Prophecy Coal Corp.: Ulaan Ovoo Update

Marketwired

VANCOUVER, BRITISH COLUMBIA--(Marketwire -08/09/12)- Prophecy Coal Corp. ("Prophecy" or the "Company") (PCY.TO)(PRPCF)(1P2.F) announces that Ulaan Ovoo, Mongolia, coal mining operations have been temporarily suspended since July 2012 because the current stockpile of coal (187,000 tonnes) is sufficient to meet contractual supply obligations through the balance of 2012. Approximately 80 mining staff were laid-off and paid aggregate severance of approximately $100,000 to comply with local employment laws. Some 15 staff members remain on site for equipment and site maintenance, shipping and security operations during the shutdown. With little local employment competition, the local labour force is expected to remain available for prompt rehire when needed. The shutdown is expected to run for approximately 6 months but could end sooner if any significant new coal sale agreements are entered into. Start-up can be effected in a matter of weeks. Management is using the downtime to work with Mongolian officials to seek road and bridge improvements, and to open Zeltura border to facilitate Russia export sales. The overall effect of the suspended operations will be modestly cash flow positive as Ulaan Ovoo operations had not yet achieved break-even levels. The Company's priority is to conclude Chandgana power plant JV discussion. Please refer to August 6, 2012 press release for the Chandgana project update.

About Prophecy Coal

Prophecy Coal Corp. is a Canadian listed company engaged in developing energy projects in Mongolia. The Company's wholly-owned subsidiary Prophecy Power is advancing plans for a proposed 600 MW mine-mouth power plant, which has been permitted by the Mongolian government, adjacent to its Chandgana coal deposit. Negotiations on financing, power purchase agreement and construction management are underway. Substantially all of the Company's resources are not mineral reserves and hence do not have demonstrated economic viability.

Further information on Prophecy Coal can be found at www.prophecycoal.com.

ON BEHALF OF THE BOARD OF PROPHECY COAL CORP.

JOHN LEE, CEO/Chairman

Forward Looking Statements: This news release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, including, without limitation, statements regarding future plans and objectives of the companies are forward-looking statements that involve various risks and uncertainties. Although Prophecy believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Forward-looking statements are based on a number of material factors and assumptions. Factors that could cause actual results to differ materially from those in forward-looking statements include general economic, regulatory, market or business conditions, and other risks detailed herein and from time to time in the filings made by the companies with securities regulators. Mineral exploration and development of mines is an inherently risky business and large infrastructure projects such as power plants require huge amounts of capital which may not be available to Prophecy on terms which will allow its shareholders to realize a reasonable return or on any terms at all. Accordingly the actual events may differ materially from those projected in the forward-looking statements. For more information on Prophecy and the risks and challenges of its business, investors should review filings that are available at www.sedar.com.

"Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release."

Contact:

Prophecy Coal Corp.
Chris Ackerman
Manager, Investor Relations
1-800-459-5583
cackerman@prophecycoal.com
www.prophecycoal.com

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