Mr. Paul McKenzie reports

PROPHECY REPORTS 5 MAJOR IP ANOMALIES AND COMMENCEMENT OF DRILLING AT ITS LYNN LAKE PROJECT, MANITOBA

Prophecy Resource Corp. has commenced a 3,000-metre drilling program at its Lynn Lake project, located in Lynn Lake, Man. The drilling program is designed to test newly discovered targets from its recently completed induced polarization (IP) survey (see Prophecy July 7, 2010, news). Five new target areas have been delineated using a proprietary deep-seeking IP method that penetrates to depths that were previously unexplored through VTEM. The five anomalies have been dubbed the North, East, West, Middle-East and Centre anomalies based on their spatial distribution on the property.

The West anomaly occurs approximately 500 metres southwest of the A shaft, and starts at 250 metres depth. The anomaly extends to at least 600 metres depth and remains open beyond the detection limits of the survey. It has a close spatial association with the G deposit that occurs at the 3,000 level (914 metres from surface), which is below and just to the east of the West anomaly. The G deposit has an NI 43-101-compliant inferred resource of 296,000 tonnes of 0.8 per cent nickel, 0.4 per cent copper using a 0.7-per-cent nickel equivalent cut-off.

The Center-East anomaly occurs approximately 200 metres grid east of the Farley shaft, and approximately 250 metres grid east of the historic B open pit. This anomaly occurs 250 metres from surface extending to greater than 600 metres depth on five grid lines over 300 metres length. The nearby Farley shaft provided access to the B orebody which was mined using both open pit and underground methods between 1952 and 1976. The mine produced a total of 4.3 million tonnes of 0.7 per cent nickel and 0.5 per cent copper during historic operations. The Center-East anomaly occurs at 250 metres from surface extending to greater than 600 metres depth. No historic drilling has been conducted in the target area.

The Centre anomaly occurs within 100 metres grid south of the B pit. The anomaly starts from 180 metres depth and extends past 600 metres from surface, and is seen on four grid lines for over a length of 250 metres.

The North Anomaly occurs in a remote swampy area on the north end of the property, and is seen over a length of four lines or over 250 metres length. It occurs as two separate anomalies overlying each other. One is a shallow anomaly centred at approximately 100 metres depth, the other anomaly is directly below this shallower expression, starting at approximately 300 metres depth.

The East anomaly is centred 200 metres below the existing Disco deposit and is approximately 475 metres from surface that extends on grid lines to the south, for a total strike length of approximately 150 metres. This anomaly appears to increase in intensity with depth, beyond 610 metres from surface, where the survey was able to penetrate. The chargeability and resistivity strongly resemble that of known mineralization such as that of the N orebody, which hosts an 11-million-tonne measured and indicated resource (400,000 tonnes measured, 10.7 million tonnes indicated) grading 0.6 per cent nickel and 0.3 per cent copper. (Please refer to company's news in Stockwatch on July 7, 2010, for complete details.)

Please visit the company's website for drill locations and the coloured 3-D IP anomaly charts for each drill target.

The current drill program is expected to take eight to 10 weeks to complete and will test each of the targets where the anomalies have the strongest and clearest response.

This news release has been reviewed and approved by Danniel J. Oosterman, PGeo, and a qualified person as defined in NI 43-101.