Mr. John Lee reports

PROPHECY SIGNS NON-BINDING JOINT DEVELOPMENT AGREEMENT WITH CHINESE PARTNER TO INVEST IN CHANDGANA POWER PLANT IN MONGOLIA

Prophecy Development Corp. today signed a non-binding joint development agreement (JDA) with a Chinese partner to invest in the company's 600-megawatt Chandgana power plant in Mongolia.

Prophecy Power Generation LLC, a wholly owned subsidiary of Prophecy, is developing the Chandgana coal-fired power plant project, which includes the construction of a 600-megawatt coal-fired mine-mouth power plant in two phases.

Further to the company's press releases dated Nov. 14, 2012, and Aug. 19, 2015, the strategic partner has established a presence in Mongolia and represents the overseas investment subsidiary of a large-scale Chinese state-owned power generation group. The strategic partner had previously executed a memorandum of understanding and exclusivity agreement with Prophecy.

Under the JDA, the companies will create a consortium, whereby the strategic partner will provide legal, financial and technical experts to assist Prophecy to negotiate and finalize the concession agreement (CA), power purchase agreement (PPA) and tariff agreement with the relevant Mongolian ministries and agencies. Upon satisfactorily completing these agreements, the parties intend to enter into an investment arrangement that will result in the strategic partner owning a minimum 51-per-cent stake in the Chandgana power plant.

With the signing of the JDA today, and the engineering procurement and construction contract with SEPCO2 dated Dec. 18, 2015, Prophecy has requested the Mongolian energy ministry to expedite the signing of the CA and PPA.

We seek Safe Harbor.