Mr. John Lee reports

PROPHECY PROVIDES UPDATE ON ULAAN OVOO MINE PREPARATION, MONGOLIA

Leighton Asia Ltd. has established the required infrastructure and deployed all necessary equipment and manpower (on schedule) to execute long-term mining operations at Prophecy Resource Corp.'s 100-per-cent-owned Ulaan Ovoo coal project in northern Mongolia.

Ulaan Ovoo site establishment commenced on July 13, 2010, to ensure that the commissioning of the 250,000-tonne starter pit will take place as planned as of September, 2010, with 57,500 tonnes in the first month ramping up to 100,000 tonnes per month by December, 2010.

Operation statistics

To date, Leighton has removed and stockpiled approximately 30,696 BCM of topsoil and 209,095 BCM of overburden, which is approximately 28,089 BCM of overburden ahead of schedule in preparation for mining.

Equipment

Operational equipment deployed by Leighton includes three 773C Cat dump trucks, one 385D Cat excavator, one D8R Cat dozer, one 160H Cat grader, one 928G Cat loader, two 10,000-litre water tankers, one 3,000-litre fuel truck, two CD150 dewatering pumps, three Allmand portable lighting plants and four diesel generators of varying capacity.

                        CURRENT LABOUR FORCE

              Expat   Mongolian

Prophecy          1           3   Mine manager, translator, driver
Leighton          2           9   Mining staff and camp manager
Wagner            0          11   Machine operators and mechanics
Contractors       0          26   Camp staff, security, water truck operator
                  -          --
Total             3          49

Bridge construction

The design of the concrete bridges that will replace all existing wooden bridges along the haul road has been completed and the foundation slabs are currently being poured. Completion of the bridge upgrade by the end of September will enable the trucking of coal from the mine site to Nauski.

Zeltura border opening

Prophecy has been informed that the Russian and Mongolian governments have agreed to open the Zeltura border crossing on a permanent basis. Zeltura port is 15 kilometres by road from the Ulaan Ovoo mine site, and could present significant reduction on the transportation cost. The exact timing of the border opening is not known at this time.

Infrastructure

The workshop, office complex and mine camp with facilities for 80 people on-site have been erected, and the area is fenced off for security and safety purposes.

Wardrop prefeasibility study

The company is working with Wardrop to clarify taxation, royalty and offtake pricing. The release of Wardrop's final report is expected in September of this year.

Offtake discussions are continuing with parties which have expressed written interests to procure coal directly at the mine site. Prophecy has also formally invited government site inspection, which is required prior to the mine starting.

Leighton Asia has been operating across Asia for 35 years in all facets of mining, including mine development, operation and management, resource optimization, mine planning, cost estimating, machine maintenance, mine infrastructure, crushing, processing and materials handling. Its strength lies in the ability to develop competitive, innovative and practical solutions for its clients.

The material in this news release has been reviewed and approved by Danniel Oosterman, PGeo, a Prophecy geologist and also a qualified person as defined by NI 43-101.

About Ulaan Ovoo

Prophecy has a 100-per-cent interest in the 208.8-million-tonne Ulaan Ovoo project that features bituminous (5,204 kilocalories per kilogram), low ash (12.46 per cent), low sulphur (0.4 per cent) thermal coal, suitable for export markets. The deposit features a single massive coal seam 45 metres to 80 m thick, with an average strip ratio of two to one. The project is located within 10 km of the Russian border, northern Mongolia and is 120 km (75 miles) east of the Central Mongolian Railroad linking the project to the vast coal markets of Russia and Asia.