TER: Prophecy Coal Corp. (PCY:TSX; PRPCF:OTCQX; 1P2:FSE) shares have had a rough time. It seems like the stock began to turn south when the company announced it was going into the power generation business in Mongolia. Did investors hate this deal because it took focus off of its core business?

JW: Not at all. Its horrible share price performance is attributable exclusively, I would say, to the political situation in Mongolia, which is still uncertain, especially with the passage of the Strategic Entities Foreign Investment Law, passed in May 2012. This document has created more uncertainty than it has assuaged, and that's why Prophecy shareholders are suffering right now. Unofficially, there is basically a sense of optimism for the long term, and pessimism for the short term.

Just look at Oyu Tolgoi—no investment hesitation there on the part of Rio Tinto. Obviously, Prophecy Coal isn't Rio Tinto, and that's probably the main roadblock to reversing the share price performance. When it becomes apparent that Mongolia is not going to make a grab for the power plant, and clear investment and power offtake agreements are in place, the share price should start to appreciate. At this level, I think it's attractive.

TER: Recently the company announced a preliminary economic assessment on its Chandgana Tal coal mining licenses in central Mongolia, reporting 124 million metric tons of measured coal with a mine life of 30 years. How significant will this be?

JW: Well this was a big cloud put over the company by the Ontario Securities Commission, which has now been quite thoroughly addressed. In any other market, that should have been sufficient to attract buyers in the company's shares, but there just aren't a lot of those around right now, thanks to the overall weakness in mining companies for the last two years. Add to that a dose of political uncertainty, and you get the share price Prophecy has right now. But there's certainly no longer any question of there being sufficient coal to supply the power plant.

TER: James, thank you for your time today.

JW: My pleasure.

James West is publisher and editor of The Midas Letter, an independent capital markets entrepreneur and investor. He has spent more than 20 years working as a corporate finance advisor, corporate development officer, investor relations officer, and media relations and business development officer for companies involved in mining, oil and gas, alternative fuels, healthcare, Internet technology, transportation, manufacturing and housing construction.

DISCLOSURE:
1) The following companies mentioned in the interview are sponsors of Streetwise Reports: Aroway Energy Inc., EFLO Energy Inc., Fortuna Silver Mines Inc. and Prophecy Coal Corp. Streetwise Reports does not accept stock in exchange for services. Interviews are edited for clarity.
2) James West: I personally and/or my family own shares of the following companies mentioned in this interview: Abakan Inc., Mason Graphite and Critical Elements Corp. I personally and/or my family am paid by the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview.