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

Prophecy Resource Corp.

December 06, 2010 08:31 ET

Prophecy Announces New Discovery at Lynn Lake Nickel-Copper Sulphide Project, Manitoba

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 6, 2010) - Prophecy Resource Corp. ("Prophecy" or the "Company") (TSX VENTURE:PCY)(OTCQX:PRPCF)(FRANKFURT:1P2) is pleased to a report that recent expansion drilling on its Lynn Lake Nickel Sulphide Project has defined new discovery zones. Prophecy commenced a 3,000 meter drilling program in September 2010 to test several induced polarization ("IP") targets derived from its spring geophysical survey. Highlights from the drill program are outlined in the following four tables:

PCY10-02

From (m)   To (m)   Length (m)   Dip   Ni %   Cu %
435.4   452.6   17.3   -51°   0.60   0.30
Including
444.6   452.6   8.0   -51°   0.90   0.60

PCY10-03

From (m)   To (m)   Length (m)   Dip   Ni %   Cu %
316.6   320.6   4.0   -45°   0.40   0.20

PCY10-04

From (m)   To (m)   Length (m)   Dip   Ni %   Cu %
331.4   346.1   14.7   -75°   0.40   0.20
Including
336.1   343.8   7.6   -75°   0.50   0.20

PCY10-05

From (m)   To (m)   Length (m)   Dip   Ni %   Cu %
430.7   441.7   11.0   -56°   0.20   0.10
Including
430.7   433.4   2.6   -56°   0.50   0.40
From (m)   To (m)   Length (m)   Dip   Ni %   Cu %
458.5   480.2   21.7   -56°   0.30   0.20
Including
463.9   474.0   10.1   -56°   0.40   0.20

Holes PCY10-02, PCY10-03, and PCY10-05 were drilled on the same section to test what was earlier called the West IP anomaly, which now represents a new zone called 'Tango'. The Tango has a broader geophysical signature than the Disco Zone and the Tango has a greater vertical extent than the Disco zone, which was discovered in 2008. The three holes delineate a vertically extensive zone of mineralization that extends from 220 meters depth at the top of hole PCY-10-03 a depth of 400 meters at the bottom of hole PCY-10-05 for a minimum total vertical extent of approximately 180 meters. The mineralized zone has an average thickness of 13.8 meters true-thickness; the best intersection being PCY10-02, which encountered 17.3 meters of 0.6% nickel, and 0.3% copper. 

The IP anomaly at Tango extends downward below a depth of 600 meters from surface and then extends southwards for another 380 meters, which remains untested. The morphology of this target closely resembles the adjacent historic 'E' and 'J' orebodies, which were vertically extensive and tabular orebodies believed to be faulted counterparts of each other. The Tango zone could represent a third faulted block of mineralization. The deepest undercut, PCY10-06, encountered low-grade mineralization (0.2% Ni, 0.1% Cu over 19.3 meters) and appears to mark the northern edge of the mineralized zone. 

Hole PCY10-04 tested an IP anomaly in another area on the property, located to the south of the 'B' open-pit. It intersected 14.7 meters of mineralized rock, including 7.6 meters of 0.5% nickel, and 0.2% copper at 323 meters depth-to-top. This IP anomaly also extends southward of the intersect by approximately 150 meters, and remains untested in that direction. 

PCY10-01 was also drilled and was designed to test an IP anomaly that extends southward from the Disco deposit. Ground conditions resulted in unexpected deviation of this hole. A gyro survey is planned as well as downhole IP in order to refine the Disco target prior to additional drilling.

Prophecy intends to immediately expand its drill program to test along the strike of the intercepts reported at Tango, as well as test three other significant targets from the 2010 IP survey, including the North Anomaly, Middle East Anomaly, and South Anomaly.

Drill locations, Cross sections, and IP targets can be viewed at www.prophecyresource.com.

More details on Lynn Lake

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%)
Resource Category   Tons   Ni Grade   Cu Grade   Ni Contained   Cu Contained
    (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. 

This news release has been reviewed and approved by Danniel J. Oosterman, PGeo, and a Qualified Person as defined in NI 43-101.

About Prophecy Resource

Prophecy 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-pitable thermal coal in Mongolia (839 Mt Measured, 579 Mt Indicated). In Canada Prophecy owns Wellgreen PGM Project in Yukon, Lynn Lake Nickel Sulphide Project in Manitoba, and a 9.9% equity stake in Victory Nickel. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Prophecy executes a quality control program to ensure best practice in sampling and analysis. Samples are cut and split for assay with the remaining sample retained for reference. Assayed samples are transported in sealed and secure bags for preparation at ALS Chemex Prep Lab located in Thunder Bay, Ont. Pulverized (pulp) samples are shipped for analysis to ALS Chemex Assay Laboratory in Vancouver, B.C. ALS Chemex is an ISO/IEC 17025:2005 accredited laboratory and registered under ISO 9001:2000.

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, 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 their businesses, 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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