Premium Exploration Inc.
TSX VENTURE : PEM

Premium Exploration Inc.

May 18, 2010 08:00 ET

Premium Exploration Clarifies Buffalo Gulch Historic Resource Estimate

As a Result of a Review by the British Columbia Securities Commission, We Are Issuing the Following News Release to Clarify Our Disclosure.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 18, 2010) - Premium Exploration Inc. (TSX VENTURE:PEM) ("Premium") is clarifying the historic resource on the Buffalo Gulch project which is located in central Idaho.

The Buffalo Gulch project is located near the north end of the Orogrande Shear zone and is defined by a north-south trending gold in soil geochem anomaly that has a length of 3200 meters (10,500 feet). The northern portion of the soil anomaly has undergone extensive reverse circulation drilling by a previous operator totaling 150 drill holes on lines spaced 30 meters apart (100 feet) and holes located 30 to 60 meters (100 to 200 feet) apart on the lines. The drilling defined a zone of mineralization hosted in intensely weathered and oxidized schists, gneisses and pegmatite's down to a depth of approximately 90 meters (300 feet).

Extensive geological modeling, block modeling, engineering and metallurgical testwork has been conducted on the mineralized zone by previous operators and culminated in the definition of a resource that Premium considers a historic resource.

The historic resources as calculated by the Bema Gold subsidiary "Idaho Gold Corporation" were prepared prior to the introduction of NI43-101, but were carried out in accordance with established practice at that time. 

After the drilling conducted during the period 1986-1988, Idaho Gold estimated "proven and probable geologic reserves" of oxide material to a depth of 220 feet as 4.839 million short tons at a grade of 0.023 ounce/ton containing 110,759 troy ounces of gold*. The estimate was based on a tonnage factor of 16 cubic feet per ton and a three dimensional kriging software was employed using an indicator variable of 0.0125 oz/short (0.428 g/tonne) to predict the proportion of each block above the cutoff. Premium's CEO, Wilf Struck, was employed by Idaho Gold during this period and was directly involved in the discovery and delineation of the zone of gold mineralization as well as the resource estimation and subsequent permitting for the proposed development of the Buffalo Gulch Mine.

The resource estimate was reviewed by Micon International in 2004 on behalf of Beartooth Platinum Corporation and they concluded that the - Buffalo Gulch property has historical Mineral Resources of about 5 million tons averaging 0.023 oz/ton Au (4.5 million tonnes at 0.8 g/t Au), comparable to an indicated resource. No cutoff grade was provided. Micon does state that the density factor of 16 cubic feet per ton was confirmed by "specific gravity measurements on material from Idaho Consolidated Metals Corporation's (ICMC) 1996 core program." ICMC is the predecessor company to Beartooth Platinum. Micon qualified the estimate by stating that "The estimations reported here were made prior to the introduction of NI 43-101 and were carried out in accordance with practice at the time. The information is reported as part of the historical data on the Buffalo Gulch property." Golder Associates also reviewed the historical estimate in a 2006 report. The Micon and Golder reports do not qualify the historical estimate as a current mineral resource.

* Estimates of gold resources are historical in nature, predate and are noncompliant with NI 43-101. Premium is not treating the historical estimate as current mineral resources or reserves. Premium has not undertaken any independent investigation of the resource estimates nor has it independently analyzed the results of the previous exploration work in order to verify the resources, and therefore the historical estimates should not be relied upon. The historical classes used by Idaho Gold are different from current CIM classes, however, they might be comparable to the CIM inferred or indicated resource classes.

Successful cyanide bottle roll extraction tests and column tests culminated in two pilot scale heap leach tests in the field and confirmed the favorable leaching parameters for the mineralized material. Based on the positive tests from these results; economic and production analysis were conducted by the Bema Gold subsidiary "Idaho Gold Corporation" in 1990; independent engineering group MRDI in 1991; independent engineering group MRDI in 1996; and independent engineering group Golder and Associates in 2006. The analysis by Idaho Gold and MRDI were prepared prior to the introduction of NI43-101, but were carried out in accordance with established practice at that time.

The prior economic analyses did not apply current parameters or assumptions, and they should not be relied on. Analyses done subsequent to the introduction of NI 43-101 were not based on a current resource estimate, as required by NI 43-101. The company previously disclosed basic economic parameters for Buffalo Gulch on its website; however, these were premature and should not be relied on.

Premium will conduct additional drilling on the Buffalo Gulch historic resource during the 2010 exploration season and will use the newly generated data in conjunction with the historic drill data to prepare a NI43-101 compliant resource estimate. A "preliminary assessment" will also be initiated, subsequent to the resource estimate, to develop an economic analysis of the potential viability of defined mineral resources.

"The ongoing drilling on the Friday-Petsite project near the south end of the Orogrande Shear Zone to follow up on the significant gold intercepts from last years drilling, coupled with the drilling and planned resource estimate on the Buffalo Gulch project represent an exciting time for the growth of Premium Exploration." Stated Wilf Struck, CEO, Premium Exploration.

Qualified Person

Wilf Struck, P.Eng., CEO of Premium Exploration, Inc. and a Qualified Person as defined by NI 43-101, has prepared and approves the content of this release.

About Premium Exploration Inc.

Premium Exploration Inc. (TSX VENTURE:PEM) explores and develops North American gold, silver, Platinum and Palladium. Our team is committed to unlocking mineral wealth for our shareholders by discovering, developing, and permitting precious metals assets to production. The Company's portfolio includes one of the largest land packages in Idaho which includes an NI 43-101 gold resource, as well as PGM exploration project in Montana. For additional information, please visit us at www.premiumexploration.com.

This press release contains certain "Forward-Looking Statements" within the meaning of Section 21E of the United States Security Exchange Act of 1934, and involves a number of risks and uncertainties. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the Company's documents filed from time to time with the TSX Venture Exchange and the British Columbia Securities Commission. All statements, other than of historical fact, included herein are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. 

Neither the 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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