Prophecy Coal Професи

Red Hill and Prophecy Provide Update on Capitalization

VANCOUVER, B.C. - April 7, 2010, : Red Hill Energy Inc. ("Red Hill") (TSX VENTURE:RH) and Prophecy Resource Corp. ("Prophecy")(TSX VENTURE:PCY)(OTCBB:PCYRF)(FRANKFURT:3P1) are pleased to announce that on March 31, 2010, each of Red Hill and Prophecy completed non brokered financings raising $3,114,000 and $3,344,506 in gross proceeds, respectively, for aggregate additional proceeds of $6,458,506. As previously disclosed, (see joint Red Hill / Prophecy news, January 21, 2010), Red Hill and Prophecy have entered into an Arrangement Agreement for the purposes of combining the businesses of Red Hill and Prophecy. The merged entity ("New Prophecy") will have working capital of approximately $7.65 million.

A total of 6,080,919 Units were placed by Prophecy at a price of $0.55 per Unit (each a "Prophecy Unit") generating gross proceeds of $3,344,506. Each Prophecy Unit consisted of one Prophecy common share (a "Prophecy Share") and one half of one share purchase warrant (a "Prophecy Placement Warrant"). Each whole Prophecy Placement Warrant entitles the holder to acquire one additional Prophecy Share at a price of $0.80 until March 31, 2012. In the event that the closing price of Prophecy's common shares on the TSX Venture Exchange is at least $1.10 for twenty consecutive trading days at any time following four months from the date of closing, Prophecy may reduce the remaining exercise period of the Prophecy Placement Warrants to not less than 30 days from the date of providing notice of such reduced exercise period.

A total of 5,463,158 Units were placed by Red Hill at a price of $0.57 per Unit (each a "Red Hill Unit") generating gross proceeds of $3,114,000. Each Red Hill Unit consisted of one Red Hill common share (a "Red Hill Share") and one full share purchase warrant (a "Red Hill Placement Warrant"). Each Red Hill Placement Warrant entitles the holder to acquire one additional Red Hill Share at a price of $0.71 until March 31, 2012. In the event that the closing price of Red Hill's common shares on the TSX Venture Exchange is at least $1.06 for ten consecutive trading days at any time following four months from the date of closing, Red Hill may reduce the remaining exercise period of the Red Hill Placement Warrants to not less than 30 days from the date of providing notice of such reduced exercise period.

All of the securities issued under the aforementioned Red Hill and Prophecy private placements are subject to a hold period expiring on August 1, 2010.

Pursuant to the plan of arrangement set forth in the Arrangement Agreement, Red Hill will create a new class of common shares called "Class A Shares". As the first step in the Arrangement, Red Hill intends to transfer $1,000,000 and its non-coal assets, principally the Red Lithium Property near Clayton Valley, Nevada and the Thor Rare Earth Property in Nevada and the Banbury Property in British Columbia, to Elissa Resources Ltd., a British Columbia company ("Elissa") in exchange for Elissa common shares. As a result of the recently completed private placements in each of Red Hill and Prophecy, and the expiry of 3,750,000 warrants of Red Hill on April 3, 2010, it is anticipated that approximately 60,557,189 Class A shares will be issued to the shareholders of Red Hill and approximately 36,115,785 Class A shares will be issued to the shareholders of Prophecy. Each one Red Hill share will be exchanged for 0.92 of a Class A Share and 0.25 of a Elissa common shares, and each Prophecy share will be exchanged for one Class A Share. In addition, each Red Hill stock option and warrant, including the Red Hill Placement Warrants, will entitle the holder to receive 0.92 Class A Share and each Prophecy stock option or warrant, including the Placement Warrants, will be exchanged for an option or warrant to acquire one Class A Share. Following completion of the Arrangement, Class A shares issued Red Hill shareholders will represent 63% of the merged entity's issued and outstanding Class A shares and Class A Shares issued to Prophecy shareholders will represent 37% of the merged entity's issued and outstanding Class A shares.

As a result of the Arrangement, the Prophecy securityholders will be Class A securityholders of Red Hill, Prophecy will be amalgamated with a wholly-owned subsidiary of Red Hill, and Prophecy will apply for voluntary delisting of its common shares from the TSX Venture Exchange. Following the Arrangement, Red Hill has agreed to change its name to "Prophecy Resource Corp." and will have a total of approximately 96,672,974 shares issued and outstanding, as well as options and warrants entitling holders to purchase approximately 30,088,865 Red Hill Class A Shares, comprising 6,996,600 options at exercise prices ranging from $0.25 to $1.03 and having expiry dates ranging from February 14, 2012 to March 24, 2015 and 23,092,265 warrants at exercise prices ranging from $0.10 to $1.36 and having expiry dates ranging from May 31, 2010 to March 31, 2012.

Elissa will have 16,455,758 common shares issued and outstanding, all of which will be held by former Red Hill shareholders and no options or warrants outstanding.

Over the 12 month period following the merger, New Prophecy will apply its attention and financial resources to the following:

• Continue with pre-operations activities to expedite production from the Ulaan Ovoo Coal Project, Mongolia (see Red Hill news March 18, 2010)
• Upgrade the resource categories and conduct expansion drilling on the Chandgana Coal Projects, Mongolia (see Red Hill news April 1, 2010)
• Continue with bulk tonnage metallurgical testing at the Lynn Lake Nickel Sulphide Project, Manitoba in addition to deep IP surveys in preparation of expansion drill programs (see Prophecy news March 24, 2010):

New Prophecy also has plans to conduct advanced exploration activities on the Titan vanadium property located in Ontario and the Okeover copper-molybedenum property located in British Columbia in 2010.

Prophecy Resource Corp.

John Lee - Chairman and CEO

Red Hill Energy Inc.

G. Arnold Armstrong - Chairman and CEO

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.

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.  

 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 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 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 failure to obtain necessary approvals in respect of the Transaction, 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 companies with securities regulators. 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. For more information on Prophecy and the risks and challenges of their businesses, investors should review their annual filings that are available at www.sedar.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."

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.