Prophecy Coal Corp. announced that it has executed a term sheet for a secured debt facility of up to $5 million with a leading resource lender and a $2 million inter-company loan facility agreement with its controlled affiliate, Prophecy Platinum Corp.

The Debt Facility is currently subject to completion of the lender’s due diligence, TSX approval and completion of customary credit documentation.

The Debt Facility is due in fourteen months after its drawdown and bears interest at 10% per annum, compounded quarterly. A structuring fee of $50,000 is payable in cash as well as up to 1 million common shares of Prophecy Coal. The common shares issuable to the lender will be subject to a four month hold period. The Debt Facility is secured by a general security agreement and by a pledge of a number of Prophecy Platinum shares which must remain at 300% of the amount owed under the Debt Facility.

The Inter-Co Facility provides the Company and Prophecy Platinum with the ability to request a demand loan from the other company of up to $2 million at an interest rate of 14.4% per annum, compounded annually. Special committees of independent directors from both companies reviewed and approved the Inter-Co Facility. The size and nature of the Inter-Co Facility make it exempt from related party transaction rules including minority shareholder approvals.

John Lee, Chairman and CEO of Prophecy Coal states: “These facilities should carry Prophecy Coal towards completing Power Plant Project Financing in 2012. The company currently has no debt and over $120 million in assets.”

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