Mr. John Lee reports

PROPHECY ANNOUNCES ADOPTION OF SHAREHOLDER RIGHTS PLAN

Prophecy Coal Corp. has adopted a shareholder rights plan designed to encourage the fair treatment of its shareholders in the event of an unsolicited takeover bid for shares of the company. The rights plan is designed to give the company's shareholders sufficient time to properly assess a takeover bid without undue pressure and to give the company's board of directors time to consider alternatives that allow the company's shareholders to receive full and fair value for their common shares.

John Lee, chairman of Prophecy Coal, states, "Prophecy management believes the company is very undervalued, thus vulnerable, given the rise in value of its equity holding in Prophecy Platinum."

Pursuant to the rights plan, each holder of record of the outstanding common shares of the company on July 20, 2011, at 5 p.m. (PST) will be issued one right per common share. The rights will trade with the common shares and be represented by the certificates representing common shares. Although the rights plan is effective immediately, it is subject to TSX Venture Exchange approval and must be ratified by the shareholders of the company within six months of its adoption. The rights plan will be submitted to the shareholders of the company for ratification at an extraordinary meeting of shareholders, which is anticipated to be held in November or December of 2011.

A copy of the rights plan will be posted on SEDAR and on the website of the company.

The rights plan is similar to shareholder rights plans adopted by numerous other Canadian corporations. Neither the board nor senior management of the company is aware of any current, pending or threatened takeover bid for the company.

We seek Safe Harbor.