Prophecy Coal Consolidates Chandgana Nyalga Coal Basin, and Enrolls a Mongolian Shareholder to its Power Subsidiary

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 18, 2014) - Prophecy Coal Corp. ("Prophecy" or the "Company") (TSX:PCY)(OTCQX:PRPCF)(FRANKFURT:1P2) is pleased to announce that it has entered into binding agreements with Cosmo Coal LLC ("Cosmo") to:

1. Consolidate the assets of Prophecy's wholly-owned subsidiary, Chandgana Coal LLC ("Chandgana Coal") with the assets of Tugalgatai Mining LLC ("Tugalgatai"), which is a wholly-owned subsidiary of Cosmo, into: Chandgana Tugalgatai Coal LLC, a newly-incorporated Mongolian company of which, Prophecy will own 51% and Cosmo will own 49%.
2. Transfer, for nominal consideration, 34% of the issued and outstanding shares of Prophecy's wholly-owned subsidiary, Prophecy Power Generation LLC ("PPG") to Cosmo.
3. Accept Cosmo's nomination of one new member to Prophecy's Board of Directors.

These actions are collectively referred to below as the "Transaction".

Further, Cosmo and Prophecy signed a non-binding intent letter in July whereby Cosmo agreed to assist PPG in securing a concession agreement and power purchase agreement, and Prophecy agreed to use its best efforts to bring to the power plant project equity investors, secure bank financing, and manage the equipment procurement and construction cycle.

Background and Rationale:

Chandgana holds the following exploration and mining licenses (collectively, the "Chandgana Licenses"):

Name	NI43-101 Compliant Resource (million tonnes)*
Khavtgai Uul Exploration License XV-011654	509 measured, 539 indicated
Chandgana Tal Mining License MV-016767	110.9 measured
Chandgana Tal Mining License MV-010126	13.5 measured

	Coal Resources
Chandgana License	Measured	Indicated	Total
Chandgana Tal	124.4	0.0	124.4
Khavtgai Uul	509.3	538.8	1,048.1
Total	633.7	538.8	1,172.5

Tugalgatai holds the following mining licenses (together, the "Tugalgatai Licenses"):