Prophecy Completes Acquisition Of The Lynn Gabbros In Manitoba; Final Private Placement Closed For $828,580

Lynn Gabbros Property in Northern Manitoba

Further to a news release dated January 12, 2010, Prophecy Resource Corp. has received TSX Venture Exchange approval and closed a purchase agreement with VMS Ventures Inc. (TSX.V.VMS) whereby Prophecy has the right to acquire a 100% interest in the Lynn Gabbros property located in Manitoba, Canada, near Prophecy's Lynn Lake nickel-copper project.  Under the terms of the purchase agreement, Prophecy has issued 750,000 shares in its capital stock and will reimburse VMS Ventures Inc. for exploration expenditure obligations up to June 1, 2010 of up to $100,000.  Prophecy paid a finder's fee of $24,000 in connection with this acquisition.

The Lynn Lake nickel camp is located in northern Manitoba, about 320 kilometres by road, northwest of the Thompson mining camp.  Historically, Lynn Lake is the third largest nickel producing region in Canada.  Sherritt Gordon Mines Ltd. mined the Lynn Lake nickel-copper deposits from 1953 to 1976.  The Main and EL gabbro plugs produced 20,151,146 tonnes of ore at an average grade of 1.023% nickel and 0.535% copper from two mines over the 24 year period.

Prophecy currently has the option to earn a 100% interest in the main gabbroic plug from Victory Nickel Inc.  According to a technical report dated December 5, 2007, prepared by Wardrop Engineering for Independent Nickel Inc., the main plug contains a National Instrument 43-101-compliant measured and indicated resource of 17 million tonnes with an average grade of 0.62% nickel and 0.31% copper.  (This technical report can be accessed under Independent Nickel's filing at SEDAR.)  By acquiring the Lynn Gabbros claims, which include five gabbro plugs, from VMS Ventures, Prophecy now has six of the seven known gabbro plugs in the Lynn Lake area and is now the dominant player in terms of land size and resource base in the Lynn Lake nickel camp.  A map of the grabbos identified at Lynn Lake can be accessed at Prophecy's website.

Private Placement Of $828,580


Prophecy has now closed the second and final tranche of a private placement announced December 9, 2009 of 2,761,936 units to raise a total of $828,580.  Each unit consists of one share and one half-warrant, with each full warrant exercisable to purchase an additional share of the Company at $0.40 until January 25, 2012.  Proceeds from the private placement will be applied to acquisition costs and exploration of the Lynn Lake project and for working capital.  Finder's fees totalling $28,120 cash were paid in respect to a portion of this placement.

All of the shares, warrants and any shares issued upon exercise of the warrants issued pursuant to the private placement as well as the shares issued in consideration of the Lynn Gabbros property are subject to a hold period and may not be traded in Canada until May 26, 2010. 

Following completion of these transactions, Prophecy will have 29,892,266 common shares issued and outstanding.

For more information about Prophecy, please contact us toll-free at 1-800-459-5583.

About Prophecy Resource Corp.

Prophecy has entered into an agreement to acquire the Lynn Lake Nickel Project in Manitoba, which contains a National Instrument 43-101 compliant Measured and Indicated resource of 17 million tonnes with an average grade of 0.62% Nickel and 0.31% Copper at a 0.4% nickel cut-off grade. The Lynn Lake Technical Report, dated December 5, 2007, was prepared by Wardrop Engineering Inc. for Independent Nickel Inc. and is available under Independent Nickel's filings at www.sedar.com.    

Prophecy has also earned a 60% interest in the Okeover Copper-Molybdenum property in B.C. where, in 2006, Dr. N.C. Carter, PhD, P.Eng, completed a technical report on the Okeover Property pursuant to NI 43-101 that estimated an inferred mineral resource of 86.8 million tonnes grading 0.31% copper and 0.014% MoS2 at a 0.20% copper cut-off grade.  This report is available at www.sedar.com.  

 

ON BEHALF OF THE BOARD

John Lee
Chairman

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.


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.