Pele Produces Mixed Rare Earth Carbonate Concentrate Along with Uranium Oxide

Pele Mountain Resources Inc. (TSX VENTURE:GEM) ("Pele" or the "Company") announced today that its bench scale metallurgical testing program has achieved a significant milestone with the production of a mixed rare earth carbonate concentrate along with uranium oxide ("U3O8"), also known as yellow cake.

The metallurgical testing is being conducted at Saskatchewan Research Council ("SRC") using HQ-size drill core samples from Pele's 100-percent owned Eco Ridge Mine Rare Earths and Uranium Project ("Eco Ridge") in Elliot Lake, Ontario.

Pele has tested the basic processing circuit elements that were the basis of its NI 43-101 Preliminary Economic Assessment ("PEA") including pre-concentration using flotation and high intensity magnetic separation, acid baking and leaching, purification of leach solutions, solvent extraction to recover uranium oxide (yellow cake), and precipitation of a mixed rare earth carbonate concentrate. Pele is now advancing processing optimization studies in order to expedite preparations for pilot plant testing and the submission of its updated Project Description to government regulators. Pele remains focused on its objective to obtain a license to construct its Eco Ridge Mine in 2015.

Al Shefsky, President of Pele stated, "Our production of mixed rare earth concentrates and yellow cake is an important metallurgical processing milestone and confirms that Pele Mountain is a clear leader in the race to develop secure and reliable supplies of critical rare earths in North America. We have achieved this excellent progress with the help of a very talented and dedicated team including the proactive and very capable personnel at SRC."

Eco Ridge has competitive advantages that may enable its development ahead of other rare earth projects, including:

• Its location in Elliot Lake, a proven mining camp with outstanding regional infrastructure including roads, railway, power, natural gas, airport, and deep-water ports. Elliot Lake has produced more than 300-million pounds of U3O8 and is the only Canadian mining camp to have achieved commercial rare earth oxide ("REO") production.
• Pele's world-class development team, led by Roger Payne P. Eng., former General Manager for Rio Algom, and includes RPA, SNC-Lavalin Inc., SENES Consultants Limited, and Golder Associates Ltd., all of which have extensive experience in Elliot Lake.
• Production of a strategically significant mix of rare earths forecast to remain in supply deficit.
• Well-understood rare earth mineralogy and metallurgy, allowing for excellent mineral extraction and recovery.
• No known environmental liabilities, enthusiastic local support, and strong government support.

Operational highlights of Pele's Eco Ridge PEA include:

• 9,000-tonne per day operation with life-of-mine production of 97.2-million lbs. of total rare earth oxides (in the form of a mixed rare earth carbonate concentrate) and 27.5-million lbs. of U3O8 over an 11-year mine life;
• Life-of-mine production includes 14.2-million lbs. of neodymium oxide (Nd2O3), 882,000 lbs. of dysprosium oxide (Dy2O3), 4.1-million lbs. of yttrium oxide (Y2O3) and significant quantities of terbium and europium oxides, providing a vital source of the most critical REO outside China;
• 85-percent of Project revenue from Heavy REO, neodymium oxide (Nd2O3) and U3O8;
• Light REO recoveries average 89-percent, Heavy REO recoveries average 78-percent, and U3O8 recovery averages 90-percent.

For further information about the PEA, please see Pele's press release of July 4, 2012.

This press release has been reviewed and approved by Roger Payne P. Eng., Pele's Executive Vice President and a Qualified Person under NI 43-101.