Prophecy Provides EPC, PPA, Project Financing Update on Chandgana Power Plant Project

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 01/24/12 -- Prophecy Coal Corp. ('Prophecy' or the 'Company') (TSX: PCY)(OTCQX: PRPCF)(FRANKFURT: 1P2) is pleased to provide the following update on EPC (Engineering, Procurement, Construction), PPA (Power Purchase Agreement), and project financing in connection with its proposed 600 MW Chandgana power plant project in Mongolia.

In the past 90 days, 4 Chinese EPC companies have reviewed information in our project data room and conducted project site visits in Mongolia. In addition, there are several other international companies that have expressed written interest in bidding on the required EPC contracts. Prophecy has prepared and distributed an RFP (Request For Proposal), and expects to have key EPC proposals by March 31, 2012. As part of any successful proposal, an EPC firm is expected to bring in a lender for debt financing to contribute to the overall project financing. The Company expects to conclude EPC selection in Q2, 2012.

Since obtaining the power plant construction license in November 2011, Prophecy has been in close dialog with the Mongolian Ministry of Natural Resources and Energy regarding the drafting and signing of the Chandgana PPA. To date, there have been several meetings between Prophecy and officials in various departments within the Ministry. In January, a working commission on the PPA was constituted and endorsed by the Minister. Prophecy is working closely with the commission towards a fair and balanced PPA. The goal is to conclude the PPA and EPC selection at the same time.

Separately, Prophecy has met in Beijing with Chinese government-sponsored policy banks currently involved in Mongolian projects, as well as private equity firms engaged in international energy production projects. IPP (independent power plant) projects in Asia, offering stable yields, have garnered interest from institutional investors and Prophecy expects Chandgana to be similarly viewed. Whilst not a certainty, Prophecy is optimistic that upon signing a successful PPA, the Company can secure the necessary equity funding in 2012 to move the project towards construction in Q2, 2013.

Further to the news release dated January 17, 2012, Prophecy wishes to clarify that the feasibility study announced in that release was for the power plant project only, which is a study that does not fall under National Instrument 43-101 (Standards of Disclosure for Mineral Projects). No feasibility study has yet been prepared on the related coal deposit resource so there can be no assurance that the projected annual volume of coal required by the plant would be available from Chandgana, or any other potential coal source. The Qualified Person endorsement in the news release referred only to the resource information contained therein and not to the power plant information.

About Prophecy Coal

Prophecy Coal Corp. is a Canadian listed company engaged in developing energy projects in Mongolia. The company has over 1.4 billion tonnes of surface minable thermal coal resources on two coal properties in Mongolia. Prophecy Coal's Ulaan Ovoo coal mine is in production and its Chandgana mine- mouth power plant has been permitted. Prophecy Coal is the controlling shareholder of Prophecy Platinum Corp (TSX VENTURE: NKL). Mineral resources that are not mineral reserves 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 of Prophecy Coal Corp.

John Lee, CEO/Chairman

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 regarding future plans and objectives of the companies 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 general economic, regulatory, market or business conditions, and other risks detailed herein and from time to time in the filings made by the companies with securities regulators. Mineral exploration and development of mines is an inherently risky business and large infrastructure projects such as power plants require huge amounts of capital which may not be available to Prophecy on terms which will allow its shareholders to realize a reasonable return or on any terms at all. 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 its business, investors should review filings that are available at www.sedar.com.

'Neither the TSX Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Exchange) accepts responsibility for the adequacy or accuracy of this release.'

Contacts:

Prophecy Coal Corp.

Chris Ackerman

Manager, Investor Relations

1-800-459-5583
cackerman@prophecycoal.com
www.prophecycoal.com