Palladon Ventures Ltd.
TSX VENTURE : PLL
FRANKFURT : PV-1

Palladon Ventures Ltd.

June 26, 2009 16:07 ET

Palladon Ventures and Luxor Capital Group Reach Agreement to Extend Maturity of Loans Due June 26, 2009

SALT LAKE CITY, UTAH--(Marketwire - June 26, 2009) - Palladon Ventures Ltd. ("Palladon" or the "Company") (TSX VENTURE:PLL) (FRANKFURT:PV-1) announced today that the Company has executed an agreement (the "Extension Agreement") with Luxor Capital Group, LP ("Luxor"), to extend the term of the Company's two loans payable to Luxor in the current aggregate amount (including principal and accrued interest) of approximately US$37 million (the "Luxor Loans"), which loans were otherwise payable in full on June 26, 2009. The Company is currently seeking TSX Venture Exchange approval of the Extension Agreement, the primary terms of which are described below.

The Extension Agreement anticipates two extension periods. The first extension period is to October 15, 2009 ("First Extension Period"), while a second extension to December 31, 2010 ("Second Extension Period") is contingent on the Company raising funds (the "Interim Financing") of no less than US$5,000,000 during the First Extension Period. The Company will pay-in-kind interest accruing during the extension periods at 12.5% per annum, thus preserving cash and providing Palladon flexibility to fund operations. In connection with the First Extension Period, the Company has agreed to pay additional interest of US$500,000, which will be added to the principal amount of the Luxor Term Loan, and would be payable in cash out of the Interim Financing.

During the First Extension Period, the Company will endeavor to complete the Interim Financing to fund operations, advance feasibility studies for iron concentrate and alternate iron products (DRI, pig iron or iron nuggets), and potentially repay a portion or all of the Luxor Loans. The Company will attempt to raise a minimum of US$5 million in the Interim Financing, which is anticipated to fully fund operations through the end of 2010. Palladon will also continue discussions with strategic and financial investors regarding larger funding options to refinance and repay the Luxor Loans, as well as to advance its concentrate and alternate iron production projects.

If Palladon raises a minimum of US$5 million of equity capital prior to October 15, 2009 and if certain other conditions have been met, then the due date on the Luxor Loans will be extended, without further action by any party, to December 31, 2010. Upon the closing of the Interim Financing and commencement of the Second Extension Period, Palladon will be obligated to pay additional interest to Luxor in the amount of US$1,750,000 (assuming the Luxor Loans have not been paid in full), payable by the issuance to Luxor of shares of Palladon's common stock at the per share price at which Palladon's common stock is issued or deemed to have been issued in the Interim Financing, provided that in no event shall any such shares issued exceed 5% of Palladon's total shares outstanding after giving effect for the Interim Financing.

Additionally, during the Second Extension Period, if the Luxor Loans continue to be outstanding, Palladon will issue to Luxor on each of December 31, 2009, March 31, 2010, June 30, 2010 and September 30, 2010 common shares in an amount equal to a maximum of 3% of the then total outstanding shares of Palladon's common stock. If the Company repays the Luxor Loans prior to the vesting dates, any future stock grant obligations would terminate.

Luxor has also agreed that after sixty five percent (65%) of the total amounts payable on the Luxor Loans has been paid in cash, at the Company's option, the balance of the Luxor Loans can be converted into Palladon common equity at the most recent share price used to refinance the Luxor Loans, provided that the amount raised in such financing is at least US$10 million and other conditions have been met. Other terms and conditions are included in the Extension Agreement.

Commenting on the Agreement, CEO John Cutler stated, "We are very pleased to have reached this Agreement with Luxor. They understand the potential for this project and have demonstrated a commitment to work with the Company to advance its efforts. The first extension will allow SRK Consulting (U.S.), Inc. ("SRK") to continue its work which will allow the Company to accelerate discussions involving near-term financing and strategic options for the project."

An important milestone in the near term will be the filing of a NI 43-101 compliant Preliminary Economic Assessment Report, including a resource statement. Recent and ongoing confirmation drilling at Comstock/Mountain Lion and stockpiles on the property is anticipated to allow SRK to bring portions of Palladon's iron ore resource into compliance with Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") guidelines. The Second Extension Period, if exercised, would allow the Company time to complete a bankable feasibility study for the project and to continue proving up additional resources. In addition to SRK's work, the Company continues to explore near-term and intermediate-term shipping options that would provide cash flow to the Company.

Finally, the Company is in the last stages of completing the 2009 audited financial statements. As part of this process, the Company anticipates that it will submit amended and restated interim financial statements to the British Columbia Securities Commission ("BCSC") within the next two weeks. The Company anticipates that the trading halt will be resolved soon after receiving approval from the BCSC at which point the audited financial statements will be released.

On Behalf of the Board of Directors,

John W. Cutler, President and Chief Executive Officer

About Palladon

Palladon Ventures Ltd. is a junior resource company focused on advancing the Comstock/Mountain Lion iron mine in Iron County, Utah. Palladon also holds gold exploration projects in Nevada, Utah and Argentina.

Disclaimer for Forward-Looking Information

Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding: (1) the Company's ability to raise the Interim Financing, complete feasibility studies for iron concentrate and alternate iron products and repay a portion or all of the Luxor Loans; (2) the Company's belief that it will raise a minimum of US $5 million in the Interim Financing and that such funds will fully fund operations through the end of 2010; (3) the Company's ability to continue discussions with strategic and financial investors regarding larger funding options to refinance and repay the Luxor Loans, as well as to advance the concentrate and alternate iron production projects; (4) the Company's expectation and ability to complete a NI 43-101 compliant Preliminary Economic Assessment Report, including a resource statement, in the near term; (5) the Company's belief and ability to provide details of SRK's preliminary evaluation in the near term; (6) SRK's ability to bring portions of the Company's iron ore resource into compliance with Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") guidelines; (7) the Company's expectation and ability to, during the second extension period, complete a bankable feasibility study for the project and to continue proving up additional resources; (8) the Company's ability to explore near-term and intermediate-term shipping options that would provide cash flow to the company; (9) the Company's expectation and belief that the amended and restated interim financial statements will be submitted to the British Columbia Securities Commission ("BCSC") within the next two weeks; and (10) the Company's belief that the trading halt will be resolved soon after receiving approval from the BCSC at which point the audited financial statements will be released. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them.
These forward-looking statements reflect management's current views and are based on certain expectations, estimates and assumptions which may prove to be incorrect. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) a downturn in general economic conditions in North America and internationally, (2) the inherent uncertainties and speculative nature associated with mineral exploration and production, (3) a decreased demand for minerals, (4) any number of events or causes which may delay or cease exploration and development of the Company's property interests, such as environmental liabilities, weather, mechanical failures, safety concerns and labour problems; (5) the risk that the Company does not execute its business plan, (6) inability to retain key employees, (7) inability to finance operations and growth, (8) other factors beyond the Company's control (9) the risk that the Company will not be able to raise funds due to Luxor Capital Group and (10) the risk that the Company is unable to satisfy the BCSC's requests. These forward-looking statements are made as of the date of this news release and, except as required by law, the Company assumes no obligation to update these forward-looking statements, or to update the reasons why actual results differed from those projected in the forward-looking statements.

Neither 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.

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