Prophecy Completes First Phase of District Exploration at Pulacayo

Vancouver, British Columbia, August 20, 2015 – Prophecy Development Corp. (“Prophecy” or the “Company”) (TSX:PCY, OTCQX:PRPCF, Frankfurt:1P2) is pleased to announce further to its press release dated July 7, 2015, that it has completed the first phase of its systematic, district exploration program at its Pulacayo project.

Detailed geological mapping and close-spaced sampling from surface trenches and underground tunnels were conducted at four priority target areas: El Abra, Pero, Paca North and Pacamayo. The detailed geological mapping has provided better information on the possible extent of mineralization. 495 samples have been collected. However, due to laboratory backlog, Prophecy has prioritized the most prospective samples for delivery to the laboratory. Prophecy has delivered the first batch of 30 samples to ALS Geochemistry Laboratory in Oruro, Bolivia for assay. Included with the 30 samples are QA/QC samples which will also be assessed to ensure the validity of the assay results. ALS Geochemistry Laboratory is a qualified and accredited laboratory.

A district exploration presentation and maps are available at http://www.prophecydev.com/pdf/Pulacayo_Rock_Samples_Pictures.pdf, along with high resolution, close-up pictures of the assayed samples. The assayed and pictured samples are non-representative of the sampled population.

Target Descriptions:

El Abra target (184 samples obtained):
Located north west of the Tajo vein system where a hydrothermal breccia system was identified. The reconnaissance mapping and sampling carried out in 2008 by Apogee Silver Ltd. (“Apogee”) identified a strong hydrothermal alteration of silica-alunite, associated with barite, pyrite and iron oxides. The outcrop samples showed the presence of galena crystals and assay of samples yielded lead values of up to 1%. The Phase 1 geological mapping found visible metallic sulphides, greater extent of oxidation and indicator minerals suggesting mineralization at depth.

Pero target (165 samples obtained):
Located south east of the Tajo vein system where reconnaissance mapping and sampling identified several veinlets of mineralization that developed into a stockwork. Limited rock sampling carried out in 2008 by Apogee yielded samples with assay values ranging from 15 to 262 g/t silver and ranging from 0.2 to 2.3% lead.

Paca North target (21 samples obtained):
Located approximately 1km north of Paca’s historic open-pit resource boundaries, and 7km north of the Tajo vein system. The target consists of a sequence of conglomerates with a siliceous matrix containing pyrite and barite. The area has an estimated dimension of 400m length, 100m width and 50m depth. Most of the cobbles of the conglomerate at the surface have silver values ranging from 50 g/t to 400 g/t and lead values ranging from 0.3 to 2%. The geological mapping found much abandoned underground mining development and barite veinlets.

Pacamayo target (125 samples obtained):
Located north east of the Tajo vein system where four veins were identified on the surface with estimated thickness of 2m and an estimated width of 26m. In underground mines developed by local residents, exposures of extensive vein development have been observed with an estimated width of 1.5m. Strong oxidation, indicator minerals and geological features found during the geological mapping suggest Pacamayo mineralization may be similar to the Tajo Vein System and mineralization may be found at depth.

The assay results are expected by late September 2015 and will be announced. The results will be integrated with the geological mapping and existing IP survey data to refine the geology of the targets. Drilling plans will then be developed for the second phase of this systematic district exploration program.

Paca Mineral Resource Estimate

Further to the Company press release dated April 2, 2015, a mineral resource estimate in accordance with NI 43-101 for the Paca open pit deposit based on a silver equivalency cut off value of 200g/t Ag Eq. is being prepared by Mercator Geological Services Limited. The Company expects to receive and announce the mineral resource estimate in September 2015.

Pulacayo Background and District Potential:

On June 18, 2015, Prophecy reported 1.27 million tonnes of indicated resource grading 530 g/t silver, 3.63% zinc, 2.51% lead (688 g/t Ag Eq.) for the Pulacayo project.*

Historic Pulacayo production was predominantly from the Tajo vein system which extends over a strike length of more than 2.5km and to a depth of at least 1,000m. Total production from the Pulacayo mine during the period 1857 to 1959 is estimated by the National Geological and Mineral Service of Bolivia (SERGEOTECMIN) to be 678 million ounces of silver, 200,000 tons (181,400 tonnes) of zinc and 200,000 tons (181,400 tonnes) of lead (SERGEOTECMIN Bulletin No. 30, 2002). Prior resource drilling only covered approximately 20% of the Tajo vein system strike length. With new drilling, there is potential to discover additional resources along the Tajo structure.

The Company is examining Pulacayo as a large-scale district silver project that includes a number of other well-known silver occurrences and anomalies in addition to the Tajo vein system. These include the: El Abra, Pero, Paca and Pacamayo prospects that all occur within 10km of the Pulacayo town site. The Company considers these as having potential for discovery of future mineral resources and is currently exploring these prospects using modern techniques.

*The mineral resource estimate was prepared in accordance with the CIM Definition Standards for Mineral Resources and Mineral Reserves referenced in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). The effective date of the estimate is June 16, 2015. Silver equivalent Ag Eg. (g/t) = Ag (g/t)*89.2% + (Pb% *(US$0.94/ lb. Pb /14.583 Troy oz./lb./US$16.50 per Troy oz. Ag)*10,000*91.9%) + (Zn% *(US$1.00/lb. Zn/14.583 Troy oz./lb./US$16.50 per Troy oz. Ag)*10,000*82.9%).

Metal prices used in the silver equivalent calculation are US$16.50/Troy oz. Ag, US$0.94/lb Pb and US$1.00/lb Zn. Metal recoveries 89.2% Ag. 91.9% Pb. 82.9% Zn. The mineral resource estimate was prepared by Mercator Geological Services Limited under supervision of Michael Cullen, P.Geo., who is an independent Qualified Person under NI 43-101. Refer to the Company’s June 18, 2015 press release at www.prophecydev.com.

Qualified Persons

The technical content of this news release was reviewed and approved by Christopher M. Kravits, P. Geo., who is a Qualified Person within the meaning of NI 43-101. Mr. Kravits is a consultant to the Company and serves as its Qualified Person and General Mining Manager.

About Prophecy

Prophecy Development Corp. is a Canadian public company listed on the Toronto Stock Exchange that is engaged in developing mining and energy projects in Mongolia Bolivia and Canada. Further information on Prophecy can be found at www.prophecydev.com.

PROPHECY DEVELOPMENT CORP.
ON BEHALF OF THE BOARD

“JOHN LEE”
Executive Chairman

For more information about Prophecy, please contact Investor Relations:

+1.604.563.0699
+1.888.513.6286
ir@prophecydev.com
www.prophecydev.com

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 “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, 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 forward-looking statements as may be included in this news release, Prophecy has made several assumptions that it believes are appropriate, including, but not limited to assumptions that: there being no significant disruptions affecting operations, such as 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.

Numerous factors could cause 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: 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 mineral 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 Bolivia, which is a developing jurisdiction; amendments to local Bolivian laws which may have an adverse impact on the Company’s operations; title to 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 Prophecy’s forward-looking statements. Prophecy believes that the expectations reflected in the forward-looking statements contained in this news release and the documents incorporated by reference herein 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. Prophecy undertakes no obligation to release publicly any future revisions to forward-looking statements to reflect events or circumstances after the date of this news or to reflect the occurrence of unanticipated events, except as expressly required by law.