TSX letter 'improperly' leaked Prophecy Coal says

HALIFAX, NS (MINEWEB) -

Prophecy Coal acknowledged late Wednesday that a letter it received from the Toronto Stock Exchange “has been improperly disclosed to the public” and said - without divulging the letter's contents - that it was preparing a response to the exchange.

Multiple financial blogs and forums carried purported contents of the letter yesterday, but neither the TSX nor Prophecy coal had verified the contents at presstime.

The TSX, asked to confirm specific details of the letter as broadcast on the Internet, responded it does not comment on specific companies.

Prophecy Coal, which is a Vancouver-headquartered junior with coal assets in Mongolia, had not responded to an early morning email Pacific Standard Time.

The letter, which could not be confirmed as authentic and did not allege any wrongdoing, outlines numerous inquiries and requests of Prophecy Coal.

Among the main inquiries, Prophecy Coal was first asked if in nominating director Chuluunbaatar Baz it had considered his allegedly poor attendance record.

Then the inquiries turned to a C$525,000 CEO termination fee that Prophecy Coal has reported, in year-end results, paying to a private company Prophecy Coal Executive Chairman and interim Ceo John Lee controls.

The C$525,000 fee, according to Prophecy Coal's 2012 annual report, was paid out late last year when it ended a consulting agreement with a Lee-controlled company called Mau Capital Management, for Lee's services as CEO, which started in 2010.

Lee then became Prophecy Coal's Executive Chairman and interim CEO and was employed through a subsequent agreement with Mau Capital which saw his monthly consulting fee lowered from $40,000 to $35,000 per the original CEO agreement.

The letter purported to be from the TSX – which explicitly states no wrongdoing is implied - inquires why Prophecy Coal paid the termination fee if Lee remains with the company and asks how Lee's current position as Executive Chairman and interim CEO differs from his previous role.

While Prophecy Coal could not be reached by press time, it said it would disclose material information if it arose through correspondence with the TSX.

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