Pele Mountain drilling expands eco ridge deposit northward, demonstrates significant rare earth mineralization outside of main conglomerate bed

TORONTO, Sept. 12, 2011 /PRNewswire/ – Pele Mountain Resources Inc. (TSXV:GEM) (OTCQX: GOLDF) (“Pele” or the “Company“) today announced results from the recent 7,000-metre drill program at its Eco Ridge Mine Rare Earths and Uranium Project (“Eco Ridge” or the “Project“) in Elliot Lake, Ontario.

Core from 23 intercepts of the Main Conglomerate Bed (“MCB“) (of 24 holes drilled) from June to July 2011 returned results typical of the Eco Ridge deposit, averaging 0.142-percent rare earth oxides (“REO“) and 0.040-percent uranium oxide (“U(3)O(8)“) over an estimated true thickness of 3.16 metres.  The 2011 drill program included four step-out holes, each more than 200 metres down-dip of the existing resource, revealing that the deposit continues to the north into a previously untested area.  The program also included 20 infill holes drilled within the existing resource in order to upgrade Inferred resources to Indicated resources.  The program again demonstrated the remarkable consistency of the MCB over vast areas.  The Eco Ridge MCB, hosted by the quartzitic Ryan Member, is a shallow dipping reef that has now been successfully drill-tested across an east-west strike length of more than 5 kilometres and a north-south dip extension of 2 kilometres.

The table below summarizes the MCB intercepts from Pele’s 2011 drill program at Eco Ridge.  To view complete assay results, please click here http://www.pelemountain.com/pdfs/DrillResultsAugust2011.pdf

                                 Core      Estimated                     
                    From        Length       True        TotalREO         U3O8
    HoleID          (m)          (m)       Width (m)       (%)             (%)

    PM190          450.60        5.13         4.36         0.022          0.042
    PM191          247.20        4.30         3.54         0.163          0.035
    PM192          238.72        3.96         3.39         0.156          0.042
    PM193b         563.74        3.19         3.10         0.186          0.057
    PM194          235.17        3.11         2.67         0.192          0.048
    PM195          310.88        3.27         3.23         0.168          0.047
    PM197          339.92        4.24         3.44         0.155          0.045
    PM198          627.17        3.41         3.40         0.151          0.052
    PM199          160.86        2.48         2.39         0.215          0.040
    PM200          180.60        4.12         3.83         0.019          0.035
    PM201          164.70        3.14         3.06         0.157          0.037
    PM202          217.76        3.29         2.81         0.152          0.040
    PM203          432.52        3.03         2.59         0.129          0.028
    PM204          214.05        4.14         3.84         0.127          0.030
    PM205          174.55        3.89         3.73         0.137          0.028
    PM206          289.84        2.96         2.90         0.125          0.042
    PM207          172.49        3.44         3.42         0.151          0.032
    PM208          286.07        3.21         2.99         0.150          0.051
    PM209          165.98        3.20         3.13         0.165          0.035
    PM210          122.69        2.67         2.62         0.147          0.028
    PM211          235.83        4.02         3.11         0.138          0.044
    PM212          118.24        2.92         2.85         0.174          0.044
    PM213          141.00        2.47         2.16         0.204          0.048

Notes:

      1. Light rare earth oxide (LREO) includes La2O3, CeO2, Pr6O11, Nd2O3,
         Sm2O3
      2. Heavy rare earth oxide (HREO) includes Eu2O3, Gd2O3, Tb4O7, Dy2O3,
         Ho2O3, Er2O3, Tm2O3, Yb2O3, and Lu2O3. Y2O3 and Sc2O3 are also
         included in HREO
      3. Total rare earth oxides include LREO and HREO.

The drill program also demonstrated the presence of widespread rare earth mineralization outside the MCB.  All mineral resources reported at Eco Ridge to-date are from within the MCB only.  The presence of wide zones of REO mineralization outside of the MCB has the potential to substantially increase mineral resources and positively impact project economics at Eco Ridge.

Pele President and CEO Al Shefsky stated, “For five years, we have worked to unlock the REO potential at Eco Ridge.  Given the production history of Elliot Lake, where REO were produced as by-products of primary uranium mines, our approach until recently has been to follow this precedent.  However, with the repricing of REO and the prospect for long-term shortages of certain critical REO, we are taking a fresh look at Eco Ridge and its potential as a primary REO mine.  Results from our recent drill program suggest that there is excellent potential to demonstrate additional REO content in areas we have already drilled, possibly improving upon the already promising economic forecast presented in our Prelimary Economic Assessment.  We have securely stored all of the more than 37 kilometres of our previously-drilled core and have assembled an experienced technical team, including RPA, to implement this program.  We are very excited about our expanded core sampling program at Eco Ridge.”

Core sampling outside of the MCB was not comprehensive because sampling limits have historically been determined by focusing on optimizing the U(3)O(8) mineralization, not REO mineralization.  In view of the increasing importance of rare earths, and the fact that there is more than 3 times as much REO as U(3)O(8) at Eco Ridge, Pele is assessing changes to this legacy practice.

Comparisons that follow are relative to the average grade and thickness of the Indicated Resources at Eco Ridge (“Ind-MCB“) as estimated by Roscoe Postle Associates (“RPA“).  The Ind-MCB is 0.164-percent Total REO and 0.048-percent U(3)O(8) over a 2.7 metre true thickness.

Drill core from the hanging wall above the MCB returned assays ranging from 0.056-percent Total REO (34-percent of Ind-MCB grade) over a 0.45 metre true thickness (Hole PM191) to 0.096-percent Total REO (59-percent of Ind-MCB grade) over a 10.04 metre true thickness (Hole PM193).  Overall, the hanging wall samples averaged nearly 50-percent of Ind-MCB grades for Total REO and more than 20-percent of Ind-MCB grade for U(3)O(8) with all samples ending in mineralization.  Limited sampling of drill core taken directly below the Ryan Member demonstrates REO presence within Basement meta volcanics at similar grades over sampled widths of less than 1 metre, with all sampling ending in mineralization.

These results clearly demonstrate the presence of significant REO mineralization outside of the MCB and have prompted Pele to launch a staged program designed to expand the sampling range of recent and historic Pele drill core.  The program has begun with expanded sampling on 14 holes from across the deposit including the MCB hanging wall from Hole PM07-14 from Pele’s 2007 drilling at Eco Ridge.

Assays from Drill Hole PM07-14 (from 2007)

     ____________________________________________________________
    |         Layer    |  From  | TrueWidth | Total REO |  U3O8  |
    |                  |  (m)   |    (m)    |    (%)    |  (%)   |
    |__________________|________|___________|___________|________|
    | MCB Hanging Wall |  70.93 |    10.48  |    0.080  |  0.010 |
    |__________________|________|___________|___________|________|
    |          MCB*    |  82.48 |     3.24  |    0.223  |  0.056 |
    |__________________|________|___________|___________|________|
    |   Combined Total |  70.93 |    13.72  |    0.114  |  0.021 |
    |__________________|________|___________|___________|________|

* reported previously

For Hole PM07-14, the sampled portion of the MCB hanging wall averaged approximately 49-percent of Ind-MCB grades for REO and approximately 21-percent of Ind-MCB grades for U(3)O(8) over a total thickness 5 times wider than the Ind-MCB, representing a substantial increase in total mineralization.

The objective of Pele’s expanded core sampling program is to evaluate the vertical extent of REO mineralization at Eco Ridge.  Core sampling in the Elliot Lake camp has historically been designed for testing the limits of the U(3)O(8) mineralization and not REO mineralization.  Accordingly, the program now underway will systematically test considerable wall rock above and below the MCB to determine the extent of the REO mineralization for the first time.  As reported with the Eco Ridge Preliminary Economic Assessment(1) (“PEA“), RPA regards the expansion of mineral resources as a potential opportunity to improve project economics at Eco Ridge.

Based on oxide price and recovery assumptions detailed in the PEA, forecast revenue at Eco Ridge now consists of 61-percent from U(3)O(8) and 39-percent from REO.  Approximately 59-percent of the REO revenue component is forecast from just three REO: dysprosium (“Dy(2)O(3)“), neodymium (“Nd(2)O(3)“), and yttrium (“Y(2)O(3)“).  Drill results for U(3)O(8) and these “big three” REO are reported in the table below.

                                 Core      Estimated                                  
    Hole            From        Length       True          Dy2O3         Nd2O3         Y2O3
    ID              (m)          (m)       Width (m)       (g/t)         (g/t)         (g/t)

    PM190          450.60        5.13         4.36           11           28             50
    PM191          247.20        4.30         3.54           15           244            70
    PM192          238.72        3.96         3.39           16           238            74
    PM193b         563.74        3.19         3.10           21           264            87
    PM194          235.17        3.11         2.67           19           265            93
    PM195          310.88        3.27         3.23           17           230            81
    PM197          339.92        4.24         3.44           15           215            69
    PM198          627.17        3.41         3.40           16           216            74
    PM199          160.86        2.48         2.39           18           308            87
    PM200          180.60        4.12         3.83            9           26             51
    PM201          164.70        3.14         3.06           16           226            74
    PM202          217.76        3.29         2.81           15           224            74
    PM203          432.52        3.03         2.59           12           191            55
    PM204          214.05        4.14         3.84           13           185            62
    PM205          174.55        3.89         3.73           13           201            60
    PM206          289.84        2.96         2.90           14           182            61
    PM207          172.49        3.44         3.42           15           220            67
    PM208          286.07        3.21         2.99           17           217            74
    PM209          165.98        3.20         3.13           16           242            70
    PM210          122.69        2.67         2.62           14           207            63
    PM211          235.83        4.02         3.11           14           196            63
    PM212          118.24        2.92         2.85           18           241            81
    PM213          141.00        2.47         2.16           22           284            98

Pele’s Eco Ridge PEA, prepared by RPA, and based solely on the mineralization within the MCB, demonstrates Pele’s potential to become a profitable producer of REO and U(3)O(8.)  The PEA base case forecasts cumulative production of 10.7-million pounds of Total REO and 24.9-million pounds of U(3)O(8) over a 15-year mine life with pre-tax cash flow of US$1.28-billion, a positive NPV of $644-million (at a 7.5% discount rate), and an IRR of 45-percent.(1)  Among aspiring Canadian REO producers, Pele’s forecast operating costs at Eco Ridge are, by far, the lowest at just $46 per tonne.  For more details on the PEA, please see Pele’s press release dated September 7, 2011.

The Resource Wireframe at Eco Ridge currently contains 14.3-million tonnes of Indicated resources plus 33.1-million tonnes of Inferred resources. The deposit extends to the north and east, beyond the Resource Wireframe boundaries.  Based on historical wide-spaced drilling and extrapolation of the resource area, RPA has estimated that these extensions could contain an additional 30 to 50 million tonnes grading from 0.03 to 0.05-percent U(3)O(8) and 0.12 to 0.18-percent Total REO as a target for further exploration(2).  The step-out holes reported today were drilled to the north of the Resource Wireframe and outside of the boundaries of the target area.

Drill core samples were analyzed at Activation Laboratories Ltd., an independent and ISO 17025 accredited laboratory.  The Company performs routine Quality Assurance and Quality Control procedures on laboratory assay results.

The technical information contained in this press release has been reviewed and approved by Tudorel Ciuculescu, P.Geo of RPA, an independent Qualified Person under NI 43-101.

About Pele
Pele Mountain Resources, a leader in Canadian rare earth development, is focused on the sustainable development of its 100-percent owned Eco Ridge Mine Rare Earths and Uranium Project.  Eco Ridge is one of very few North American rare earths deposits that has a NI 43-101 Preliminary Economic Assessment with robust economics and is located in Elliot Lake, the only Canadian mining camp to have ever achieved commercial REO production.  With well-understood geology, mineralogy, and metallurgy, excellent regional infrastructure, and strong local support, Eco Ridge is an ideal location for a safe, secure, and reliable long-term supply of REO and U(3)O(8).  Pele also holds interests in a portfolio of Northern Ontario gold properties at Highland and Ardeen.  Pele’s shares are listed on the TSX Venture Exchange under the symbol “GEM” and on the OTCQX under the symbol “GOLDF”.

      1. The PEA is preliminary in nature. It includes inferred mineral
         resources which are considered too speculative geologically to
         have the economic considerations applied to them that would enable
         them to be categorized as mineral reserves and there is no
         certainty that the preliminary economic assessment will be
         realized.

      2. The potential quantity and grade of the target area is conceptual
         in nature and there has been insufficient exploration to define a
         mineral resource and it is uncertain if further exploration will
         result in the targets being delineated as a mineral resource.

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.  Some of the statements contained in this release are forward-looking statements, such as estimates and statements that describe Pele’s future plans, objectives or goals, including words to the effect that Pele or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements. The economic viability of the 43-101 mineral resource at Pele’s Elliot Lake Project has not yet been demonstrated by a preliminary feasibility study.

SOURCE Pele Mountain Resources Inc.

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