm EPC Bids Sep 2012 √ Received Chandgana Coal Preliminary Economic Assessment Nov 2012 √ Received Project Finance Debt Term Sheet Jan 2013 √ Received Geotechnical Study Feb 2013 √ Received Chandgana Power Plant Land Use Approval Mar 2013 √ Received Water & Power Supplies to Site During Construction Permits Mar 2013 √ Received Preliminary Mobilization Work Apr 2013 Started Electricity Tariff Proposal from the Working Group May 2013 √ Received Coal Supply Agreement Jun 2013 √ Received Application for Concession Aug 2013 Submitted Project Qualified under Concession Feb 2014 √ Approved Invitation from Ministry of Economic Development to Negotiate on Concession Agreement #7/2055 Oct 2014 √ Received 3 Chandgana Power Plant Project Location Chandgana aerial view, 100 sqkm land > 1 bt coal, featuring 40m thick coal seam outcrop Next Steps: • Signing of the Concession Agreement and Power Purchase Agreement: 2015 • Award of the EPC contract: 2015 • Project Financing (Debt + Equity) 2015-2016 • Construction and COD: 2016-2019 www.prophecydev.com TSX: PCY 2nd Floor, 342 Water Street Vancouver, BC Canada V6B 1B6 Email: [email protected] Tel: +1.604.569.3661 Fax: +1.604.569.3617 4 Cautionary Note Regarding Forward-Looking Statements This summary may include certain “forward-looking statements” within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, included herein, including, without limitation, statements regarding future plans and objectives of the Company , projected capital and operating expenses, permitting approvals, timetable to permitting and production and the prospective mineralization of the properties, are forward-looking statements that involve various risks, assumptions, estimates and uncertainties. Generally, forward looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or 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". There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Forward-looking information is subject to known and unknown risks, including but not limited to: general business, economic, competitive, geopolitical and social uncertainties; the actual results of current exploration activities; acquisition risks; and other risks of the mining industry. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. These statements reflect the current internal projections, expectations or beliefs of Prophecy Development Corp. (“the Company” or “Prophecy”) and are based on information currently available to the Company. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws. The technical content of the Company’s presentation was reviewed and approved by Chris Kravits P.Geo., who is a Qualified Person within the meaning of National Instrument 43-101. Mr. Kravits has reviewed and approved the scientific and technical aspects of this presentation. Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred Resources – The information presented uses the terms “measured”, “indicated” and “inferred” mineral resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable. 5