Mr. Scott Parsons reports

PROPHECY RESOURCE CORP.: DETAILED ENVIRONMENTAL IMPACT ASSESSMENT APPROVED FOR 600 MW PIT-MOUTH POWERPLANT BY PROPHECY'S 1.2 BILLION TONNE CHANDGANA COAL PROJECT, MONGOLIA

A detailed environmental impact assessment (DEIA) pertaining to the construction of a pit-mouth 600-megawatt coal-fired power plant by Prophecy Resource Corp.'s 1.2-billion-tonne Chandgana coal project has been approved by the Mongolian Ministry of Nature and the Environment.

The DEIA is a 139-page document that was prepared for Prophecy by the leading independent Mongolian environmental consulting firm. The DEIA considered social and labour issues, climate, and environmental circumstances representative of the proposed power plant. The approved study concluded that there are no major impediments to the project and provided recommendations on best practices for conservation of the environment and the community.

According to the preliminary plan of construction as outlined in the DEIA, the 600 MW power station will be built and put into operation within 20 months and supply electricity through connection of 220-kilowatt (KW) electricity transmission lines from the power plant to the Central Energy System (150 kilometres away) and Eastern Energy System (60 km away). Two 220 kV Central Electricity System (CES) transmission lines power 90 per cent of Mongolian electricity demand. Furthermore, Chandgana is right on the path of a government-approved future CES grid extension.

With the DEIA, the Mongolian Ministry of Nature and the Environment concluded, "The 600 MW Chandgana power station project can be fully implemented, provided the measures to reduce adverse impacts and measures to prevent possible unexpected accidents envisaged in the detailed environmental impact assessment will be considered and taken to operate the power station."

John Lee, chief executive officer of Prophecy Resource, stated:

"The DEIA approval is a major milestone clearing the way for full scale permitting in early 2011. Prophecy is committed to investing heavily in Mongolia and looks forward to working with all major Mongolian stakeholders to ensure Chandgana's smooth rollout to providing affordable and reliable electricity to sustain the country's rapid growth."

With a population of 2.7 million and an aging installed base of 650 MW, Mongolia runs an energy deficit of over 120 MW, which is made up from Russian electricity import at over seven U.S. cents per kilowatt hour. The deficit is expected to balloon to 500 MW by 2013 fuelled by its GDP growth and new mission-critical mill and smelter openings.

Chandgana is approximately 1,000 km from Beijing and 350 km from the Chinese border. Mongolia's Choibalsan City, where Mongolian East Energy System ends, is merely 70 km from the Chinese border. Chandgana's endowed base of 1.2 billion tonnes is ideally suited for future 4,200 MW to 10,000 MW installed base; vast potential exists to supply Chandgana electricity to China via dedicated 800 kv DC lines.

The initial two 300 MW power plants will be built on Prophecy-owned land and serviced by 2.4 million tonnes of coal annually from Prophecy's 150-million-tonne Chandgana Tal coal project with a strip ratio of 0.5 to 1. Future plant expansions will be serviced by Prophecy's 1.05-billion-tonne Chandgana Khavtgai coal project (nine km from Tal) with a strip ratio of 2 to 1. Chandgana Tal has a renewable 40-year mining licence and the coal mine can be fully commissioned within 90 days, as was the case for Prophecy's Ulaan Ovoo coal mine, Northern Mongolia.

              DETAILS OF THE CHANDGANA COAL PROJECTS

                                  Heating
            Measured Indicated     value    Ash  Sulphur    Strip Thickness

Khavtgai                           4,354
             524.3mt   545.7mt   kcal/kg  12.66%   0.72%    1.9:1    37.7 m

Tal                                4,238
             141.3mt             kcal/kg  12.49%   0.68%   0.53:1    45.4 m

Total        665.6mt   545.7mt

Prophecy has received expressions of interest from several local and international entities. Prophecy is evaluating proposals and offers on power off-take, design and constructions of plant and transmission lines, and investment. Prophecy would like to caution that discussions are early stage that there are no assurances of positive conclusions in the imminent horizon.

The technical information 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.

Please visit the company's website for 3-D diagrams of Chandgana coal deposits, cross-sections and Mongolia electricity grid.