Prophecy Announces Private Placement with An Asian Strategic Partner

Vancouver, British Columbia, February 7, 2013: Prophecy Coal Corp. (“Prophecy” or the “Company”) (TSX: PCY, OTCQX: PRPCF, Frankfurt: 1P2) announces that it is undertaking a non- brokered private placement to raise gross proceeds of up to Can. $8,400,000 (the “Placement”).

The Placement involves the issuance of up to 60,000,000 units (each a ‘Unit”) at a price of $0.14 per Unit. Each Unit consists of one common share (a “Share”) of the Company and 0.75 of a share purchase warrant (a “Warrant”). Each whole Warrant entitles the holder to acquire an additional Share at a price of $0.18 per Share for a period of two years following closing. NewMargin Prophecy Coal Ltd. (“NewMargin”), at arms lengths to the Company, has subscribed 40 million units of this financing. Company insiders may participate in the Placement.

The Company intends to issue a combination of Units and special warrants (“Special Warrants”) to keep the share issuance under 25% of the Company’s outstanding common shares. Each Special Warrant will be automatically exercised for one Unit without payment of additional consideration following receipt of shareholder approval, which the Company will seek at its next annual general meeting in June.
The proceeds of the Placement will be used to prepare for Chandgana power plant construction and for general working purposes.

The Shares are subject to a minimum hold period of four months plus one day. Finder’s fees may be paid as part of this private placement.

The Placement is subject to the approval of the Toronto Stock Exchange.

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 Generation LLC (“Prophecy Power”), is advancing plans for a proposed 600 MW coal mine-mouth power plant, which has been permitted by the Mongolian government, adjacent to its Chandgana coal deposit.  Chandgana Coal LLC, another wholly-owned Mongolian subsidiary of Prophecy Coal, is expected to supply 3.5 million tonnes of coal per year to Prophecy Power for 25 years.  Chandgana Coal LLC controls over 1.2 billion tonnes of thermal coal in the measured and indicated categories, including two mining licenses containing 141 million tonnes of measured resource with a strip ratio of 0.7:1.  Substantially all of the Company’s resources are not mineral reserves, hence they do not have demonstrated economic viability.  The Company cautions that the Chandgana project is in Mongolia and requires substantial capital to develop.

Further information on the Company can be found at www.prophecycoal.com.

The technical contents of this news release have been reviewed and approved by Christopher M. Kravits, P.Geo., who is a Qualified Person as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects.  Mr. Kravits has 34 years of US and international relevant coal geology experience.  He has been active in Mongolia since 2007.

ON BEHALF OF THE BOARD OF PROPHECY COAL CORP.

“JOHN LEE”
John Lee
CEO/Chairman

For more information about Prophecy, please contact:

Bekzod Kasimov
Business Development Manager
1-888-513-6286
bekzod@prophecycoal.com

Forward Looking Statements: This news release includes certain “forward-looking statements” and “forward looking information” as defined under applicable securities regulatory authorities in Canada (collectively, the “forward-looking statements”). All statements in this release, other than statements of historical fact, including, without limitation, statements of potential mineralization, the estimation of mineral resources, the realization of mineral resource estimates, interpretation of prior exploration and potential exploration results, the timing and success of exploration activities generally, the timing and results of future resource estimates, permitting time lines, metal prices and currency exchange rates, availability of capital, government regulation of exploration operations, environmental risks, reclamation, title, and future plans and objectives of the Company are forward-looking statements that involve various risks and uncertainties. Although Prophecy Coal 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 unsuccessful exploration results, changes in project parameters as plans continue to be refined, results of future resource estimates, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, risks associated with operating in foreign jurisdictions, uninsured risks, regulatory changes, defects in title, availability of personnel, materials and equipment on a timely basis, accidents or equipment breakdowns, delays in receiving government approvals, unanticipated environmental impacts on operations and costs to remedy same, and other exploration or other risks detailed herein and from time to time in the filings made by the Company with securities regulators. Assumptions underlying the Company’s expectations regarding forward-looking statements contained in this news release include, among others, that all required third party contractual, regulatory and governmental approvals will ultimately be obtained for the development, construction and production of the Company’s properties, there being no significant disruptions affecting operations, including labour disruptions, currency exchange rates being approximately consistent with current levels, certain price assumptions for coal, prices for and availability of fuel, parts and equipment and other key supplies remaining consistent with current levels, production forecasts meeting expectations, the accuracy of the Company’s current mineral resource and reserve estimates, labour and material costs increasing on a basis consistent with the Company’s current expectations and that any additional required financing will be available on reasonable terms. Readers are cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. 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.  The Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect changes in assumptions or the occurrence of anticipated or unanticipated events, except as required by law. For more information on Prophecy Coal and its wholly-owned subsidiaries and the risks and challenges of their businesses, investors should review their annual filings that are available at www.sedar.com.