Prophecy Announces Adoption of Shareholder Rights Plan.

(Note that part "ABOUT PROPHECY COAL" to understand what they control.)

VANCOUVER, BRITISH COLUMBIA, July 20, 2011 - Prophecy Coal Corp. ("Prophecy") (TSX-V: PCY)(OTCQX: PRPCF)(Frankfurt: 1P2) (the "Company") announces that it has adopted a shareholder rights plan (the “Rights Plan”) designed to encourage the fair treatment of its shareholders in the event of an unsolicited take-over bid for shares of the Company. The Rights Plan is designed to give the Company’s shareholders sufficient time to properly assess a take-over bid without undue pressure and to give the Company’s Board of Directors time to consider alternatives that allow the Company’s shareholders to receive full and fair value for their common shares.

John Lee, Chairman of Prophecy Coal states: “Prophecy management believes the company is very undervalued, thus vulnerable given the rise in value of its equity holding in Prophecy Platinum.”

Pursuant to the Rights Plan, each holder of record of the outstanding common shares of the Company at 5:00 p.m. (PST) on July 20, 2011 will be issued one right per common share. The rights will trade with the common shares and be represented by the certificates representing common shares. Although the Rights Plan is effective immediately, it is subject to TSX Venture Exchange approval and must be ratified by the shareholders of the Company within six (6) months of its adoption. The Rights Plan will be submitted to the shareholders of the Company for ratification at an extraordinary meeting of shareholders which is anticipated to be held in November or December of 2011.

A copy of the Rights Plan will be posted on SEDAR and on the website of the Company at the website address listed below.

The Rights Plan is similar to shareholder rights plans adopted by numerous other Canadian corporations. Neither the Board nor senior management of the Company is aware of any current, pending or threatened take-over bid for the Company.

About Prophecy Coal

Prophecy Coal Corp. (formerly Prophecy Resource Corp) is a Mongolian coal company engaged in developing energy projects. The company controls over 1.4 billion tonnes of surface minable thermal coal resources on two coal properties in Mongolia. Prophecy's Ulaan Ovoo thermal coal mine has been commissioned and its Chandgana mine mouth power plant is currently being permitted. Prophecy also owns 22.5 million common shares in Prophecy Platinum Corp. (TSX-V: NKL), as well as shares in Victory Nickel Inc. and Compliance Energy Corp. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Further information can be found at www.prophecycoal.com

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

"JOHN LEE"

John Lee

Chairman

For more information about Prophecy, please contact

David Jan

Chief Financial Officer

1-800- 358-5865

djan@prophecycoal.com

www.prophecycoal.com