Prophecy Closes First Tranche of Private Placement

Vancouver , British Columbia, April 16, 2013: Prophecy Coal Corp. (“Prophecy” or the “Company”) (TSX: PCY, OTCQX: PRPCF, Frankfurt: 1P2) announced that it has closed the first tranche of the non-brokered private placement (the “Private Placement”) announced on February 7, 2013. The first tranche of the Private Placement raised gross proceeds of $613,560 through the issuance of 4,382,571 units (each a “Unit”) of the Company, of which each Unit consists of one common share (a “Share”) and 0.75 common share purchase warrant (a “Warrant”), at a purchase price of $0.14 per Unit. Each whole Warrant is exercisable into one common share of Prophecy at a price of $0.18, expiring two years from the date of issue. Finder’s fees of 6% were paid in connection with a portion of the first tranche of the Private Placement. The foregoing Shares, Warrants and any shares issued upon the exercise of the Warrants are subject to a hold period which expires August 12, 2013.

The Private Placement involves the issuance of up to 60 million Units for gross proceeds of $8.4 million. In its February 7, 2013, news release, the Company announced that NewMargin Prophecy Coal Ltd. (“NewMargin”) had subscribed for 40 million Units in the Private Placement. The Company continues to work towards the completion of the NewMargin portion of the Private Placement, and will provide further updates in due course.

TSX policy requires shareholder approval for (a) the acquisition by NewMargin of over 20% of the Company’s issued and outstanding Shares, and (b) for the Private Placement generally, as it will involve the issuance of more than 25% of the Company’s issued and outstanding Shares, in each case after giving effect to the exercise of the Warrants. At the closings of further tranches of the Private Placement, the Company intends to issue a combination of Units and special warrants (“Special Warrants”) to stay below each of these thresholds. 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 2013. If such approval is not obtained, the Special Warrants will be cancelled and the portion of the Placement proceeds which relates to their sale will be returned to the subscribers.

The proceeds of the Placement will be used for the Chandgana power plant project and for general working purposes.

About Prophecy’s Power Plant Project

Prophecy Coal Corp. is a Canadian TSX listed company engaged in developing coal properties and an energy project in Mongolia. The Company’s wholly-owned subsidiary, Prophecy Power Generation LLC, is advancing plans for the proposed 600 MW coal mine-mouth Chandgana power plant located in central Khentii Province in east-central Mongolia, which has been permitted by the Mongolian government. Chandgana Coal LLC, a wholly-owned Mongolian subsidiary of Prophecy Coal Corp, controls a significant coal asset located adjacent to the site of the proposed Chandgana power plant, which includes the two Chandgana Tal mining licenses containing 124 million tonnes of measured resource with an average strip ratio of 0.7 to 1, and the Khavtgai Uul license containing 509 million tonnes measured and 539 million tonnes indicated resource with a strip ratio of 2.2 to 1. Chandgana Coal LLC could potentially supply 3.5 million tonnes of coal per year for 25 years to the Chandgana power plant. Prophecy cautions that mineral resources that are not mineral reserves, do not have demonstrated economic viability, that the Chandgana project is located in Mongolia, and that its successful development is subject to a variety of risks, including substantial capital requirements. Readers are encouraged to refer to the risk factors disclosed in Prophecy’s most recent annual information form and MD&A, both of which are available at www.sedar.com, and to the caution regarding forward-looking statements below.

Further information on Prophecy and its projects can be found at www.prophecycoal.com

Qualified Person

Mr. Christopher Kravits, LPG, CPG, is a qualified person as defined under National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). Mr. Kravits is not considered independent of Prophecy Coal given the large extent that his professional time is dedicated solely to, and his position as Manager of Mining with, Prophecy Coal Corp. Mr. Kravits has reviewed and approved the technical and scientific disclosure within this news release.

ON BEHALF OF THE BOARD OF PROPHECY COAL CORP.
“JOHN LEE”
John Lee
Executive Chairman
For further information about Prophecy, please contact

Bekzod Kasimov
Manager, Business Development (Mongolia)
+976 – 11 327556
+976 – 99 012672
bekzod@prophecycoal.com

*Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this news release, including statements which may contain words such as “believes”, “could”, “potentially”, or similar expressions, and statements related to matters which are not historical facts, are forward-looking information within the meaning of applicable securities laws. Such forward-looking statements, which reflect management’s expectations regarding Prophecy’s future growth, results of operations, performance, business prospects and opportunities, are based on certain factors and assumptions and involve known and unknown risks and uncertainties which may cause the actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements. These estimates and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies, many of which, with respect to future events, are subject to change and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by Prophecy. In making the forward-looking statements in this news release, Prophecy has made several assumptions that it believes are appropriate, including, but not limited to assumptions that: all required third party contractual, regulatory and governmental approvals will be obtained for the development, construction and production of Prophecy’s properties and the Chandgana Power Plant; there being no significant disruptions affecting operations, whether due to 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 remain consistent with current levels; production forecasts meeting expectations, the accuracy of Prophecy’s current mineral resource estimates; labour and materials costs increasing on a basis consistent with Prophecy’s current expectations; and that any additional required financing will be available on reasonable terms. Prophecy cannot assure you that any of these assumptions will prove to be correct.

In light of the risks and uncertainties inherent in all forward-looking statements, the inclusion or incorporation by reference of forward-looking statements in this news release should not be considered as a representation by Prophecy or any other person that Prophecy’s objectives or plans will be achieved. Forward-looking statements in this news release include, without limitation, statements regarding the permitting, feasibility, plans for development and production of Prophecy’s Chandgana Power Plant, including finalizing of any power purchase agreement; the likelihood of securing project financing; estimated future coal production at the Chandgana coal mineral properties; and other information concerning possible or assumed future results of operations of Prophecy. Numerous factors could cause the Prophecy’s actual results to differ materially from those expressed or implied in the forward looking statements, including the following risks and uncertainties, which are discussed in greater detail under the heading “Risk Factors” in Prophecy’s most recent Management Discussion and Analysis and Annual Information Form as filed on SEDAR and posted on Prophecy’s website www.prophecycoal.com: Prophecy’s history of net losses and lack of foreseeable cash flow; exploration, development and production risks, including risks related to the development of Prophecy’s coal properties; Prophecy not having a history of profitable mineral production; the uncertainty of mineral resource and mineral reserve estimates; the capital and operating costs required to bring Prophecy’s projects into production and the resulting economic returns from its projects; foreign operations and political conditions, including the legal and political risks of operating in Mongolia, which is a developing jurisdiction; the availability and timeliness of various government approvals and licenses; the feasibility, funding and development of the Chandgana Power Plant; title to the Prophecy’s mineral properties; environmental risks; the competitive nature of the mining business; lack of infrastructure; Prophecy’s reliance on key personnel; uninsured risks; commodity price fluctuations; reliance on contractors; Prophecy’s need for substantial additional funding and the risk of not securing such funding on reasonable terms or at all; foreign exchange risks; anti-corruption legislation; recent global financial conditions; the payment of dividends; and conflicts of interest.

These factors should be considered carefully, and readers should not place undue reliance on the Prophecy’s forward-looking statements. Prophecy believes that the expectations reflected in the forward-looking statements contained in this news release are reasonable, but no assurance can be given that these expectations will prove to be correct. In addition, although Prophecy has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended.