Vancouver, British Columbia, August 9, 2012: Prophecy Coal Corp. (“Prophecy” or the “Company”) (TSX: PCY, OTCQX: PRPCF, Frankfurt: 1P2) announces that Ulaan Ovoo, Mongolia, coal mining operations have been temporarily suspended since July 2012 because the current stockpile of coal (187,000 tonnes) is sufficient to meet contractual supply obligations through the balance of 2012.  Approximately 80 mining staff were laid-off and paid aggregate severance of approximately $100,000 to comply with local employment laws.  Some 15 staff members remain on site for equipment and site maintenance, shipping and security operations during the shutdown.  With little local employment competition, the local labour force is expected to remain available for prompt rehire when needed.  The shutdown is expected to run for approximately 6 months but could end sooner if any significant new coal sale agreements are entered into.  Start-up can be effected in a matter of weeks.  Management is using the downtime to work with Mongolian officials to seek road and bridge improvements, and to open Zeltura border to facilitate Russia export sales.  The overall effect of the suspended operations will be modestly cash flow positive as Ulaan Ovoo operations had not yet achieved break-even levels.  The Company’s priority is to conclude Chandgana power plant JV discussion.  Please refer to August 6, 2012 press release for the Chandgana project update.

About Prophecy Coal

Prophecy Coal Corp. is a Canadian listed company engaged in developing energy projects in Mongolia.  The Company’s wholly-owned subsidiary Prophecy Power is advancing plans for a proposed 600 MW mine-mouth power plant, which has been permitted by the Mongolian government, adjacent to its Chandgana coal deposit.  Negotiations on financing, power purchase agreement and construction management are underway. Substantially all of the Company’s resources are not mineral reserves and hence do not have demonstrated economic viability.

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
Manager, Investor Relations
1-800-459-5583
[email protected]

*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.