Prophecy Resource Corp. and Pacific Coast Nickel Corp. Sign Arrangement Agreement

Vancouver, British Columbia, April 4, 2011: Prophecy Resource Corp. ("Prophecy") (TSX-V: PCY, OTCQX: PRPCF, Frankfurt: 1P2) and Pacific Coast Nickel Corp. ("PCNC") (TSX-V: NKL) ("PCNC", and collectively with Prophecy, the "Companies") are pleased to announce that further to their announcements on January 18, 2011 and February 17, 2011, they have signed the definitive arrangement agreement ("Arrangement Agreement") to sell Prophecy's Wellgreen PGM Ni-Cu and Lynn Lake Nickel projects (the "Projects") to PCNC.

Pursuant to the Arrangement Agreement, the transaction will be implemented by way of a plan of arrangement under the Business Corporations Act (British Columbia). (the "Arrangement").  Prior to the Arrangement, Prophecy will transfer the assets comprising the Projects, as well as $2 million cash, to a newly incorporated subsidiary ("Spinco"), PCNC will then acquire 100% of the shares of Spinco in exchange for the issuance of 450,000,000 common shares in the capital of PCNC (the "PCNC Shares"), of which 225,000,000 PCNC Shares will be retained by Prophecy and 225,000,000 PCNC Shares will be distributed  or reserved for distribution on a pro rata basis to holders of Prophecy shares on a fully diluted basis ("PCNC Distribution").  Prophecy may also grant up to 500,000 options prior to the effective time of the Arrangement. 

Upon completion of the Arrangement, Prophecy and its shareholders will hold approximately 88.97% of the issued and outstanding shares of PCNC.  Following the completion of the Arrangement, Prophecy will change its name to "Prophecy Coal Corp." and PCNC will consolidate its share capital on a 10:1 basis and be renamed as "Prophecy Platinum Corp.".

The effective date of the Arrangement and the PCNC Distribution (the "Effective Date")  is expected to be in early May.  It is not possible at this time to determine a Prophecy shareholder's exact entitlement to PCNC Shares as a result of the Arrangement. As of the date of this press release, there are 189,669,994 Prophecy shares issued and outstanding and 47,650,658 Prophecy options and warrants issued and outstanding. Assuming those numbers were unchanged on the Effective Date, each Prophecy shareholder would be entitled to 0.9482 of a pre-consolidation PCNC Share, and each Prophecy convertible securityholders, when exercising their options or warrants, as the case may be would receive one Prophecy share and 0.9482 of a pre-consolidation PCNC Share. In the event that more Prophecy shares, options or warrants are issued and outstanding on the Effective Date, the number of PCNC Shares to which a Prophecy shareholder shall be entitled to will be reduced in accordance with their pro rata holdings.

Prophecy and PCNC will each be convening a shareholders meeting to consider and approve the Arrangement and related transactions.  It is expected that the shareholder meetings will occur in early May.  A joint management information circular containing detailed disclosure regarding the Arrangement and related transactions will be mailed to Prophecy and PCNC shareholders.

Completion of the Arrangement is subject to a number of conditions, including the approvals of the shareholders of Prophecy and PCNC, the Supreme Court of British Columbia, and the TSX Venture Exchange, as well as other customary conditions. The Arrangement Agreement and related information circular will be filed and available for public download at www.sedar.com .

About Prophecy Resource

Prophecy Resource Corporation is an internationally diversified company engaged in developing energy, nickel and platinum group metals projects. The company controls over 1.4 billion tons of open-pittable thermal coal in Mongolia (839 Mt Measured, 579 Mt Indicated). Prophecy's Ulaan Ovoo coal mine is fully commissioned.

About PCNC

Pacific Coast Nickel Corp is a Canadian based nickel and copper base metal exploration company actively exploring properties in Canada, Argentina and Uruguay.

 

ON BEHALF OF THE BOARD OF DIRECTORS Prophecy Resource Corp.
"JOHN LEE"
John Lee
Chairman
Telephone 1.800.851.1528
Email: [email protected]

Pacific Coast Nickel Corp.
"John Lee"
John Lee
Chairman and Interim CEO
For further information:
John Lee
Telephone 1.800.851.1528
Email: [email protected]

www.pacificcoastnickel.com

 



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.  


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.