Prochecy Coal Професи

Prophecy Completes Transportation Study On Its Ulaan Ovoo Coal Project And Tenders For Trucking Contracts From Mine Site To Railroad Offload

Vancouver, British Columbia, June 4, 2010: Prophecy Resource Corp. ("Prophecy" or the "Company") (TSX-V:PCY, OTC: PRPCF, Frankfurt: 1P2) reports that it has received an independent transportation Study for trucking of coal from its proposed Ulaan Ovoo mining operations to Mongolia's Sukhbaatar Railroad Station (Trans-Mongolian Railway) to fulfill secured capacity to transport a minimum of 1.5 million tonnes of coal annually to Russia and/or China.

The Sukhbaatar Station borders Russia and is located 120km (75 miles) by road east of Prophecy's 208.8 million tonne (174.5 Measured, 34.3 Indicated) Ulaan Ovoo coal project. Coal produced at the proposed Ulaan Ovoo mining operations will be hauled by trucks from Ulaan Ovoo mine site via public road to the Sukhbaatar Railroad station. The coal will then be transported to the eastern seaboard port of Vladivostock via Trans-Siberian Railway. Vladivostock is a leading coal port to the world's largest coal importing nations, Japan South Korea and Taiwan. Coal prices comparable to Ulaan Ovoo's quality have been exceeding US$ 85 per tonne at Vladivostock.

The independent transportation study was prepared by RandTip of South Africa. RandTip specializes in the short and long distance hauling of coal for clients such as X-Strata, Amcoal and Eskom(SA).

RandTip and representatives from Mercedes Benz of Germany visited Ulaan Ovoo in May of this year and produced a cost study taking into consideration the condition of the haul road, its ongoing maintenance requirements, equipment selection, and the travelling speed at which payload can be safely carried.

Based on a 50,000 tonne per month throughput (600,000 tonnes a year), the optimal cost per tonne is estimated to be $11.91/t based on 17 haul trucks with 60 tonne pay load and 2 cycles per day.

Based on a 175,000 tonne per month throughput (2,100,000 tonnes per year), the optimal cost per tonne is estimated to be $10.65/t based on 58 haul trucks with 60 tonne pay load and 2 cycles per day.

The cost per tonne estimates include truck leasing, driver, maintenance, fuel, and G&A. Mercedes Benz have confirmed the leasing availability of a truck fleet for Prophecy with 10 week lead time.

The entire cost table based on various throughput, truckload, and cycles can be accessed at www.prophecyresource.com. Prophecy has thus completed its mining and transportation cost model, which is being incorporated into a prefeasibility being prepared by Wardrop Engineering Inc, wholly owned by Tetra Teck Inc (NASDAQ: TTEK) to be released in early July of this year. Prophecy is currently engaged in multi party discussion on securing Ulaan Ovoo coal off-take agreements. About Ulaan Ovoo

The Ulaan Ovoo project is located within 10 km of the Russian border, northern Mongolia and is 120km (75 miles) east of the Central Mongolian Railroad which links the project to the vast coal markets of Russia and Asia.

On May 11, Prophecy entered into a mine services agreement with Leighton Asia Ltd. for the equipment leasing and mining operation at the Ulaan Ovoo coal deposit. Mine site establishment will commence in July, 2010 to ensure 250,000-tonne production in 2010. The pay-as-you-go contract mining and equipment leasing cost for 2010 is $3.7 million. The 2011 target is 2 million tonnes and Leighton expects to present similar contract terms on a cost-per-tonne basis.

On May 21, Prophecy secured rail loading facilities to transport over 1.5 million tonnes per year of Mongolian Coal to Russia and China.

The project contains 174.5 million tons Measured, 34.3 million tons Indicated and 35.9 million tons of Inferred thermal coal. The coal is of excellent low ash (<15%) and sulfur quality (<1%) at 5,204 KCAL/KG which is highly desired regionally. SGS Coal Quality by Seam Specification is available to down load at Prophecy's website. The average seam thickness of the resource is 53.9 metres with a stripping ratio of 2.0:1 on the first 140 million tons and requires no washing for the first 50 million tonnes of production.

The Mongolian government has granted the Ulaan Ovoo project a 30 year mining license that can be extended by an additional 40 years. The project has met Mongolian environmental approvals as per the Mongolian Ministry of Nature and the Environment which approved a Detailed Environmental Impact Assessment (DEIA) and Environmental Protection Plan (EPP). As the last step to commence mining, Prophecy filed for its Ulaan Ovoo operating permit in April including necessary license, mine plan, and environmental approvals. The Company anticipates obtaining the permit by summer 2010.

The material in this news release has been reviewed and approved by Danniel Oosterman P. Geo, a Prophecy geologist and also a Qualified Person as defined by NI 43-101.

For more information about Prophecy, please contact Paul McKenzie at +1.604.642.2625 ext. 107 or John Lee at +1.800.851.1528.

Ulaan Ovoo's Connection to Russia's Trans-Siberian Railway
Click to enlarge

The material in this news release has been reviewed and approved by Danniel Oosterman P. Geo, a Prophecy geologist and also a Qualified Person as defined by NI 43-101. For more information about Prophecy, please contact Scott Parsons at +1.604.642.2625 ext. 106 or John Lee at +1.800.851.1528

About Prophecy

Prophecy Resource Corp is a near term coal producer with 1 billion tonnes of Measured and Indicated open-pittable thermal coal resources in Mongolia. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The Company's other focus is in Nickel Sulphide in Canada, where Prophecy owns 100% of the Lynn Lake Nickel Sulphide project in Manitoba and 10% stake in Victory Nickel (TSX: NI). The Company is currently reviewing additional opportunities for growth.  

For more information about Prophecy, please contact John Lee at +1.800.851.1528.
ON BEHALF OF THE BOARD OF DIRECTORS
Prophecy Resource Corp.
"JOHN LEE"
John Lee
Chairman

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