Vancouver, British Columbia, May 10, 2012: Prophecy Coal Corp. (“Prophecy” or the “Company”) (TSX: PCY, OTCQX: PRPCF, Frankfurt: 1P2) As a result of a review by the British Columbia Securities Commission (“BCSC”), the Company is issuing this news release to clarify certain previous disclosures.  On January 17, 2012, the Company issued a news release describing a feasibility study (the “Report”) for a proposed mine-mouth power plant to be located adjacent to the Company’s Chandgana coal deposit in Mongolia.

Further to the Company’s January 24, 2012 news release, the Company reconfirms that the Report pertains to the power plant study only, and does not include an economic assessment of the Chandgana coal deposit pursuant to the Canadian National Instrument governing disclosure standards for mineral projects (NI 43-101).

Given the Report is linked to a specific coal deposit, a coal mine economic assessment under NI 43-101 is required before any disclosure can be made regarding the feasibility of a power plant project, as economics of each is integral to the other.  Until an NI 43-101 economic assessment is prepared for the Chandgana coal deposit which estimates a mine’s capital costs and the operating economics of coal production for power plant use, no meaningful feasibility study can be prepared in connection with the power plant.

To address the deficiency, the Company has retained John T. Boyd Company (“Boyd”) to prepare a NI 43-101 compliant preliminary economic assessment (PEA) for the Chandgana deposit. The report is expected to incorporate a summary assessment of the Chandgana power plant economics along with an assessment of the technical and economic viability of coal production from Chandgana’s coal resources to verify the feasibility of the input prices assumed in the Report.

Accordingly, the Company has fully retracted the power plant feasibility study disclosure until a Chandgana coal economic assessment is complete. The retracted disclosure includes the Company’s February 8, 2011 and September 15, 2011 news releases whereby progress on power plant feasibility was discussed.

The Company’s January 17th, 2012 news release also made reference to a Chandgana mine costing study that was not compliant with NI 43-101.  While no mine analysis from the study was disclosed, the Company should not have referred to any study which was non-compliant with NI 43-101.  The above commissioned study will supersede the costing study.

The Company’s news releases have on several occasions grouped together its estimated coal resources in the two Mongolian properties contrary to NI 43-101.  The Company clarifies that its Ulaan Ovoo deposit hosts a measured resource of 174 million tonnes and an indicated resource of 34 million tonnes, of which 20.7 million tonnes have been classified as a reserve in accordance with a December 2010 prefeasibility study.  The Chandgana property coal resources consist of three licenses. Chandgana Tal, located in the north-eastern end of the basin, includes two licenses and has a measured resource of 141 million tonnes. Khavtgai Uul contains one license and is located in the south-western end of the basin with a 509 million tonne measured and 539 million tonne indicated resource.  These resources are nearly contiguous being only some 14 km apart, and are close to important infrastructure – towns, roads, and electric transmission lines.  They are linked by paved highway to Mongolia’s capital, Ulaanbaatar, and the Trans-Mongolian Railroad.  Resources that are not reserves do not have demonstrated economic viability.

Finally, the Company notes all material information about the Company has now been brought current in its March 30, 2012 AIF (annual information form).  The Company has implemented procedures to ensure that material change reports are filed in a timely manner as required by securities legislation.

About Prophecy Coal

Prophecy Coal Corp. is a Canadian listed company engaged in developing energy projects in Mongolia. Prophecy’s primary project is a proposed 600 MW mine-mouth power plant adjacent to the Chandgana coal deposit which has been permitted by the Mongolian government.  Negotiations on financing, power purchase agreement and construction management are underway.  Further information on Prophecy Coal can be found at www.prophecycoal.com.

About John T. Boyd Company

BOYD is one of the world’s largest independent consulting firms exclusively serving the coal, mineral, financial, utility, and power-related industries.  BOYD has extensive work experience with lignite reserves and mines in the US and throughout the world, including numerous coal mining projects in Mongolia, ranging from start-up to major international mining operations.  Providing expert consultancy services since 1943, Boyd’s core competencies include mine planning and design, mining evaluations, geology and reserve valuations, strategic planning and financial analysis.  Further information on John T. Boyd Company can be found at www.jtboyd.com.
ON BEHALF OF THE BOARD OF DIRECTORS Prophecy Coal Corp.
“JOHN LEE”
John Lee
CEO/Chairman

David Brook
Manager, Investor Relations
1-800-358-5865
[email protected]
www.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.

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.