Pele Mountain Resources Inc.
TSX VENTURE : GEM

Pele Mountain Resources Inc.

May 12, 2008 07:00 ET

Pele Mountain Enters Into Option Agreement to Sell Its Timmins Nickel Project

TORONTO, ONTARIO--(Marketwire - May 12, 2008) - Pele Mountain Resources Inc. (TSX VENTURE:GEM) ("Pele" or the "Company") and Fletcher Nickel Inc. ("Fletcher") (TSX:FL) announced today that they have entered into an option agreement (the "Option Agreement") pursuant to which Fletcher may acquire 100-percent of Pele's Timmins Nickel Project, subject to a 1.5-percent Net Smelter Returns royalty ("Royalty"), in favour of Pele. The project consists of certain unpatented mining claims and interests (the "Claims") located approximately 35 kilometres south of Timmins in Northern Ontario.

Pele President and CEO Al Shefsky stated, "The Option Agreement for our Timmins project illustrates our strategy to joint-venture and/or monetize our non-core assets as we focus on developing our Elliot Lake Uranium Mine Project. As announced last week, the progress achieved in our ongoing optimization studies has led to the decision to conduct a pre-feasibility study which we expect to complete by year-end. We remain on schedule to submit our application to the Canadian Nuclear Safety Commission ("CNSC") this summer, to commence the formal licensing process for a new mine at Elliot Lake. Our objective is to develop a safe, secure, and reliable uranium mine, providing a model for excellence in sustainable long-term development."

In consideration of the sale of the Claims on the terms and subject to the conditions of the Option Agreement, Fletcher has agreed: (i) to pay the Company an aggregate of $600,000 in cash in eight quarterly payments of $75,000 beginning on the effective date and with the final payment being on or before January 15, 2010; and (ii) to issue to the Company 600,000 common shares in the capital of Fletcher (each a "Fletcher Common Share") on the effective date of the Option Agreement and an second issuance of Fletcher Common Shares on May 15, 2009 having a value of $325,000, based on a weighted average trading price formula calculated at the time of issuance. Fletcher may also buy back 1-percent of Pele's 1.5-percent Royalty for $1,000,000, thereby reducing the Royalty to 0.5-percent.

About Pele Mountain Resources

Pele Mountain Resources provides investors with superior leverage to uranium as it advances its 100-percent owned Elliot Lake Uranium Project toward objectives of development and production. The project hosts substantial NI 43-101 compliant U3O8 resources (6.4 million pounds "indicated" at a grade of 0.051-percent and 36.1 million pounds "inferred" at a grade of 0.044-percent) and has received a positive Scoping Study, providing the basis for economically-viable, environmentally-compliant uranium mining and processing operations.(1) The Elliot Lake mining camp has produced more than 300 million pounds of U3O8 and was formerly known as the "Uranium Capital of the World". Pele also holds a diverse portfolio of gold, diamond, and base metal projects in Northern Ontario. Pele stock is listed on the TSX Venture Exchange under the symbol "GEM".

(1) The Scoping Study is preliminary in nature and includes both indicated and inferred mineral resources. Inferred mineral resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary assessment will be realized.

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.

Common Shares Outstanding: 84,067,612

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

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