Pele Mountain Resources Inc.

Pele Mountain Resources Inc.

December 18, 2006 10:45 ET

Pele Mountain to Increase Uranium Holdings at Elliot Lake; Consolidated Project Area Contains Over 26 Million Pounds U3O8

TORONTO, ONTARIO--(CCNMatthews - Dec. 18, 2006) - Pele Mountain Resources Inc. (TSX VENTURE:GEM) ("Pele" or the "Company") announced today that it has entered into a binding agreement (the "Agreement") with Precambrian Ventures Ltd. (the "Vendor") to purchase 101 mining claim units (the "New Claims") along the eastern and southern boundaries of Pele's Elliot Lake Uranium Project in northern Ontario. On closing of the Agreement, scheduled for tomorrow, Pele's 100-percent owned consolidated project area will comprise a total of 256 mining claim units covering approximately 10,000 acres.

The New Claims include most of the previously announced "Measured Ore Estimate", defined by Rio Algom in the mid-1970s, which Pele did not already own. Previous drilling by several companies in the project area led to Rio Algom outlining a measured ore estimate of 27,181,000 tons grading 1.03 pounds per ton U3O8, or approximately 28 million pounds of U3O8. While this historic ore estimate does not conform to NI 43-101 standards, Rio Algom mined more than 100 million pounds of U3O8 from similar deposits in the Elliot Lake camp and its compilation is generally considered reliable according to local industry standards.(1) Pele now controls all but a small fraction of this historic ore estimate.

Pele President and CEO Al Shefsky stated, "The agreement announced today, combined with our previously announced acquisitions in the area, successfully consolidates a very large zone of uranium mineralization. Furthermore, there are several historic drill holes that confirm the continuation of uranium mineralization both down dip and to the east of the area containing the Rio Algom ore estimate".

The New Claims cover the eastern extension of the main mineralized zone, in an area that was not included in the Rio Algom ore estimate. At least 15 holes were drilled on this extension, all of which intersected the uranium-bearing horizon. On Pele's original Elliot Lake mining claims, previous drilling by several companies has confirmed the continuation of mineralization within the project boundaries to the northwest, indicating the potential for 50 to 60 million tons of uranium-bearing conglomerates in addition to the Rio Algom ore estimate(2). The uranium-bearing conglomerates outcrop intermittently on the surface of Pele's claims for more than four kilometres and continue down dip to the northwest for more than four kilometres, remaining open down dip and along strike at depth.

The Elliot Lake area was once known as "the uranium capital of the world", and has produced more than 270 million pounds of U3O8 from stratigraphically bound conglomerate deposits that demonstrate remarkable consistency over large areas. The uranium mineralization on the Pele property occurs in a geological environment similar to several past-producing mines on adjacent properties, including the Algom Nordic, Lacnor and Stanleigh mines. The project is ideally situated, adjacent to an all-season highway with secondary roads and power lines extending throughout the property.

TradeTech's Uranium Information Website ( reported on December 15, 2006, that "...the spot price for uranium jumped $7.00 this week to $72.00 per pound U3O8 - the single largest increase reported since NUEXCO began publishing prices in 1968". (NUEXCO was the predecessor company to TradeTech.)

Mr. Shefsky concluded, "Our 100-percent ownership interest in millions of pounds of U3O8(1) within a proven mining camp, combined with the demonstrated potential for additional uranium mineralization elsewhere on our property, provides our shareholders with compelling exposure and leverage to the rapidly increasing price trend for uranium".

As announced on November 28, Pele has retained the services of Scott Wilson Roscoe Postle Associates Inc. to complete a NI 43-101 technical report on the Elliot Lake project. The report will now also cover the portion of the New Claims included in the area of the Rio Algom ore estimate. The report is expected to be available during January 2007.

Under the terms of the Agreement, Pele has agreed to pay the vendor a total of $305,000 in cash and to issue 425,000 common shares in the capital of Pele at an attributed value of $0.88 over the next three years, in accordance with the following schedule:

- $30,000 and 50,000 shares upon closing, scheduled for December 19, 2006;
- $50,000 and 75,000 shares by December 19, 2007;
- $75,000 and 100,000 shares by December 19, 2008;
- $150,000 and 200,000 shares by December 19, 2009.

The Vendor will also retain a 1.75-percent NSR royalty, of which Pele may buy back 1-percent for $1-million.

Pele also announced today that on closing of the Agreement, it will enter into consulting agreements with Mr. Gregory Campbell and Mr. Donald Hawke (the "Consultants"), who are the principal owners of the Vendor. Over the past several years, the Consultants have gained considerable knowledge relating to the geology and mineral potential of the New Claims and other uranium deposits of the Elliot Lake area. Based on their knowledge, expertise, and years of experience, the Consultants have postulated a new model for potential higher-grade uranium mineralization below the stratigraphic horizon hosting the known uranium deposits of the Elliot Lake, within the basement rocks.

The consulting agreements will provide Pele with access to the expertise and knowledge of the Consultants for a period of 5 years (the "Option Period"). Each Consultant will be granted an option to purchase 100,000 shares of Pele during the five-year Option Period commencing on December 15, 2006 at a purchase price of $0.88 per share (the "Options"). The Consultants may only exercise their Options during the first four years of the Option Period following a discovery in drill core of uranium mineralization in the basement rocks on the New Claims that returns any combination of width and grade that is equivalent to a minimum of 1-percent uranium over a true width of 2 metres (the "Condition Precedent"). Such a discovery would represent a profound achievement and would add substantial value to Pele's Elliot Lake project.

Upon fulfillment of the Condition Precedent during the Option Period, Pele will pay each of the Consultants $88,000 as a consulting fee (the "Consulting Fee"), to be used entirely toward the exercise of their options. During the fifth year of the Option Period, the Condition Precedent will not apply to the exercise of the Options. Any Consultant who fully exercises his Options during the fifth year of the Option Period, prior to the fulfillment of the Condition Precedent, will nevertheless receive the Consulting Fee if the Condition Precedent is subsequently fulfilled within 5 years following the expiration of the Option Period.

The completion of the purchase of the New Claims and entering into the Consulting Agreements remain subject to regulatory acceptance of applicable filings.

This press release has been reviewed and approved by Robert MacGregor, P.Eng., an independent Qualified Person with 14 years experience working in the Elliot Lake area during its time as an active uranium mining camp.

About Pele Mountain Resources

Pele Mountain Resources is discovering and developing the mineral wealth of northern Ontario. Pele is focused on the exploration and development of its 100-percent owned projects at Elliot Lake and Highland. The Elliot Lake uranium project contains a substantial "Measured Ore Estimate" compiled by Rio Algom within an historically prolific mining camp. Exploration at Highland indicates outstanding potential for gold resources and existing regional infrastructure provides opportunities for revenue producing operations. Pele is also a generative exploration company holding a diverse portfolio of gold, diamond, and base metal projects, providing exposure and leverage to discovery and to the increased global demand for natural resources. Four Pele projects are currently funded through agreements with strategic partners, including Goldcorp, Wallbridge Mining, Trigon Exploration, East West Resources and Maple Minerals (a division of Mega Uranium). Pele stock trades on the TSX Venture Exchange under the symbol "GEM".

(1) The Rio Algom "measured ore estimate" is historical, has not been confirmed by a qualified person, and should not be relied upon.

(2) The potential quantity and grade is conceptual in nature. There has been insufficient exploration to define a mineral resource. It is uncertain if further exploration will result in the discovery of a mineral resource.

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.

Common Shares Outstanding: 64,172,145

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

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