Mr. Brian Wesson reports

WOULFE MINING ACTIVITIES UPDATE FROM ITS SANGDONG TUNGSTEN AND MUGUK GOLD PROJECTS

Woulfe Mining Corp.'s fast-track strategy for bringing the Sangdong tungsten project back into production has successfully moved the project through each phase of development. The Wardrop-led feasibility study, which began in June, 2011, is expected to be completed by the end of the year with a report out in January of 2012. The completion of the feasibility study will allow Woulfe to begin the construction phase of development and provide support for a possible project finance application early next year.

Highlights:

• Updated NI 43-101 resource released for the Sangdong tungsten/molybdenum project;
• Independent valuations of Sangdong by Canadian and Korean experts confirm prefeasibility value of around $300-million (U.S.);
• Sangdong feasibility study progressed during the quarter and construction expected to commence by year-end;
• Woulfe team invited to China by major global tungsten group to inspect facilities;
• Woulfe management considering various financing options for Sangdong;
• Discussions with prospective tungsten offtake partners well advanced with agreements to be formalized in the near future;
• Muguk gold project progressed during quarter with 3-D orebody modelling completed and resource estimations in progress;
• Woulfe now trading on the U.S. OTCQX market;
• Woulfe has $5-million (U.S.) in cash (September, 2011) and $5.5-million (U.S.) in 12-cent warrants (expiring December, 2011);
• KPMG appointed for 2011 audit in Korea and Canada.

Sangdong tungsten/molybdenum project

Strategy

During the course of 2011, the company has refined its strategy for the development of Sangdong, a world-class tungsten brownfields project located in South Korea. This has been influenced by the strong tungsten price which has increased from around $200 (U.S.) per tonne of APT (metric tonne unit or 10 kilograms of ammonium paratungstate) in early 2010 to over $450 (U.S.) per tonne.

Sangdong was the largest global tungsten producer prior to its closure in 1993 due to low tungsten prices (around $40 (U.S.) per tonne). Historic mining focused on the central skarn sheet referred to as the Main zone which extends laterally for 1,200 metres and downdip at 20 degrees to 30 degrees for 1,500 metres. The mine is flooded below the valley floor, however the upper levels are accessible. The strategy is to fast-track the reopening of the mine by focusing on the upper levels. Mining will exploit the hangingwall and footwall zones which lie above and below the Main zone respectively, plus remnant mining of the Main zone. A scoping study completed in early 2010 by Wardrop United Kingdom (a Tetra Tech company) estimated total inferred resources of 103.2 million tonnes at 0.35 per cent tungsten oxide and 0.04 per cent molybdenum disulphide, excluding the Main zone. This study was submitted to SEDAR in April of 2010 and is available on the company's website. The scoping study resource was based entirely on historical drilling data. Under current guidelines, these data do not comply with NI 43-101 quality assurance and quality control. As a result, the resource was classified in the inferred category.

The proposed steady-state production rate is 1.2 million tonnes per annum although the plant will have a rated capacity of around 1.6 million tonnes per annum. First production is scheduled in early 2013.

Resource update in the first half of 2011

An infill drilling program was undertaken to upgrade the resource status in the upper levels, focusing on the eastern half of the deposit where the access points are located. Most of the drilling was conducted from the Sangdong level and targeted the three parallel mineralized zones.

In July, 2011, Wardrop updated the resource for the upper portion only above the historic level two, with the following results:

• Indicated resource of 6.0 million tonnes at 0.42 per cent WO3 and 0.04 per cent MoS2;
• Inferred resource of 18.6 million tonnes at 0.45 per cent WO3 and 0.05 per cent MoS2;
• A large tonnage of target mineralization that requires further drilling to upgrade to resource status.

This resource estimate is now available on SEDAR and the company website.

This resource estimate is significant for two reasons:

• The grade is currently higher than the scoping study grade, reflecting the higher-grade remnant Main zone mineralization included in the latest estimate.
• The tonnage above level two could conceivably provide the mill feed for more than 20 years, assuming upgrade of inferred resources.

A second drilling program is under way to increase the total resource, and in particular upgrade the inferred resource.

Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Feasibility study progress

The feasibility study was initiated in June, 2011, following the completion of the scoping study which demonstrated very robust project economics at a price of $250 (U.S.) per tonne APT. The study is due for completion by year-end and is being led by Wardrop with support from industry experts.

The study will be based on measured/indicated resources only, to be updated at the end of November. Phase two drilling will continue with three underground rigs operating to maximize the feasibility resource estimate.

Feasibility study components either completed or under way are discussed below.

Engineering design

Detailed plant engineering is being undertaken by Contromation Energy Services of Jakarta. Contromation is a multiengineering and construction group with extensive experience in providing outsourcing services to projects particularly in the southeast Asian region.

Contromation has completed the initial design for the crushing and milling circuits, and the company has invited proposals from Korean companies for the construction of these circuits. Woulfe has purchased a new primary 2.4-million-tonne-per-annum crushing circuit and this is currently being shipped to Korea.

A video of the plant layout, with schematics of the deposit and plant design, is available on the company's website.

Site geotechnical drilling has largely been completed, with additional drilling to be completed in September to finalize the foundation design.

All site survey data have been checked by a consulting surveyor, and a UTM-compatible grid system has been adopted.

Metallurgical testwork

Matt Bolu of Bolu Consulting Engineering Inc. of Vancouver (BCE) is leading the metallurgical testwork and this will be reviewed by Wardrop. BCE and Wardrop have extensive tungsten experience having been involved in numerous studies on tungsten projects worldwide.

Currently, drill core samples for the feasibility metallurgical testing program are being prepared. The program will target a process that is directed at flotation of molybdenum and sulphides, and scheelite flotation along with their respective dewatering circuits. Molybdenum concentrates may be considered for direct marketing while tungsten concentrates will be converted into APT. Other miscellaneous testing will focus on preconcentration and gravity separation potential of the samples.

This work will be undertaken in Canada and will complement the scoping study testwork undertaken by SGS U.K. in 2007. The scoping study work focused on mineralogy, grinding characteristics, gravity separation, and flotation of both sulphides and scheelite.

A one-tonne sample of core from drill holes located in the upper eastern portion of the deposit was dispatched to Canada in July. While this sample was considered representative of the mineralogy within the three mineralized zones, the overall grade was low and not representative of the forecast mining head grade. Additional samples are being prepared and will be sent to Canada in September.

Mine geotechnical

Mike Turner of Turner Mining and Geotechnical Pty. Ltd. (TMG) is leading the geotechnical evaluation and providing input to the mine design being undertaken by Wardrop. TMG will make recommendations on the extraction sequence for the three mineralized zones, and on ground support requirements for the development and production stopes.

TMG has trained the site geologists on geotechnical core logging and underground mapping, including all parameters required for the calculation of rock mass strength in terms of rock quality, and for determining wedge stability for support and critical span calculations.

All core is now geotechnically logged and photographed, and drill core samples are being laboratory tested in Korea to determine strength and deformation properties for pillar designs.

Mining design and tailings backfill

Drift-and-fill mechanized mining has been considered to optimize extraction and dispose of the tailings underground. As noted, mining will initially be carried out above the valley floor from level one above, including the historic Sangdong, Taebaek, Baegun and Jangsan levels where the Main zone has been only partially exploited.

Drilling to date has confirmed that the three mineralized zones in the upper portion of the deposit are typically five to 10 metres thick and wider in places, which is ideal for bulk mining methods. The old workings have now been opened up right across the deposit to the western ventilation shaft, allowing access for further drilling and metallurgical sampling.

The natural water table in the mine is just below level one, and dewatering will initially be carried out to level two only. The mine extends to level 18, and further dewatering will take place on an as-needs basis, for continuing drilling purposes or for opening additional backfill areas. Mining below level two is not planned in the near future.

Mine access will be via a new six-metre-by-six-metre adit on the Sangdong level and decline to level one, which will accommodate the planned 40-tonne haulage trucks. Permission for the adit development has been granted by relevant authorities, and site preparations have commenced.

Tailings disposal will be mostly by backfill, with a small surface tailings storage facility planned. The cement backfill will be used to support the old room and pillar stopes, and modern drift and fill stopes.

Capital cost

Plant capital cost estimates are based on the detailed design work carried out by Contromation. The Contromation cost estimate of approximately $83-million (U.S.) includes all engineering, procurement, construction management costs plus freight and a 10-per-cent contingency. It is considered to be accurate to within 20 per cent.

Cost estimates prepared by Woulfe and to be independently developed by Wardrop include approximately $20-million (U.S.) for mine development and equipment, and $20-million (U.S.) for the APT refinery. The mining equipment estimate is based on indicative costs provided by reputable suppliers. The refinery cost is based on discussions with a leading process-oriented engineering group with specific experience in the design and construction of APT plants in China. A delegation from Woulfe visited China in July to inspect tungsten processing and refining facilities, and further discussions will be held with prospective parties with APT experience.

It was planned to construct the APT plant off site at a port location due to logistical considerations, in particular the processing of imported third party concentrates. However, due to the high cost of land at suitable port sites, the APT plant will be located at Sangdong and in fact will utilize the old APT building if the structural integrity is intact. The tungsten concentrate can therefore be slurried directly into the refinery without filter pressing with a direct reduction in capital and operating costs.

The total capital cost estimate is around $135-million (U.S.), including indirect costs and owner's costs.

Environmental considerations

The requirement for environmental approvals is limited as Sangdong is a brownfields site and the plant will be located on the footprint of the old plant. The land is owned by Yeongwol county, and final approval for the use of this land is contingent on satisfying the authorities that appropriate mining practices will be adopted.

Based on discussions held with the various authorities involved in the permitting, no material issues are expected. Cultural heritage clearance for the site has been granted.

Muguk gold project

Now that the Sangdong feasibility study is well advanced, Woulfe is fast-tracking the evaluation of its Muguk gold project in South Korea. Muguk was the largest gold mine in South Korea until its premature closure in 1997 due to low gold prices.

Woulfe has appointed AMC Consultants of Melbourne as technical adviser to the project. AMC's initial brief is to:

• Prepare a 3-D digital model of the Muguk mine workings utilizing the available level plans and long sections (completed);
• Update the extensive database comprising final survey of underground workings prior to closure, face grades, drill data, ore extraction data and process data (work in progress);
• Prepare an NI 43-101-compliant resource estimate for the main mineralized structures.

The Muguk gold-silver mineralization is hosted within a series of parallel, steeply dipping quartz veins that extend discontinuously for 400 to 2,000 metres along strike and to a known depth of 800 metres. The average width of the veins is typically less than one metre, although the veins pinch and swell and can be up to two metres in width in places.

The two most significant veins are the No. 2 vein and the Three Brothers vein or Samhyungje vein. The No. 2 vein was exploited between 1944 and 1972, and was developed to a depth of 755 metres along a strike length of 1,800 to 2,000 metres. The grades reportedly varied from seven grams per tonne gold to 50 g/t gold. Reported production during this period was approximately 260,000 ounces of gold. The Three Brothers vein was exploited between 1984 and 1997, and was developed to a depth of 600 metres. Reported production during this period was approximately 328,000 ounces. There has been minor exploitation of a number of other veins, including Baksan, Geumyong, and No. 1 and No. 7 to 11 veins.

The executive general manager of the mine at time of closure is now an adviser to Woulfe and is assisting with the evaluation. He acknowledges that the operation was not profitable at the prevailing under-$300-(U.S.) gold prices in 1997, but expressed the view that he was very much against mine closure at the time, given the known residual resources remaining within the structures.

In 1994, Korea Resources Corp. (KORES) completed a resource update on Muguk, resulting in a total resource estimate of 1,418,980 tonnes grading 13.5 g/t gold and 72.8 g/t silver, and containing 615,956 ounces of gold and 3,321,599 ounces of silver, based on a 10 g/t gold cut-off grade. Woulfe cautions that a qualified person has not done sufficient work to classify the historical estimate as current, that it is not treating the historical estimate as current and that the historical estimate should not be relied upon. The mine operated for a further three years after this estimate was undertaken.

In 2010, Woulfe completed a two-hole program at Muguk to comply with its mining rights obligations, which required a total of 750 metres to be drilled. Woulfe opted to target the secondary No. 7 vein to the west of the No. 2 and Three Brothers veins as known mining only extended to a depth of a few hundred metres and shorter holes could be confidently planned to avoid old mining cavities. The first hole intersected two metres at 5.6 g/t gold and 26 g/t silver at 414 metres depth, and the second hole intersected 0.36 metre at 16.6 g/t gold and 16 g/t silver at 386 metres depth.

In July, 2011, Woulfe commenced a third hole targeting the depth extension of the Three Brothers vein. This hole is currently at a depth of around 600 metres and is expected to intersect mineralization at around 735 metres. The objective of the current drilling program is to confirm the downdip extension of the mineralization below the historic workings and to substantiate the grades that were reported in the lower levels.

With the completed 3-D model, AMC is now working on preparing the updated mineral resource estimate, with particular attention to those areas that were historically considered low grade (below 10 g/t), given the very substantial increase in gold prices since mine closure in 1997.

Corporate

Key corporate activities progressed during the quarter relate to Sangdong and include:

• Financing options;
• Tungsten offtake agreements;
• Independent project valuation.

Woulfe management is considering a number of financing options for the estimated $135-million (U.S.) initial capital cost of Sangdong. The preferred strategy will involve the least dilution to the existing Woulfe shareholders.

Management has also had very productive discussions with prospective offtake parties in Asia and Europe. Sangdong's APT product was highly regarded in the industry, and Woulfe expects that its forecast output will be fully committed under new offtake agreements.

Independent valuer Ross Glanville & Associates Ltd. of Vancouver completed a valuation of Sangdong in July. Glanville is of the opinion that the after-tax value of Sangdong, after paying the 2-per-cent net smelter return royalty, is approximately $300-million (U.S.), within a reasonable range from $200-million (U.S.) to $400-million (U.S.). Significantly, this valuation opinion takes into account a 50-per-cent reduction to reflect the project's current scoping study status. The valuation will increase on completion of the feasibility study. The valuation report is available on the company's website.

Woulfe also commissioned PricewaterhouseCoopers in Seoul to undertake a valuation of Sangdong. Due to the confidential nature of some of the information contained in the PwC report, it was not made public; however the conclusions of the PwC report are consistent with the Glanville valuation opinion.

Message from the chief executive officer/president

QUOTE

Woulfe and Wardrop are moving rapidly forward with the feasibility study which is scheduled for completion at the end of the calendar year with the document most likely out in January. The feasibility study is important as it documents the project in detail and defines the project to the level required under National Instrument 43-101. The document will crystallize the project and would support a possible application for project finance in the form of debt early next year.

The company has decided not to produce a prefeasibility report. The intent with the prefeasibility report was to provide the market a significant update during the third quarter. However, it was decided that the expense and time required for this interim step were too high and that they would have delayed the scheduled delivery date of the full feasibility study. After meeting in London with Wardrop, it was decided that we would not require Wardrop to publish a prefeasibility document but keep moving to feasibility.

With respect to Muguk, we are very pleased to be moving ahead now that Sangdong is on track for development. When it was in production, Muguk used a cut-off grade of 10 g/t gold. With the gold price now more than six times the price when the mine closed, we will be working to determine the resource based on a significantly lower cut-off grade. There are numerous secondary mineralized veins within the mining field which add to the potential upside. The grades at Muguk are well above the average cut-off grade for operating gold mines worldwide, recently reported to be around two g/t gold.

UNQUOTE

The Muguk portions of this news release have been reviewed and approved in the form and context in which they appear by Woulfe's Canadian-based geological adviser, Pat Stephenson, PGeo, of AMC Mining Consultants. Mr. Stephenson has appropriate qualifications and sufficient relevant experience to qualify as a qualified person for the reporting of exploration results for the Muguk deposit.

The Sangdong portions of this news release have been reviewed and approved in the form and context in which they appear by Paul Gribble, FIMMM, CEng, of Wardrop, who is working with Woulfe on the Sangdong studies. Mr. Gribble has appropriate qualifications and sufficient relevant experience to qualify as a qualified person for the reporting of mineral resources for the Sangdong deposit.

We seek Safe Harbor.