Prophecy Resource Corp.
TSX VENTURE : PCY

Prophecy Resource Corp.

July 07, 2010 09:00 ET

Prophecy Detects Strong IP Anomaly at its Disco Nickel-Copper-Cobalt Deposit, in Lynn Lake, Manitoba

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 7, 2010) - Prophecy Resource Corp. (TSX VENTURE:PCY)(PINK SHEETS:PRPCF)(FRANKFURT:1P2) ("Prophecy" or the "Company") announced today that it has as received the first results of a property-wide surface induced polarization ("IP") survey conducted during the late-spring of 2010. To date, results have been modeled for the area coinciding with the Disco deposit that was discovered during 2008. Results indicate a strong chargeability anomaly centred 200 meters below the existing Disco deposit approximately 475 meters from surface that extends on gridlines to the south, for a total strike length of approximately 150 meters. This anomaly appears to increase in intensity with depth, beyond 610 meters from surface, where the survey was able to penetrate. The current extent of the Disco deposit is approximately 60 meters long, with mineralization encountered to 275 meters depth-to-top. The chargeability and resistivity strongly resemble that of known mineralization such as that of the 'N' orebody, which hosts an 11 MT Measured and Indicated resource (0.4 MT Measured, 10.7 MT Indicated) grading 0.6% nickel and 0.3% copper (0.5% NiEQ cut-off).

The Company also conducted a borehole IP survey on the longest hole at the Disco Zone hole designation LLN-034 which has detected conductivity at 575 meters depth, and coincides spatially with the ground IP anomaly. This strong IP anomaly occurs below the Disco Zone IP anomaly and is only one of a number of new IP anomalies discovered during the survey. Off-hole chargeability and conductivity was also discovered west of LLN-034 at 342 meters depth.

This newly discovered, south-extending, anomaly begins approximately 120 meters below the Disco deposit, exhibiting a stronger magnitude of chargeability with depth. The trend of the anomaly is consistent with the geological model and observed structures in drillcore that suggest the presence of a southwest trending structure that may be a splay or conjugate structure to the main mine trend that hosted 11 orebodies, most of which were mined out from 1952 to 1976. Lynn Lake mineralization typically occurs as vertically extensive mineralized zones that have been faulted locally, such that an orebody is often comprised of several 'blocks' of mineralization. The high depth-to-width ratio, and faulted lower contact of the Disco Zone appears to follow this model; these new anomalies may represent shifted mineralized blocks that have been observed in the Lynn orebodies. Prophecy Resource Corp. intends to test this hypothesis with a drill program scheduled to commenced mid-summer 2010.

The Disco deposit was discovered by previous operators on the project during the spring of 2008. Significant mineralization was intercepted in 15 drillholes with mineralized intercepts featuring hole LLN-043 which intercepted 47.1 meters of 0.7% nickel, 0.5% copper 0.02% cobalt, and LLN-015 which intercepted 18 meters of 1.5% nickel, 0.7% copper and 0.04% cobalt. Mineralization was intercepted down to 275 meters from surface, and drilling delineated a vertically-extensive mineralized body, truncated by faults to the west and at depth. The morphology, occurrence, and mineralization of the Disco deposit is characteristic of the morphology of the orebodies mined at Lynn Lake during its historic operations, over which period more than 20 million tons of nickel was mined over a 24 year mine life. Currently, 22.9 million Measured and Indicated tons of material grading 0.57% nickel and 0.3% copper (1,017,558 Measured & 21,884,121 Indicated) remains in situ on the Lynn Lake nickel property, hosted in the 'N' and 'O' orebodies (see Prophecy news, February 3, 2010). The Disco deposit is separate from this resource.

The Company is currently awaiting data interpretation and modeling for other areas covered by the ground IP survey, which consisted of 42 line kilometres at 250 grid-spacing (approximately 75 meters), covering most of the A-plug intrusion (1 x 3 kilometres), and will report these results when they are compiled.

Visit www.prophecyresource.com for the IP grid on Prophecy's Lynn Lake claims, multiple views of the 3D Disco Anomaly, and comparison between Disco Chargeability and N orebody Chargeability.

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 Resource Corporation is an internationally diversified company engaged in developing, energy, nickel and platinum group elements projects. The Company controls over 1 billion tonnes of open-pittable thermal coal in Mongolia (503 MT Measured, 503 MT Indicated) (see Prophecy news, January 21, 2010 and Red Hill Energy news, March 26, 2010). In Canada Prophecy owns Lynn Lake Nickel Project, a 10% equity stake in Victory Nickel and agreed to merge with Northern Platinum (TSX-V: NTH) on June 15, 2010. 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 and CEO

Cautionary Language and Forward-Looking Statements

This press release includes certain statements that may be deemed "forward-looking statements". All statements in this discussion, other than statements of historical facts, that address future exploration drilling, exploration activities, anticipated metal production, internal rate of return, estimated ore grades, commencement of production estimates and projected exploration and capital expenditures (including costs and other estimates upon which such projections are based) and events or developments that the Company expects, are forward looking statements. Although the Company 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 forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include metal prices, exploration successes, continued availability of capital and financing, and general economic, market or business conditions. Accordingly, readers should not place undue reliance on forward-looking statements.

This news release and the information contained herein does not constitute an offer of securities for sale in the United States and securities may not be offered or sold in the United States absent registration or exemption from registration.

"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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