VANCOUVER, BRITISH COLUMBIA, August 17, 2011 - Prophecy Coal Corp. (“Prophecy”) (TSX-V: PCY)(OTCQX: PRPCF)(Frankfurt: 1P2) (the “Company”) announces today that it has intercepted a 19-meter-thickness coal seam at the newly acquired Ilch Khujirt property (“Ilch“). The 4,773-hectare Ilch property is located 17 km northeast of Prophecy’s producing Ulaan Ovoo coal mine. It is contiguous to Prophecy’s existing exploration license covering 7,392 hectares.

Prophecy Drilled Hole RHJ-11-01 on Ilch and encountered the following coal seams:

Depth	Gross Seam Thickness	Net Thickness
41.2	3.0	3.0
48.5	0.5	0.5
69.3	19.4	15.0

Assay results (Air Dried Basis) of the coal core are – inherent moisture 20.96%, ash 14.52%, volatile matter 29.83%, fixed carbon 34.69%, calorific value 5,130 kcal/kg and total sulfur 0.35%.  These are preliminary results because core recovery was poor and additional drilling is needed.  This license was considered prospective for coal as is Prophecy’s adjacent Khujirt license. Due to its shallow nature, the coal seam has the potential to be mineable.  This new information is being reviewed and additional surface mapping will be performed to plan additional drilling.

Prophecy has the right to acquire 100% ownership of Ilch for US $2 million within the first year, or US $4 million in the second year after the agreement signing (see the news release of May 4, 2011).  Drill Hole RHJ-11-01 confirmed the presence of coal, provided coal for assay, and provides information to plan future exploration.

John Lee, CEO and Chairman of Prophecy Coal Corporation says “We believe through systematic exploration, there exists great potential to discover additional coal seams of minable depths in the surroundings of Ulaan Ovoo mine.”

The core drilling methods followed Prophecy’s quality analysis and control procedures.  These procedures include monitoring core recovery to adjust drilling parameters and equipment as needed, avoiding the use of drilling fluids that may contaminate the core samples, and careful handling of the core to avoid loss and breakage, among others.  The core samples were preserved following industry standard procedures including ASTM D5192 to retain in-situ moisture and avoid contamination.  Christopher M. Kravits P. Geo. a Qualified Person as defined in Canadian National Instrument 43-101, supervised the drilling, drill site geology, and core sampling.  The core samples were assayed following ASTM and ISO procedures and methods appropriate for coal.  The sampling plan was to sample the core in three meter intervals making for approximately 6.7 kg of sample but drilling conditions caused core loss so that the sample masses were less.  SGS Mongolia of Ulaanbaatar, Mongolia assayed the core samples and is not owned or controlled to any degree by Prophecy.  This news release was prepared by Christopher M. Kravits, P. Geo. Mr. Kravits has 34 years of US and international experience as a coal geologist and has been active in Mongolia since 2007.

Click above map to enlarge

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 Chandgana mine mouth power plant is currently being permitted. Prophecy Coal is the controlling shareholder of Prophecy Platinum Corp (TSX-V: 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

For more information about Prophecy, please contact
Joseph Li
General Manager
1-800-362-7366
[email protected]
www.prophecycoal.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.