Prophecy Resource Corp.
TSX VENTURE : PCY
FRANKFURT : 1P2
OTCQX : PRPCF

Prophecy Resource Corp.

February 18, 2011 08:31 ET

Prophecy Achieves Over 95% Nickel Recovery in Preliminary Results From Lynn Lake Bioleach Study by Mintek

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 18, 2011) - Prophecy Resource Corp. ("Prophecy" or the "Company") (TSX VENTURE:PCY)(OTCQX:PRPCF)(FRANKFURT:1P2) has received preliminary results from its ongoing metallurgical study on the amenability of its Lynn Lake resource to the bioleach process. The bioleach study is being conducted by Mintek in South Africa and overseen by Andy Carter, Manager of Metallurgical Engineering for Wardrop Engineering Inc., a Tetra Tech Company. Key findings of the results to date show that nickel recoveries in excess of 95% can be achieved using only a moderate grind and leach temperature, whereas high copper recoveries generally require finer grinding and higher temperatures.

Details:

In July 2010, Prophecy collected 3.7 tonnes of a representative sample of ore from Lynn Lake and shipped it to Mintek in Randburg, South Africa for study. Continuous pilot flotation tests produced a bulk concentrate containing 5.3% nickel and 3.4% copper at 89% recovery for both metals. This concentrate was used as the feed stock for the bioleaching testwork. Laboratory testwork conducted in 2008 by PRA associates showed that a separate nickel concentrate of 9.2%, and a copper concentrate of 7.5% could also be produced.

The nickel in the concentrate occurs as pentlandite and violarite, while the copper is present as chalcopyrite. Bioleach amenability test work was performed in fully-controlled continuously operated multi-stage reactor systems using microbial cultures which have been adapted at Mintek to perform optimally under the required operating conditions. The final metal extractions were calculated based on analysis of samples obtained from each of the reactor stages after achievement of steady state conditions. The process was staged over a cumulative residence time of just 6 days.

A process flowsheet is envisaged that consists of fine concentrate regrinding followed by bioleaching at either 45°C or 70°C. The parameters used for the study to date will guide the optimisation of the processing route for concentrate production and downstream processing to a saleable product.

Conclusion:

Mintek's results show a marked improvement in nickel recoveries by as much as 6.5% compared to a previous lab bioleach study by PRA Associates in 2008. While preliminary, the results indicate that the Lynn Lake sulphide ore is highly amenable to the bioleach process. Further process optimisation is currently underway. The nine month long study is expected to be completed by June of this year. Full results will be incorporated in a feasibility study to be commenced later this year.

Lynn Lake and Bioleach Background:

The Lynn Lake mine was operated by Sherritt-Gordon from 1953 to 1976 and ranked as the third largest nickel producer in North America, after only the Sudbury and Thompson mining camps.

Wardrop Engineering Inc., a Tetra Tech company, in a National Instrument 43-101 report dated May 6, 2010 (available under the Company's profile at www.sedar.com), estimated Lynn Lake to contain a Measured and Indicated resource of 22.9 million tons at 0.57% nickel and 0.3% copper, and an Inferred resource of 8.1 million tons at 0.51% nickel and 0.28% copper. (0.4% nickel equivalent cutoff) as outlined in the following table. 

Mineral Resource Estimate for Lynn Lake (at a cut off of 0.4% NiEQ%)
    Ni Cu Ni Cu
  Tons Grade Grade Contained Contained
Resource Category (millions) (%) (%) lbs lbs
Measured and Indicated 22.9 0.57 0.30 262,480,801 137,502,679
Inferred 8.1 0.51 0.28 81,560,064 45,615,427

The above resource estimate does not include the recent Disco Zone discovery located within 1.5 km of the outlined resource. The Lynn Lake project has immediate access to electrical power and rail transportation and can be operated year-round.

Prophecy Resources is examining the bioleach- SX/EW option in lieu of a direct smelter take-off for its Lynn Lake nickel-copper concentrate. Bioleach SX/EW offers a proven, less expensive and greener alternative to smelting. A bioleach SX/EW process, as part of a fully integrated nickel operation will permit pure nickel to be produced on site without transportation of concentrate and costly smelter penalties. Currently bioleaching is being used with commercial success in Finland (Talvivaara), China (Laizhou) and Chile (Escondida). Owing to the exothermic nature of the reactions, cold weather has a negligible effect on the process as demonstrated at Talvivaara. In contrast to Talvivaara, which is a heap bioleaching process, Prophecy plans utilising a tank based bioleach reactor system.

Mintek

Mintek is based out of South Africa and has successfully completed bioleach processes at the commercial level. They are industry leaders in the field, with 25 years experience. Commercial level implementation of this process for base-metals include the Mount Lyell copper mine in Tasmania, and a 500kg per day pilot plant at Industrias Peñoles' facility in Monterrey, Mexico, during 2001; the plant has produced more than 40 t of LME A-grade cathode copper from a complex polymetallic, chalcopyritic feed concentrate.

For more information about Prophecy, please contact Paul McKenzie at +1.604.642.2625 ext. 107 or John Lee at +1.800.851.1528.

This news release has been reviewed and approved by Danniel Oosterman, PGeo, Prophecy Geologist who is a Qualified Person as defined in NI 43-101. The material in this news release has been reviewed and approved by Andy Carter, a Qualified Person as defined by NI 43-101.

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 and in production. In Canada Prophecy owns Wellgreen PGM Ni-Cu Project in Yukon, Lynn Lake Nickel Sulphide Project in Manitoba, and a 10% equity stake in Victory Nickel. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

ON BEHALF OF THE BOARD OF DIRECTORS of Prophecy Resource Corp.

John Lee, 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. 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.

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.

"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."

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