Vancouver, British Columbia, July 16, 2012: Prophecy Coal Corp. (“Prophecy” or the “Company”) (TSX: PCY, OTCQX: PRPCF, Frankfurt: 1P2) has arranged a $10 million secured debt facility (the “Loan”) with Waterton Global Value, L.P. (“Waterton Global”).  The funds will be used to complete the purchase of the Tugalgatai, Mongolia coal licenses on which a large coal resource is known to exist as described in the Company’s news release of June 18, 2012.  The Loan has a one year term and bears interest at 14% per annum.  A structuring fee of 2.5% plus a bonus of $600,000 are payable through the issuance of 2,735,617 of the Company’s common shares on closing of the Loan which occurred today.  These shares are subject to a four month hold period.

John Lee, CEO of Prophecy, stated today that “We appreciate Waterton Global’s continuing support.  The proceeds will fully fund completion of the acquisition of Tugalgatai coal licenses which are expected to significantly increase our coal resources.”

Cheryl Brandon, Portfolio Manager at Waterton Global, stated “We look forward to working with Prophecy Coal to finance the Company as they continue to expand in the Chandgana Coal Basin.  The Waterton Global facility provides the required capital to complete the recently announced $10 million coal license acquisition and implement the company’s production growth strategy in the region.”

About Prophecy Coal

Prophecy Coal Corp. is a Canadian listed company engaged in developing energy projects in Mongolia. Prophecy’s Ulaan Ovoo mine has achieved production status.  Prophecy’s proposed 600 MW mine-mouth power-plant adjacent to the Chandgana coal deposit has been permitted by the Mongolian government.  Negotiations on financing, power purchase agreement and construction management are being pursued.

Further information on Prophecy Coal can be found at www.prophecycoal.com.
ON BEHALF OF THE BOARD OF DIRECTORS Prophecy Coal Corp.
“JOHN LEE”
John Lee
CEO/Chairman

Chris Ackerman
Senior Manager, Investor Relations
1-800-459-5583
[email protected]
www.prophecycoal.com

*Mineral resources that are not mineral reserves do not have demonstrated economic viability.
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.