Private Placement Arranged for $507,500

October 10, 2007 - Prophecy Resource Corp. (TSX.V: PCY) has agreed to a non-brokered private placement of up to 1,450,000 flow-through units at a price of $0.35 per unit. Each unit will consist of one common share of the company and one half share purchase warrant, with each full warrant exercisable into one additional common share of the Company for a period of eighteen months from closing at an exercise price of $0.45 per share. Finders fees will be payable on a portion this placement, with the net proceeds being used for exploration of the Company's Okeover copper/molybdenum property located on the B.C. coast. This placement is subject to acceptance for filing by the TSX Venture Exchange.

The Okeover property encompasses 3,900 hectares (15 square miles) of mineral claims centered on the Bunster Hills, east of Okeover Inlet, and located 20 km north of Powell River. In late 2006, N.C. Carter, PhD, P.Eng. completed a technical report on the property pursuant to National Instrument 43-101 that estimated an inferred mineral resource for the North Lake Zone of 86.8 million tonnes grading 0.31% copper and 0.014% MoS2 at a 0.20% copper cut-off grade (approximately 593 Million lbs of copper and 15 million lbs of MoS2 ).

Drilling is currently scheduled to begin at Okeover in mid-October. The October drill program will continue to delineate the North Lake Zone, which is one of eight prospective zones identified at Okeover, but will also explore the South Breccia area, which has not had any significant exploration work undertaken for more than ten years.

The South Breccia area is a hydrothermal breccia first recognized in 1979. Between 1966 and 1977, seven corporations, including Noranda, Falconbridge and Asarco Exploration completed 14,000 metres of diamond drilling at Okeover. In 1979, two years following these campaigns, logging activities exposed the South Breccia Zone approximately 3.5 kilometres south of the North Lake Zone. In 1979, Aquarius Resources Ltd. completed three holes in this then newly discovered area (205 metres in total) with results which included 1.49% Copper over 9 metres in hole 79-2 and 0.49% Copper over 21 metres in hole 79-3. In 1996, Canquest Resource Corp. drilled a single 154 metre deep hole with the strongest mineralization in that hole (0.21% Cu) occurring at the bottom. A review of this drill hole indicates that it may have stopped short (to the east) of the South Breccia Zone. In addition, surface trenching returned assays of 2.4% copper and 0.52% MoS2 across a 12 metre width. Geological mapping of the area peripheral to the South Breccia discovery outcrop indicates that brecciation and silicification extend over an area of at least 300 metres by 600 metres, offering substantial potential for discovery.

This flow-through financing will enable Prophecy to satisfy the requirement of $1,000,000 in exploration at Okeover in order to earn its 60% joint venture interest in what we believe may prove to be a significant copper/molybdenum project located near infrastructure on the B.C. coast.
J.W. (Bill) Morton, P.Geo., a director of the Company and qualified person within the context of National Instrument 43-101, has read and takes responsibility for this news release.

This news release shall not constitute an offer to sell or the solicitation of any offer to buy the securities in any jurisdiction. The common shares will not be and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the U.S., or to a U.S. person, absent registration or an applicable exemption therefrom.

ON BEHALF OF THE BOARD OF DIRECTORS

"STUART ROGERS"

Stuart Rogers, Chief Financial Officer

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.


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.

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*Ulaan Ovoo: 174 million tonnes  of measured and 34 million tonnes of indicated coal. Ulaan Ovoo’s resource numbers are from the Behre Dolbear & Company (USA), Inc  report referenced in the Dec 2010, 43-101 Prefeasibility Study by Wardrop Engineering. Chandgana consists of two properties-Chandgana Tal and Chandgana Khavtgai. Chandgana Tal consists of 141 mt of measured resource. Chandgana Khavtgai consists of 509 mt measured and 539 mt indicated resource. Chandgana Khavtgai’s resource estimates are based on the September 2010 NI 43-101 Chandgana Khavtgai Technical Report by Kravits Geological Services, LLC. The report is authored by Christopher M. Kravits CPG, LPG of Kravits Geological Services, LLC., who was an independent Qualified Person under NI 43-101 at the time of report preparation. And the Chandgana Tal resource estimate is also based on the September 2007 NI 43-101 Chandgana Tal Technical Report by Behre Dolbear & Company (USA), Inc..The report is authored by Mr. Gardar G. Dahl, Jr., CPG of Behre Dolbear & Company (USA), Inc., who is an independent Qualified Person under NI 43-101.