Pele Mountain Announces Preliminary Economic Assessment for Eco Ridge Mine Rare Earths and Uranium Project with $1.31-Billion Pre-Tax Cash Flow, $662-Million NPV (at 7.5% Discount Rate), 47% IRR

TORONTO, July 5, 2011 -

    Trading Symbol:      TSX Venture : GEM
                         OTCQX : GOLDF
    Shares Outstanding:  133,918,746

Pele Mountain Resources Inc. (TSXV: GEM) (OTCQX:
GOLDF) (”Pele” or the “Company“) today
announced results of a NI 43-101 Preliminary Economic Assessment
(the “PEA“) on its Eco Ridge Mine Rare Earths and Uranium
Project (”Eco Ridge” or the “Project“). The PEA was
prepared by Roscoe Postle Associates (”RPA“) and
demonstrates that Eco Ridge has potential to become a profitable
producer of rare earth oxides (”REO“) and uranium oxide
(”U₃O₈“).

The Project is located in Elliot Lake, Ontario, the only
Canadian mining camp to ever achieve commercial REO production and
an historically important source of “Heavy” REO in North
America.  Recent extraordinary REO market developments,
sparked by China’s reduction of export quotas, have resulted in
sharply higher prices, inciting a rush to find and bring to
production new sources outside of China. With well-understood
geology, excellent regional infrastructure, and strong local
support, Eco Ridge is an ideal location for a safe, secure, and
reliable long-term supply of REO and
U₃O₈. Pele is focused on transitioning
Eco Ridge into the feasibility and licensing stages as it advances
the Project toward development and production.

Highlights of the PEA include (all financial terms in US$):

• 9,400-tonne per day operation with life-of-mine production of
  10.7-million pounds of Total REO and 24.9-million pounds of
  U₃O₈ over a 14-year mine life.
• Cumulative operating cash flow of US$1.72-billion; Cumulative
  pre-tax cash flow of US$1.31-billion.
• Positive NPV of $662-million (at a 7.5% discount rate); IRR of
  47-percent.
• Operating cash cost of $16 per pound
  U₃O₈, net of REO credits.
• Start-up capital cost of $212-million; Sustaining capital cost
  of $195-million.
• Life-of-mine production includes 430,000 pounds of dysprosium
  oxide (Dy₂O₃), 1.28-million pounds of
  neodymium oxide (Nd₂O₃), 2.08-million pounds
  of yttrium oxide (Y₂O₃), and 67,000 pounds of
  scandium oxide (Sc₂O₃).
• Two-thirds of REO revenue is from Heavy REO (including yttrium
  and scandium oxides) many of which are forecast to be in
  particularly short supply in the years ahead while demand continues
  to rise sharply.
• Opportunities for improvement of project economics include
  improved REO and U₃O₈ recoveries, and
  increased resources and production rate.

To view the full press release, please click here: href="www.pelemountain.com/pdfs/GEMPEA07052011.pdf">www.pelemountain.com/pdfs/GEMPEA07052011.pdf

For further information:

Al Shefsky, President, at +1-416-368-7224, or visit the Pele
website at  href="www.pelemountain.com/">www.pelemountain.com.

For further information: Al Shefsky, President, at +1-416-368-7224, ashefsky at pelemountain.com