Preliminary Economic Assessment on Pyrite Recovery Project Supports Potential to Increase Chelopech Metal Recoveries to 90%

TORONTO, ONTARIO--(Marketwire - July 26, 2012) -

(All amounts have been expressed in US Dollars except where otherwise indicated)

Dundee Precious Metals Inc. (TSX:DPM)(TSX:DPM.WT.A) ("DPM" or "the Company") is pleased to report the positive technical results outlined in its preliminary economic assessment ("PEA") of the pyrite recovery project (the "Pyrite Project") at its Chelopech Mine in Bulgaria. "We are excited by the potential of this Pyrite Project and the opportunities it may create for us in the future. Should this proceed, the study indicates that up to an additional 85,000 oz of gold could be recovered annually from Chelopech, increasing the gold contained in concentrate recovery from 55% to 90%", stated Jonathan Goodman, President and CEO.

Background

Chelopech is an underground gold, copper and silver mine, which currently produces a copper concentrate with metal recoveries averaging 55%, 85% and 42%, respectively. The work has confirmed that with this Pyrite Project there is potential to recover most of the unrecovered gold, silver and copper. The bulk of these unrecovered metals are mainly associated with the mineral pyrite, which is currently rejected in the flotation process to ensure a saleable copper concentrate. The PEA is based on the Mineral Reserves reported in the National Instrument 43-101 ("NI 43-101") Technical Report for the Chelopech Project, Bulgaria filed on SEDAR on March 25, 2011. At the full mine production rate of 2 million tonnes per annum, approximately 400,000 tonnes of pyrite concentrate could be generated from the mill feed as a separate concentrate product in addition to the copper concentrate already produced. Initial flotation test work has indicated that a pyrite concentrate would contain:

Contained Metal Content				Annual Production
Pyrite concentrate				380,000 - 420,000 tonnes
		Gold (@ 6-7 g/t)		75,000 - 90,000 oz
		Silver (@ 10-15 g/t)		130,000 - 190,000 oz
		Copper (@ 0.5%-0.7%/t)		4.5 - 6.0 M lbs

Project Description

An initial desktop study assessed several options for further processing of this concentrate to recover the gold and other economic metals contained following which bench scale test work was conducted on the highest potential options. The test work included roasting, atmospheric oxidation, pressure oxidation ("POX") and biological oxidation, each with the subsequent leaching and smelting. This work has indicated that a POX process or autoclave could be used to produce a low mass metals rich residue containing high values of gold and silver.

Subsequent laboratory and pilot scale test work conducted at the SGS Lakefield laboratory in Canada has confirmed the technical viability of this process. Results to date have shown that a product containing 30-60 g/t of gold and 25-75 g/t of silver, with recoveries of 95% of the gold and approximately 50% of the silver, can be produced. There is a significant mass reduction which provides a unique opportunity to produce a product which can be transported economically to DPM's smelter in Namibia.

It is proposed that the copper and silver remaining in the acid solution after the POX process would be recovered through a precipitation process as part of the neutralization stages.

This solution will be neutralized in several stages using limestone, which will form gypsum. This will then be disposed of in a properly designed waste storage facility adjacent to the existing tailings storage facility.

The test work shows the following products will be produced from this process:

Oxidation Products				Annual Production
Solid residue				40,000 - 80,000 tonnes
		Gold (@ 30 - 60 g/t)		70,000 - 85,000 oz
		Silver (@ 25 - 75 g/t)		60,000 - 100,000 oz
From the solution
		Copper (as precipitate)		3.0 - 4.5 M lbs
		Silver (as precipitate)		35,000 - 80,000 oz
		Neutralized waste		1.2 - 1.5 M tonnes

Further flow sheet test work and conceptual studies will be conducted in the next three months to complete the basis for input to the feasibility study, which is expected to commence in the fourth quarter of 2012.

Project PEA

The Pyrite Project is expected to be implemented in two stages. The first stage is a pyrite concentrate circuit, which includes a new flotation, thickening and filtration installation in the existing mill facility. This requires minimal capital and permitting and can immediately generate a pyrite concentrate for sale to smelters to generate some initial cash flow while the remaining phases of the Pyrite Project are being designed, permitted and constructed. A stockpile of pyrite concentrate, previously produced at Chelopech, is currently being sold to smelters confirming that there is a market for this product. The PEA assumes the sale of a portion of the 400,000 tonnes of pyrite concentrate available for the period 2013 - 2016. The remaining portion would be stockpiled for later processing through the POX facility.

The second stage would be the construction of the POX facility, which is expected to be done in two phases to reduce the Pyrite Project risk and to make use of the existing autoclave, oxygen plant and other equipment already owned by DPM and not used in a previous project. Phase 1 would allow for the processing of approximately 200,000 tonnes, or half, of the annual pyrite concentrate. Completion of a feasibility study and environmental permitting is expected to take up to two years from initial start in early 2013. Assuming the foregoing milestones are achieved within this time frame, the Pyrite Project construction would be expected to be completed within one year with operation of the first phase beginning in 2016.

The second phase of the POX facility (comprising an additional autoclave and associated infrastructure) would be capable of processing the remaining 200,000 tonnes of pyrite concentrate. Construction would commence after it has been confirmed that the first phase has been operating successfully. The PEA assumes construction would take place in 2016 with start-up commencing in 2017.

Preliminary capital cost estimates for each phase of the Pyrite Project are as follows:

PRELIMINARY CAPITAL COST ESTIMATE SUMMARY
Item				Total ($M)
Stage 1: Concentrator Upgrade - Start Production Mid 2013				22
Stage 2: POX Facility
		Phase 1 - Start Production 2016		65
		Phase 2 - Start Production 2017		67
Owner's Cost and Contingency
		Phase 1 – Start Production 2016		28
		Phase 2 – Start Production 2017		20
Total Capital				202

The following table summarizes the key parameters and preliminary economics of the Pyrite Project:
Pyrite Project Highlights		2013 - 2025 (1)
Stage 1 - Pyrite Concentrate (3)		Mid 2013
Average annual mill production		2,000,000 tonnes
Average annual pyrite production (2)		400,000 tonnes
Average annual contained gold		82,000 oz
Average annual contained silver		215,000 oz
Average annual contained copper		4.4 M lb (6)
Stage 2 - Pyrite Treatment (3)		2016
Average annual gold production		78,000 oz
Average annual silver production		180,000 oz
Average annual copper production		3.8 M lb
Pyrite Project Economics
Cash cost per tonne of pyrite		$156
Cash cost per oz of gold (net of by-product credits)		$615
Project capital costs (4)		$202 M
Sustaining capital cost		$16 M
Closure and rehabilitation costs		$14 M
Average annual EBITDA (5)		$49 M
NPV (5% Discount Rate) after tax (5)		$141 M
Internal rate of return after tax (5)		24%

(1)	Representative period based on 2011 Mineral Reserves and Life of Mine ("LOM") to 2022, followed by one year of accumulated stockpile processing and two years of recovery of pyrites from the existing tailings facility.
(2)	A typical average based on LOM grades.
(3)	Pyrite production commences mid-2013, Phase 1 POX treatment 2016, Phase 2 full POX treatment 2017.
(4)	Phased expenditure from 2013 through 2016.
(5)	Assuming $1,250/oz gold, $25/oz silver and $2.75/lb copper after 2016.
(6)	Copper values contained in pyrite are not payable when sold as pyrite but will be following processing through the POX facility.

Technical Information

The technical information contained in this news release has been prepared in accordance with Canadian regulatory requirements set out in NI 43-101 and has been reviewed and approved by Dr. Simon Meik, B.Sc. Hon., PhD (Minerals Processing), Vice President, Processing, of DPM, who is a Qualified Person, as defined under NI 43-101, and not independent of the Company. An NI 43-101 compliant technical report is expected to be filed on Sedar within 45 days of the date of this press release.

FORWARD LOOKING STATEMENTS

This news release contains "forward-looking statements" that involve a number of risks and uncertainties. Forward-looking statements include, but are not limited to, statements with respect to the economic potential, associated costs and future production performance of the Pyrite Project outlined by the PEA, the future price of gold and silver, the estimation of mineral reserves and resources, the realization of mineral estimates, the timing and amount of estimated future production and output, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage and timing and possible outcome of pending litigation. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made, and they involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any other future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others: the uncertainties inherent to a PEA, which has a lower level of confidence than feasibility studies, the actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold, copper, zinc and silver; possible variations in ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, fluctuations in metal prices, as well as those risk factors discussed or referred to in Management's Discussion and Analysis under the heading "Risks and Uncertainties" and other documents filed from time to time with the securities regulatory authorities in all provinces and territories of Canada and available at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Unless required by securities laws, the Company undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements.

NON-IFRS FINANCIAL MEASURES

This news release refers to estimated EBITDA, cash cost per tonne of ore processed and cash cost per ounce of gold because management and certain investors use this information to assess the Company's performance and also determine the Company's ability to generate cash flow for investing activities. In addition, management utilizes these metrics as an important management tool to monitor cost performance of the Company's operations. These measurements have no standardized meaning under International Financial Reporting Standards ("IFRS") and may not be comparable to similar measures presented by other companies. These measurements are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Dundee Precious Metals Inc. is a well-financed, Canadian based, international gold mining company engaged in the acquisition, exploration, development, mining and processing of precious metals. The Company's principal operating assets include the Chelopech operation, which produces a gold, copper and silver concentrate, located east of Sofia, Bulgaria; the Kapan operation, which produces a gold, copper, zinc and silver concentrate, located in southern Armenia; and the Tsumeb smelter, a concentrate processing facility located in Namibia. DPM also holds interests in a number of developing gold properties located in Bulgaria, Serbia, and northern Canada, including interests held through its 51.4% owned subsidiary, Avala Resources Ltd., its 47.3% interest in Dunav Resources Ltd. and its 10.7% interest in Sabina Gold & Silver Corp.