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Early Warning Report

Corporate Actions

Early Warning Report

Vancouver, British Columbia, January 16, 2017 – Prophecy Development Corp.

(“Prophecy” or the “Company”) ( TSX:PCY, OTC:PRPCF,

Frankfurt:1P2N) announces that John Lee, of Suite 1301, 12 Harcourt Road,

Central, Hong Kong, Executive Chairman of the Company, acquired 30,000 options

to purchase shares of Prophecy and 18,000 shares as a performance bonus on

January 12, 2017, and acquired 300,000 shares via a debt settlement private

placement, and disposed of 450,000 shares through two private sales on January

13, 2016 (collectively, the “Transactions”).

Prior to the Transactions, Mr. Lee beneficially owned 1,127,253 shares, representing

approximately 23.45% of the issued and outstanding shares of the Company.

As a result of the Transactions, Mr. Lee now beneficially owns and exercises control

over an aggregate of 995,253 shares representing an interest of approximately

19.12% of the Company’s cu rrently issued and outstanding shares, and 30.62% of

the Company’s shares on a fully diluted basis assuming exercise of all of the

Company’s outstanding share purchase warrants.

The securities were acquired or disposed of by Mr. Lee for investment purposes

only, and not for purposes of exercising control or direction over the Company.

Generally, Mr. Lee intends to evaluate his investment in the Company and to

increase or decrease his shareholdings as circumstances require, depending on

market condi tions and other factors, through market transactions, private

agreements or otherwise.

The information contained in this news release has been provided by Mr. Lee and

the Company is not responsible for its accuracy.

A copy of the early warning report pur suant to National Instrument 62 -103 required

to be filed with the applicable securities commissions in connection with the

acquisition of the shares described in this news release will be available for viewing

under the Company’s profile at www.sedar.com. A copy of the early warning report

can also be obtained from the contact number for Investor Relations below.

About Prophecy

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Prophecy Development Corp. is a Canadian public company listed on the Toronto

Stock Exchange that is engaged in developing mining and energy projects in

Mongolia, Bolivia and Canada. Further information on Prophecy can be found

at www.prophecydev.com.

PROPHECY DEVELOPMENT CORP.

ON BEHALF OF THE BOARD

“JOHN LEE”

Executive Chairman

For more information about Prophecy, please contact Investor Relations:

+1.888.513.6286

[email protected]

www.prophecydev.com

Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that

term is defined in the policies of the Toronto Stock Exchange) accepts responsibility

for the adequacy or accuracy of this release.