Bandera Gold Ltd.

Bandera Gold Ltd.

July 16, 2009 08:00 ET

Bandera Announces First Instance Ruling in Connection With Its Mexican Properties

EDMONTON, ALBERTA--(Marketwire - July 16, 2009) - Bandera Gold Ltd. ("BGL") (TSX VENTURE:BGL) is pleased to announce that it has obtained a favorable first instance ruling (the "Ruling") from the Fifth Mercantile Court (Guadalajara) (the "Court") in its lawsuit against Minera San Jorge ("MSJ"), George Barnett and others. As previously announced, the lawsuit was brought by BGL to enforce its rights under the option agreement dated November 15, 2005 (the "Option Agreement") under which BGL was entitled to earn in up to a 60% equity interest in the Cinco Minas and Gran Cabrera projects in Mexico (the "Properties").

The validity and enforceability of the Option Agreement has been confirmed by the Court and it reinstates BGL's rights to the Properties by ordering the transfer of title to both Properties to the Joint Venture company through which BGL holds its interest in the Properties.

The ruling is dated July 7, 2009 and is 118 pages in length. The board and its lawyers are reviewing the detailed contents of the ruling.

As of August 7, 2009 this ruling will be final absent any appeal by MSJ.

Additionally, the Court has been notified that in a separate legal action, to which BGL was not a party, the labor court awarded a settlement against MSJ which resulted in the transfer of title to the Properties to a third party. This transfer appears to have occurred without proper notification to the Court or reference to BGL's prior lien over the Properties as registered in the records of the Mining Public Registry ("MPR"). BGL lawyers have commenced a case in the Federal courts, seeking an "Amparo judgment" (relief of violated civil rights by authorities). Our lawyers have argued that the process resulting in the transfer was illegal and should be declared invalid and null and void. The Amparo court has issued a suspension (freezing the process in place) pending issuance of its judgment. The suspension prevents MPR from registering any further changes of title to the Properties and make no further changes to its records until the Amparo court issues its ruling. We await the Amparo court's ruling in the very near future.

BGL is assessing its continued strategy to enforce its contractual rights and to gain control over its projects in Mexico.

On behalf of the Board

Kelvin Williams, CEO

Information provided herein contains forward-looking statements. The reader is cautioned that assumptions used in the preparation of such information, which are considered reasonable by Bandera at the time of preparation, may prove to be incorrect. Actual results achieved will vary from the information provided and the variations may be material. There is no representation by Bandera that actual results achieved will be the same in whole or in part as those indicated in the forward-looking statements.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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