TORONTO, ONTARIO--(Marketwire - April 16, 2012) - Pele Mountain Resources Inc. (TSX VENTURE:GEM)(OTCQX:GOLDF) ("Pele" or the "Company") today announced results of an updated NI 43-101 Preliminary Economic Assessment (the "PEA") on its Eco Ridge Mine Rare Earths and Uranium Project ("Eco Ridge" or the "Project"). The PEA was prepared by Roscoe Postle Associates Inc. ("RPA") and demonstrates that Eco Ridge has excellent potential to become a profitable producer of rare earths and U₃O₈.

Since publication of its previous PEA in July 2011 (the "2011 PEA"), Pele has pursued opportunities for processing circuit improvements at Eco Ridge. The updated PEA demonstrates that the projected financial benefits from sharply higher rare earth recoveries, as a result of conventional milling rather than leaching, far outweigh associated capital and operating cost increases and more conservative forecast pricing for rare earth oxides ("REO") and uranium oxide ("U₃O₈"). All production and recovery figures below represent significant gains from the 2011 PEA for Eco Ridge.

Operational highlights of the updated PEA include:

• 9,000-tonne per day operation with life-of-mine production of 97.2-million lbs of total REO (in the form of a mixed rare earth carbonate concentrate) and 27.5-million lbs of U₃O₈ over an 11-year mine life;
• Production of a strategically significant combination of rare earths forecast to remain in supply deficit, with 85-percent of Project revenue from Heavy REO, neodymium oxide (Nd₂O₃) and U₃O₈.
• Life-of-mine production includes 14.2-million lbs of Nd₂O₃, 882,000 lbs of dysprosium oxide (Dy₂O₃), 4.1-million lbs of yttrium oxide (Y₂O₃) and significant quantities of terbium and europium oxides, providing a vital source of Critical REO outside China.
• Light REO recoveries average 89-percent, Heavy REO recoveries average 78-percent, and U₃O₈ recovery averages 90-percent;
• Increased mineral resources include new Hanging Wall Zone ("HWZ") mineralization and recently drilled lateral extensions of the Main Conglomerate Bed ("MCB").

Financial highlights of the updated PEA include (all terms in US$):

• For an 11-year mine life, Cumulative total revenue of $5.90-billion; Cumulative operating cash flow of $2.83-billion; Cumulative pre-tax cash flow of $2.16-billion;
• NPV of $1.02-billion (at a 10-percent discount rate);
• IRR of 50-percent with before-tax payback period of 1.5 years from commencement of commercial production.
• Operating unit cost of $71.33 per tonne; Net revenue of $154.22 per tonne.
• Start up capital expenditures of $563-million (includes contingency of $108-million);
• $535-million of processing fees included for separation of concentrates into individual oxides;
• REO basket price of $78 per kg for individual oxides net of separation costs and U₃O₈ price of $70 per lb are far more conservative than price forecasts in 2011 PEA;
• 67-percent of Project revenue from REO; Nearly 80-percent of REO revenue from Heavy REO plus Nd₂O₃.

Pele President and CEO Al Shefsky stated: "We are extremely pleased with this updated PEA for Eco Ridge. The implementation of an acid baking circuit has a tremendous impact on our mineral recoveries and anticipated REO production resulting in significantly improved financial and operational results relative to our 2011 PEA. Also, historically drilled deposit extensions and our recent discovery of substantial HWZ mineralization above the MCB have the potential to extend mine life by several years. Our updated PEA demonstrates that Pele is one of the clear leaders in the ongoing race to develop new sources of critical rare earths outside of China. We are focused on transitioning into the feasibility and licensing stages as we advance Eco Ridge toward development and production."

Pele has assembled a world-class team to advance mine development at Eco Ridge. The team is led by Pele's Executive Vice President Roger Payne, a Professional Engineer with over 45 years of international experience including 20 years in the Elliot Lake mining camp. Permitting efforts will be led by SENES Consultants Limited ("SENES") and Golder Associates Ltd. ("Golder"), both of which have provided consulting services to Pele during the past five years at Eco Ridge and have worked closely with Mr. Payne during his tenure at Rio Algom. SENES and Golder have comprehensive knowledge and experience regarding the regulatory processes pertinent to licensing, operating, and decommissioning mines in Elliot Lake. RPA and SNC-Lavalin Inc. are leading the mine design and mineral processing design engineering, respectively. Pele's Rare Metals Advisory Board includes renowned industry experts Dr. Tony Mariano and Dr. William Bird.

The Updated Preliminary Economic Assessment for Eco Ridge

• Key Operational & Financial Metrics are presented in Section 1. As expected, the predominant monazite rare earth mineralogy allows for excellent recovery with acid baking methods. Processing improvements had a major impact on REO production and Project economics.

• Mineral Recovery & Revenue Forecasts are presented in Section 2. As expected, acid-baking boosted recoveries by more than 10-fold for Light REO, by more than double for Heavy REO, and by nearly 30-percent for U₃O₈. A relatively conservative pricing approach was used in the updated PEA with prices quoted for separated oxides.

• An Updated NI 43-101 compliant Mineral Resource estimate is presented in Section 3. HWZ mineralization is included for the first time and there is considerable potential for expanding the deposit and substantially extending mine life. Infill drilling to date has been 100-percent successful in upgrading Inferred resources to the Indicated category in the MCB.

• Pele's Competitive Advantages, which have positioned the Company as one of the clear leaders in the ongoing race toward REO production outside of China, are presented in Section 4.

Section 1: Key Operational & Financial Metrics

Pele has achieved significant mining and processing improvements at Eco Ridge since the 2011 PEA. The proposed mine plan includes access from the four kilometre surface outcrop through two decline ramp systems. Crushing, grinding, mineral concentration, acid baking, and oxide precipitation will occur in an on-site processing complex that is currently planned to produce a mixed rare earth carbonate concentrate and a U₃O₈ concentrate known as yellow cake. Click here to see a Preliminary Processing Block Flow Diagram for Eco Ridge. The following tables summarize key operational and financial metrics, as presented by RPA in the updated PEA.

Table 1A: Updated Base Case Operational Metrics

1. The PEA is based on a Mineral Resource estimate in Table 3A below, and estimated mineral recoveries based on preliminary bench scale test work conducted at Saskatchewan Research Council for REO and assumptions based on historic uranium production in Elliot Lake.
2. See Tables 2A & 2B for more details, including forecast production of each individual oxide.

Table 1B: Updated Base Case Financial Metrics (all financial terms in US$000, except "per tonne" figures)

Click here for a more detailed version of Table 1B.

1. See Tables 2A & 2B for more details.
2. Deductions from Gross Revenue were applied to account for royalty payments as well as for a charge of $10 per kg of Light REO and a charge of $30 per kg of Heavy REO in concentrate to account for separation and upgrading costs to produce high purity saleable REOs.
3. Costs for mining of ore during construction, totalling $61.5 million, are included in operating costs.
4. Pre-production capital cost estimates includes a 24-percent contingency on direct and indirect capital costs.
5. Includes certain mining, tailings, and infrastructure costs incurred after the commencement of production.
6. The PEA assumes a C$:US$ exchange rate of 1.00:1.00.

Note: 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 their categorization as mineral reserves. There is no certainty that the PEA forecast will be realized.

Section 2: Mineral Recovery & Revenue Forecasts for Individual Oxides

The REO revenue forecast in the updated PEA is based on the production of individual separated REO. A $535-million charge has been included in the PEA to account for the cost of REO separation into saleable, high-purity oxides. This charge is based on costs of $10 per kg for Light REO and $30 per kg for Heavy REO, which is believed to represent reasonable estimates of separation costs within the scope and accuracy of this PEA. Pele is exploring several options for REO separation including outsourcing and strategic alliances.

Estimated mineral recoveries are based on preliminary metallurgical bench scale testwork conducted at Saskatchewan Research Council for REO and assumptions based on historic uranium production in Elliot Lake. Assumed recoveries of individual oxides, along with forecast life-of-mine production and revenue contributions from each individual oxide are listed in Tables 2A & 2B.

Click here for Table 2A - Rare Earths Recovery & Revenue and Table 2B - Uranium Recovery & Revenue.

REO price forecasts vary widely among industry analysts and other emerging rare earth developers, highlighting considerable uncertainty regarding future prices. The updated Eco Ridge PEA uses more conservative pricing than both the 2011 PEA and a 2015 REO price forecast prepared for Pele by Asian Metal in February 2012. Asian Metal is a market service whose price assessments serve as the benchmark for contracts signed by major industry participants worldwide.

The forecast U₃O₈ price used in the PEA is $70 per lb and is based on the approximate midpoint of 2015 forecast price expectations by a group of independent analysts. This forecast price is significantly more conservative than the $85 per lb U₃O₈ price that was used in the 2011 PEA.

U₃O₈ is the largest individual contributor to gross revenue at nearly 33-percent, followed by Nd₂O₃ at 19-percent. Heavy REO, which are expected to remain in supply deficit for many years to come, provide over half of REO revenue. Cerium and lanthanum oxides, which are expected to be available in abundant supply when emerging producers commence production, provide significant tonnage at Eco Ridge but account for less than 10-percent of Project revenue.

Section 3: Updated NI 43-101 Compliant Mineral Resource

Since the NI 43-101 resource estimate announced in February 2011, Pele completed a 7,000-metre drill program as well as a massive core resampling campaign to increase the sampling range to include the HWZ above the MCB. As a result of these initiatives, the Indicated and Inferred resources have increased significantly.

The shape of the Resource Wireframe has been changed due to the inclusion of new drilling and the exclusion of historic uranium-focused drill holes where complete assay analysis for REO in the MCB and sampling of the HWZ is not available. However, the MCB was reported as present in every one of the historic drill logs in those areas and at similar thicknesses. A mine life sensitivity analysis that included quantities equivalent to these historically drilled areas showed an increase in mine life to 14 years and NPV (at a 10-percent discount rate) increased by more than $200-million (20-percent) to $1.23-billion.

The mineral resources at Eco Ridge have excellent potential for upgrade and expansion, with lower-than-normal exploration risk in the historically drilled areas. The mineralized reefs of the Elliot Lake mining camp are well known for their consistency and size and, to-date, infill drilling to date has been 100-percent successful in upgrading Inferred resources to the Indicated category in the MCB. There is also excellent potential to add substantial new mineral resources in areas beyond the Resource Wireframe where the deposit remains open down dip beyond the historically drilled areas.

Mineral resources for Eco Ridge were estimated by RPA, as summarized in Table 3A. Mineral resources are estimated within the MCB and for the new HWZ zone, immediately above the MCB.

Table 3A: Mineral Resource Estimate for Eco Ridge

1. CIM definitions were followed for Mineral Resources.
2. The Qualified Person for this Mineral Resource estimate is Tudorel Ciuculescu, P.Geo.
3. Mineral Resources are estimated at a cut-off value of $100 per tonne for the MCB, and $50 per tonne for the HWZ. Values were calculated based on prices and recoveries of uranium and rare earths, net of off-site rare earth separation costs.
4. Mineral Resources are estimated using an average long-term uranium price of US$70 per lb U₃O₈, a rare earth "basket price" of $78 per kg (net of separation charges), and a C$:US$ exchange rate of 1.00:1.00.
5. A minimum mining thickness of 1.8 metres was used.
6. Light Rare Earth Oxides include La₂O₃, CeO₂, Pr₆O₁₁, and Nd₂O₃.
7. Heavy Rare Earth Oxides include Sm₂O₃, Eu₂O₃, Gd₂O₃, Tb₄O₇, Dy₂O₃, Ho₂O₃, Er₂O₃, Tm₂O₃, Yb₂O₃, Y₂O₃, and Lu₂O₃. Sc₂O₃ is also included in HREO, as it occurs in low concentrations and carries high unit values like an HREO.

Mineral resources are estimated within the MCB and for the new HWZ zone, immediately above the MCB. Click here for Table 3A - Mineral Resource Estimate for Eco Ridge & Table 3B - Mineral Resource Grade (Individual REO) for Eco Ridge.

Section 4: Pele's Competitive Advantages

Eco Ridge has competitive advantages that may enable its development ahead of other REO projects, including:

• Elliot Lake is a proven mining camp with outstanding regional infrastructure in-place including roads, railway, power, natural gas, airport, and deep-water ports. Elliot Lake has produced more than 300-million lbs of U₃O₈ and is the only Canadian mining camp to have achieved commercial REO production in the past.
• Two-thirds of Project revenue is from REO; Nearly 80-percent of REO revenue is from Heavy REO plus Nd₂O₃ , with significant diversification from U₃O₈.
• Monazite rare earth mineralogy and metallurgy is well-understood and allows for excellent recovery with acid baking methods.
• It is one of the few North American REO deposits with a positive NI 43-101 compliant PEA.
• An updated Project Description will be prepared and readied to file with regulators this quarter, targeting a license to construct the mine in 2015.
• Pele's world-class development team is led by Roger Payne P. Eng., former General Manager for Rio Algom, and includes RPA, SNC-Lavalin Inc., SENES Consultants Limited, and Golder Associates Ltd., all of which have relevant experience in Elliot Lake.

The Project has no known environmental liabilities and enjoys enthusiastic local support. The Province of Ontario has already granted two renewable 21-year mining leases at Eco Ridge (the "Mining Leases"), giving Pele the exclusive right to mine the deposit. The Mining Leases also include surface rights except where the City of Elliot Lake owns certain surface patents (the "Surface Patents"). The City of Elliot Lake (the "City") has also granted to Pele a renewable 21-year lease with an option to purchase the Surface Patents (the "City Lease"). Both the Mining Leases and the City Lease allow for siting of project infrastructure like mine portals and processing facilities.

Pele places great value on community relations and has maintained friendly and productive dialogue with local First Nations and the City of Elliot Lake since the inception of the Eco Ridge Mine project in 2006. Pele is committed to sustainable development and seeks to provide long-term benefits to local communities.

The PEA for Eco Ridge was completed by independent consultant, Roscoe Postle Associates Inc., of Toronto, Canada. Metallurgical process design was completed by the Toronto office of SNC-Lavalin Inc., on the basis of data provided from preliminary bench scale testing of Eco Ridge mineralization at the Saskatchewan Research Council in Saskatoon, Canada, and historic Elliot Lake operations. SNC-Lavalin Inc. does not take responsibility for the data provided by the Saskatchewan Research Council.

The technical and economic information relating to the PEA contained in this press release has been reviewed and approved by Jason Cox, P.Eng., Director of Mine Engineering for RPA, an independent qualified person under NI 43-101. This press release has been reviewed and approved by Roger Payne P. Eng., Pele's Executive Vice President and a Qualified Person under NI 43-101. The PEA technical report will be filed on SEDAR in due course.

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 located in Elliot Lake, the only Canadian mining camp to have ever achieved commercial REO production. At one time, Elliot Lake supplied 35-percent of the world's yttrium. 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 U₃O₈. Pele has also entered into an agreement to purchase the Simon Rare Earth Claims in Mountain Pass, California. Pele's shares are listed on the TSX Venture Exchange under the symbol "GEM" and on the OTCQX under the symbol "GOLDF".

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.

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