"Vancouver, British Columbia, May 4, 2011: Prophecy Resource Corp. (“Prophecy” or the “Company”) (TSX-V: PCY, OTCQX: PRPCF, Frankfurt: 1P2) announces that it has entered into an Option Agreement ("Agreement") with a private Mongolian company ("Seller") holding an exploration license near Prophecy’s Ulaan Ovoo mine, pursuant to which Prophecy has been granted the right to acquire 100% ownership for US $2 million within the first year, or US $4 million in the second year of the execution of the Agreement.
The 4,773-hectare property has an existing, fully transferable exploration license located 17 km northeast of Prophecy’s producing Ulaan Ovoo coal mine. It is contiguous to Prophecy’s existing exploration license covering 7,392 hectares. These exploration licenses are located in the same structural basin as the Ulaan Ovoo Mine. Recent reconnaissance programs including geophysical work to date indicates the presence of shallow sedimentary rocks up to 100meters in thickness, which demonstrates the potential for coal discovery. Prophecy plans to commence drilling operations on the 4,773 hectare property in June 2011.
Pursuant to the Agreement, Prophecy has the right to acquire 100% of the property by making the following payments to the Seller:
US$200,000 on agreement signing (paid); and
US$1,800,000 before April 21, 2012, 50% payable in Prophecy shares.
Or
US$200,000 on agreement signing (paid);
US$500,000 on April 22, 2012; and
US$3,300,000 before April 21, 2013, 50% payable in Prophecy shares
A 2% net royalty on production from the Property is payable to the Seller, which can be purchased at any time at Prophecy’s discretion for US$1,000,000 on or before April 21, 2013. Half (½) of the royalty purchase price shall be payable through the issuance of common shares of Prophecy.
The transaction is subject to regulatory approval, including the approval of the TSX Venture Exchange.
This news release has been reviewed and approved by Christopher M. Kravits, PGeo who is a Qualified Person as defined in NI 43-101. Mr. Kravits has 34 years of US and international relevant coal geology experience. He has been active in Mongolia since 2007.
Please visit www.ProphecyResource.com to review property claim maps with proposed drill holes and geophysical surveys.
About Prophecy Resource
Prophecy Resource Corp. is an internationally diversified company engaged in developing energy, nickel and platinum group metals projects. The company controls over 1.4 billion tonnes of surface minable thermal coal resources in Mongolia. Prophecy's Ulaan Ovoo coal mine is fully operational and its Chandgana mine mouth power plant is currently being permitted. In Canada, Prophecy owns the Wellgreen PGM Project in Yukon and Lynn Lake Nickel Sulphide Project in Manitoba, both of which it has agreed to sell to Pacific Coast Nickel Corp. Prophecy also owns equity stakes in Victory Nickel Inc. and Compliance Energy Corp. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
ON BEHALF OF THE BOARD OF DIRECTORS Prophecy Resource Corp.
"JOHN LEE"
John Lee
CEO/Chairman
Telephone 1.800.851.1528
Email: john@prophecyresource.com
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 Northern and Prophecy believe 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, 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. Accordingly the actual events may differ materially from those projected in the forward-looking statements. For more information on Northern and Prophecy and the risks and challenges of their businesses, investors should review their annual filings that are available at www.sedar.com.
This press release does not constitute an offer to sell or a solicitation to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (“the U.S. Securities Act”) or any state securities law and may not be offered or sold in the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
FOR FURTHER INFORMATION PLEASE CONTACT:
Scott Parsons
Prophecy Resource Corp.
1.604.642.2625 ext. 106
or Paul McKenzie
Prophecy Resource Corp.
1.604.642.2625 ext. 107
or John Lee
Prophecy Resource Corp.
1.800.851.1528
john@prophecyresource.com Prophecy Resource Corp.
John Lee - Chairman and CEO
For further information:
John Lee
Telephone 1.800.851.1528
Email: john@prophecyresource.com
www.prophecyresource.com
"Neither The TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."
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