Mr. Collin Ellison reports

PMI GOLD CORPORATION: OBOTAN GOLD PROJECT FEASIBILITY STUDY DEMONSTRATES A ROBUST, VIABLE PROJECT, POISED FOR DEVELOPMENT

PMI Gold Corp. has released positive results from the independent National Instrument 43-101 feasibility study on its flagship 100-per-cent-owned Obotan gold project in Ghana through its wholly owned subsidiary Adansi Gold Company Ghana Ltd. The feasibility study has outlined a strong and viable gold project based on a gold price of $1,300 (U.S.) per ounce that will form the cornerstone of PMI's emerging West African gold production strategy.

Highlights:

• Independent NI 43-101-compliant feasibility study confirms a financially and technically robust mining operation at Obotan, with key outcomes including:
  • Pretax net present value of $614-million (U.S.) and after-tax net present value of $387-million (U.S.), assuming a gold price of $1,300 (U.S.) per ounce, a 5-per-cent discount rate and contract mining scenario (consistent with the January, 2012, prefeasibility study);
    • Pretax internal rate of return of 35 per cent and after-tax internal rate of return of 28 per cent;
    • Capital payback period of 2.9 years;
  • At current prices of $1,600 (U.S.) per ounce:
    • Pretax net present value rises to $1.07-billion (U.S.) and after-tax net present value to $686-million (U.S.);
    • Pretax internal rate of return of 54 per cent and after-tax internal rate of return of 43 per cent;
    • Capital payback period of two years;
  • Average production of 221,500 ounces gold per year over the first five years;
  • Total production of 2.26 million recovered ounces gold over the 11.5-year mine life;
  • Life-of-mine project revenue of $2.9-billion (U.S.);
  • Estimated average life-of-mine cash operating costs of $626 (U.S.) per ounce;
  • Increased proven and probable ore reserves of 34.2 million tonnes at 2.21 grams per tonne gold for 2.43 million ounces of gold across four deposits. This is a rise of 170,000 ounces from the January, 2012, prefeasibility study;
  • Capital cost estimate of $296.6-million (U.S.) including a prestrip mining cost of $82.2-million (U.S.);
• Feasibility study completed with a high level of cost estimates based on firm tenders from suppliers and quotes from five mining contractors;
• Final investment decision (FID) on track for the fourth quarter of 2012, with interim board approval to expedite engineering designs of key long-lead items;
• At the end of July, 2012, PMI had $39-million (U.S.) cash;
• Environmental studies, mining lease application and other statutory approvals on track to be finalized during the fourth quarter of 2012;
• A select group of leading international banks have provided detailed indicative offers to deliver debt financing facilities for the development of the Obotan project;
• PMI continues to focus exploration on tenements close to the Obotan project, and the Kubi and Asanko exploration projects, which offer potential to become future production centres;
• Together with Obotan, these centres support the company's medium-term objective of becoming a mid-tier West African gold producer.

The strong economics of the Obotan project provide a solid investment case with the commencement of construction targeted during the first quarter of 2013 to achieve first gold production from Obotan in 2014, conditional on obtaining all statutory approvals, board approval and the finalization of financing arrangements.

The feasibility study commenced in the January, 2012, quarter and was completed by GR Engineering Services Ltd. (GRES), with support and input from a range of internationally renowned consultancy groups including SRK, Orelogy, Knight Piesold and AERC. Cost estimates have been based on quotes from five mining contractors and firm tenders received from suppliers.

Further details of the feasibility study include:

• Increased proven and probable reserves of 34.2 million tonnes at 2.21 grams per tonne gold for 2.43 million ounces of contained gold have been calculated. This represents a 13-per-cent increase in tonnage and 8-per-cent increase in contained gold compared with the maiden proven and probable ore reserve in the January, 2012, prefeasibility study (30.3 million tonnes at 2.32 grams per tonne gold for 2.26 million ounces of gold). A 4.7-per-cent reduction in grade has been offset by the conversion of additional inferred resources to indicated resources then into reserves as a result of successful infill drilling programs. There are additional inferred resources within the open pit which have not been included in the ore reserve but which may be converted in future.
• Life-of-mine production of 2.26 million ounces of recovered gold over an initial 11.5-year production life (exclusive of one year of prestrip operations). The waste-to-ore ratio has been reduced from 7.6 in the prefeasibility study to 6.4 (including the prestrip). After the prestrip, the life-of-mine strip ratio drops to 5.6:1.
• Life-of-mine average cash operating costs are estimated at $626 (U.S.) per ounce (excluding royalties and refining costs). Total cash operating costs are estimated at $722 (U.S.) per ounce including royalties and refining costs, positioning the Obotan project at the lower end of the global cash cost curve.

Commenting on the feasibility study results, PMI's managing director and chief executive officer, Collin Ellison, said: "We are very pleased with the results of the Obotan feasibility study, which clearly demonstrates the potential to develop a robust, long-term mining operation capable of delivering strong investment returns that will form the cornerstone of our emerging gold business in West Africa.

"We are currently continuing detailed design and engineering work, as well as assessing options to optimize capital and operating costs while we continue discussions with potential project financiers. This puts us firmly on track to make a development decision during the fourth quarter of 2012, paving the way for us to secure project finance and commence development early next year.

"A select group of leading international banks have provided detailed indicative offers to deliver debt financing facilities, and we are currently assessing these offers in conjunction with our advisers, Optimum Capital Pty. Ltd., in order to determine the best combination of debt and equity funding to underpin project development. The company has also made excellent progress with the statutory approvals process, and is well placed to finalize its environmental approvals and secure the grant of a mining lease during the fourth quarter of 2012.

"PMI is assembling a highly skilled technical team with extensive experience in developing gold projects in West Africa. This team will realize the company's broader corporate objective of creating a substantial mid-tier gold producer in West Africa.

"The key elements of this strategy are already well advanced with over 85,000 metres of exploration drilling completed, focused on identifying potential additional oxide resources within economic trucking distance of the Obotan treatment plant, as well as progressing the Kubi project as a potential second stand-alone operational centre and exploring the exciting Asanko project, which covers a significant portion of the highly prospective Asankrangwa gold belt.

"These projects will deliver the second and third growth horizons for PMI Gold, building on the strong foundations established at Obotan."

Mineral resources and ore reserves

The previously reported JORC- and NI 43-101-compliant mineral resource inventory for the Obotan gold project was estimated by SRK Consulting and reported to the Australian Securities Exchange and Toronto Stock Exchange on April 11, 2012.

   NI 43-101-/JORC CODE-COMPLIANT SRK RESOURCE ESTIMATE -- MARCH, 2012 
              (based on a 0.5 g/t Au lower cut-off grade)

                         Measured                      Indicated           
                 Tonnes     Grade    Ounces     Tonnes     Grade    Ounces
Deposit        (million)  (g/t Au) (million)  (million)  (g/t Au) (million)

Nkran             11.74      2.55      0.96      20.41      2.12      1.39
Adubiaso           1.50      2.98      0.14       2.67      2.41      0.21
Abore              2.33      1.78      0.13       3.70      1.53      0.18
Asuadai             n/a       n/a       n/a       2.44      1.28      0.10
Total             15.57      2.47      1.23      29.21      2.00      1.88
                                                                
                     Measured and indicated              Inferred
                 Tonnes     Grade    Ounces     Tonnes     Grade    Ounces
Deposit        (million)  (g/t Au) (million)  (million)  (g/t Au) (million)

Nkran             32.15      2.28      2.35      14.47      2.21      1.05
Adubiaso           4.17      2.59      0.35       1.25      1.91      0.08
Abore              6.03      1.60      0.31       3.92      1.50      0.19
Asuadai            2.44      1.28      0.10       2.00      1.33      0.08
Total             44.79      2.16      3.11      21.91      1.99      1.40

Note: All resource numbers are rounded to two decimal places (10,000 
      tonnes).

Following completion of mine optimization and planning, an updated ore reserve statement has been completed by Orelogy Mining Consultants, as outlined in the attached table.

          NI 43-101-/JORC CODE-COMPLIANT FEASIBILITY STUDY 
                          OBOTAN ORE RESERVE   

                         Tonnes          Grade      Contained
Class                       (Mt)       (g/t Au)     gold (Moz)

Proven                     14.8           2.39           1.14
Probable                   19.4           2.08           1.30
Total                      34.2           2.21           2.43

Technical notes:

1. The Orelogy mineral reserve was estimated by construction of a block model within constraining wire frames based on measured and indicated resources.
2. The reserve is reported at a lower cut-off grade of 0.5 gram per tonne gold, which defines the continuous/semi-continuous mineralized zone potentially amenable to the low-grade, bulk-tonnage mining scenario currently being considered by PMI.
3. The grades and reserve tonnes have been modified by an average ore loss and mining dilution of 4.8 per cent with a mining dilution grade of zero gram per tonne gold.
4. An average metallurgical recovery of 92.8 per cent was used in defining the optimal pit shell.
5. The mineral reserves are based on the March, 2012, mineral resource reports for the Nkran, Adubiaso, Abore and Asuadai deposits.
6. All tonnes reported are dry tonnes.
7. The base-case pit optimization utilized a gold price of $1,300 (U.S.) per ounce.
8. Mineral reserves are reported in accordance with NI 43-101 and JORC.

This compares with the previous ore reserves (in the attached table) as reported in the prefeasibility study.

                NI 43-101-/JORC CODE-COMPLIANT 
               PREFEASIBILITY OBOTAN ORE RESERVE   

                        Tonnes             Grade         Contained
Class                      (Mt)          (g/t Au)        gold (Moz)

Proven                    14.0              2.36              1.06
Probable                  16.3              2.28              1.20
Total                     30.3              2.32              2.26

Note: Any inconsistencies are due to rounding.

Key project parameters

The feasibility study results demonstrate a technically robust mining operation with anticipated life-of-mine parameters as shown in the attached table.

Item                                  Description/estimate              

Mining method                         Open-pit mining                     
Processing rate                       Three million tonnes per year primary ore, 
                                      3.8 million tonnes per year oxide ore
Metallurgical recovery                92.8 per cent average                       
Total recovered gold                  2.26 million ounces
Mine production life                  11.5 years                          
Cash operating costs                  $626 (U.S.) per ounce                            
Preproduction capital cost            $296.6-million (U.S.) per ounce                             
Pretax operating cash flow            $953-million (U.S.)                               
Life-of-mine sustaining mine capital  $35.6-million (U.S.)                              
Construction commencement (i)         First quarter of 2013                    
First production (i)                  End of the first quarter of 2014             

(i) Subject to financial investment decision (FID) timing.

              CAPITAL COST BREAKDOWN
           (in millions of U.S. dollars)

Cost area                                      Cost                                       

Process plant direct                        $  83.6
Infrastructure                              $  49.2
Indirect                                    $  26.1
Spares and first fills                      $   8.9
Owners' costs                               $  26.2
Prestrip                                    $  82.2
Mining establishment                        $  20.3
Initial capital                             $ 296.6
Deferred and sustaining
life-of-mine capital                        $  35.6

                                OPERATING COST BREAKDOWN

                                Total cost     U.S. dollars per       U.S. dollars per
Costs                         (millions of         tonne milled     ounce Au recovered
                              U.S. dollars)

Mining                             $ 850.4              $ 24.84                $ 376.5
Processing                         $ 473.1              $ 13.82                $ 209.4
General and administration         $  90.6              $  2.65                $  40.1
Subtotal                           $1414.0              $ 41.31                $ 626.0
Bullion and refining               $  12.1              $  0.35                $   5.3
Royalties                          $ 205.6              $  6.01                $  91.0
Total operating cost               $1631.7              $ 47.67                $ 722.3

  
                              FINANCIAL EVALUATION

                                             At $1,300 (U.S.)         At $1,600 (U.S.)
                                                   per ounce                per ounce

Project revenue                                $ 2.9-billion           $ 3.61-billion
Project pretax cash flow                       $ 953-million           $ 1.58-billion
Project pretax NPV (5% discount rate)          $ 614-million           $ 1.07-billion
Project pretax NPV (8% discount rate)          $ 472-million           $  856-million
Project pretax IRR                                       35%                      54%

Project implementation

Subject to the board of directors' financial investment decision (FID), key project milestones are shown in the attached table.

           KEY PROJECT IMPLEMENTATION MILESTONES -- TARGETED DATES          

                     Calendar year 2012    Calendar year 2013   Calendar year 2014    

                            1H       2H           1H       2H          1H       2H

Completion of                                                              
feasibility study                     x                                    
Project finance                       x                                    
Commencement of                                                            
construction                                       x                           
Mining prestrip                                    x                           
First production                                                        x         

Foundations for a substantial West African gold-mining house

The completion of the Obotan feasibility study puts in place the foundations for development of PMI's first operating gold mine in Ghana and represents the first step in the execution of the company's broader growth strategy to become a substantial West African producer across multiple production centres.

The company believes that its strategic 580-square-kilometre landholding in the highly prospective Ashanti and Asankrangwa gold belts in southwest Ghana will support an aggressive organic growth strategy that has the potential to deliver this level of production in the medium term.

In order to realize this objective, PMI has completed over 85,000 metres of drilling to date on high-priority regional targets within its three potential production hubs: the Obotan, Kubi and Asanko projects. The three key objectives of this work are:

• Obotan project -- to identify additional oxide resources within an economic trucking distance of Obotan, defined as the Obotan exploration area of influence defined by a 15-kilometre radius of the proposed treatment facility at Obotan;
  • Recent drilling has focused on prospects including Fromenda, Afiefiso and Kaniago (Adansi), with recent drilling at Fromenda returning excellent results and indicating the potential for the Fromenda shear to host significant oxide gold mineralization;
  • The company is aiming to delineate JORC-/NI 43-101-compliant resources for some of these oxide prospects next year;
• Kubi project -- to re-evaluate the existing resources (an NI 43-101-/JORC-compliant measured resource of 660,000 tonnes at 5.30 grams per tonne gold for 112,000 ounces, an indicated resource of 660,000 tonnes at 5.65 grams per tonne gold for 121,000 ounces, an inferred resource of 670,000 tonnes at 5.31 grams per tonne gold for 115,000 ounces) and assess the potential for new discoveries at the Kubi project, located 60 kilometres southwest of Obotan, as the foundation for PMI's second production centre in southwest Ghana;
  • Recent drilling has intersected significant zones of gold mineralization at the Kubi South prospect (1.5 kilometres south of the Kubi main deposit) highlighting the potential for economic mineralization to be discovered within close trucking distance of the Kubi main deposit;
  • Kubi lies immediately along strike from the 60-million-ounce (premined) Obuasi goldfield owned by AngloGold Ashanti;
• Asanko project -- to discover significant new stand-alone gold deposits within the Asanko project, which occupies a commanding position covering over 40 strike kilometres of the underexplored Asankrangwa gold belt, providing a strong pipeline of future exploration and development opportunities that could collectively justify the development of a third production centre for the company.

PMI has this year established a significantly expanded in-house exploration project evaluation and development capability to enable it to unlock the value of its broader portfolio of projects in southwest Ghana, and implement the strategies and programs required to realize these growth objectives.

Obotan gold project

Feasibility study mineral resources and reserves estimate

Information that relates to mineral resources at the Obotan gold project is based on a resource estimate that has been carried out by Peter Gleeson, a full-time employee of SRK Consulting of Australia. Mr. Gleeson is a member of the Australian Institute of Geoscientists (MAIG). Information that relates to mineral reserves (for the feasibility study) at the Obotan gold project is based on a reserve estimate that has been carried out by Ross Cheyne, a full-time employee of Orelogy Mining Consultants. Mr. Cheyne is a fellow of the Australasian Institute of Mining and Metallurgy (FAusIMM). Both have sufficient experience which is relevant to the style of mineralization and type of deposit under consideration, and to the activity undertaken to qualify as a competent person as defined in the 2004 edition of the Australasian code for reporting of exploration results, mineral resources and ore reserves (JORC), and as a qualified person (by recognized overseas professional organizations) as defined in terms of NI 43-101 standards for resource estimate of gold. Mr. Gleeson and Mr. Cheyne have more than five years of experience in the field of exploration results and of resource/reserve estimation, and consent to and approve the inclusion of matters based on information in the form and context in which it appears.

The mineral resource and mineral reserve estimates have been prepared in accordance with the 2010 Canadian Institute of Mining, Metallurgy and Petroleum (CIM) definition standards for mineral resources and mineral reserve, as incorporated by reference in NI 43-101 of the Canadian securities administrators, and is consistent with the Australasian guidelines and code for the reporting of exploration results, mineral resources and ore reserves (revised in December, 2007) as prepared by the joint ore reserves committee of the AusIMM, AIG and MCA (JORC).

PMI will file an NI 43-101-compliant technical report on the Obotan project outlining the mineral resources and reserves estimate, and the result of the feasibility study. The report will be available on SEDAR within 45 days of the date of this press release. The NI 43-101 technical report will be authored by Peter Gleeson, MAIG, for SRK, Ross Cheyne, FAusIMM, for Orelogy and Gerry Neeling, FAusIMM, of GRES. These independent qualified persons have verified the data in this news release. Collin Ellison, president and chief executive officer, MIMMM, CEng, a qualified person within the definition of that term in NI 43-101, has supervised the preparation of the technical information contained in this news release.

Prefeasibility study mineral reserves estimates

Information that relates to prefeasibility study mineral reserves as previously reported on the Obotan gold project is based on a reserve estimate that has been carried out by Duncan Pratt, CP (mining), a full-time employee of SRK Consulting of Australia. Mr. Pratt is a member of the Australasian Institute of Mining and Metallurgy (MAusIMM), and has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activities undertaken to qualify as a competent person as defined in the 2004 edition of the Australasian code for reporting of exploration results, mineral resources and ore reserves (JORC), and as a qualified person in terms of NI 43-101. Mr. Pratt consents to and approves the inclusion of matters based on information in the form and context in which it appears.

Kubi gold project

The information that relates to mineral resources at the Kubi main deposit in Ghana, is based on a resource estimate that has been audited by Simon Meadows Smith, who is a full-time employee of SEMS Exploration Services Ltd. of Ghana. Mr. Smith is a member of the Institute of Materials, Minerals and Mining (IMO3), London, and has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a competent person as defined in the 2004 edition of the Australasian code for reporting of exploration results, mineral resources and ore reserves and under NI 43-101. Mr. Smith consents to the inclusion in the presentation of the matters based on information in the form and context in which it appears.

Technical notes:

1. Resources figures for Kubi are based on a two-gram-per-tonne-gold cut-off grade.
2. Mineral resources are reported in accordance with NI 43-101 and JORC.

Exploration results

The information that relates to exploration results is based on information compiled by Thomas Amoah, who is employed by Adansi Gold Company (Gh) Ltd., a wholly owned subsidiary of PMI Gold. Mr. Amoah, who is a member of the Australian Institute of Geoscientists (MAIG), has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration, and to the activity which he is undertaking to qualify as a competent person as defined in the 2004 edition of the Australasian code for reporting exploration results, mineral resources and ore reserves. Mr. Amoah consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

Scientific and technical information contained in this news release has been reviewed and approved by Thomas Amoah, MAIG, MSEG, a qualified person as defined under NI 43-101. Fieldwork was supervised by Mr. Amoah (vice-president, exploration). Drill cuttings were logged and sampled on site, with three-kilogram samples sent to the MinAnalytical prep laboratory on site and analyzed for gold by fire assay AA on a 50-gram sample charge or by screened metallics AA finish in MinAnalytical laboratory in Perth. Internal quality control consisted of inserting both blanks and standards into the sample stream and multiple reassays of selected anomalous samples. Where multiple assays were received for an interval, the final value reported was the screened metallic assay if available, or in lieu of that, the average of the other results for the interval. Results from the quality control program suggest that the reported results are accurate. Intercepts were calculated using either a minimum 0.1-gram-per-tonne-gold (for the Kaniago (Adansi) prospect, the Afiefiso prospect and the 513 prospect) or 0.5-gram-per-tonne-gold (for the Fromenda prospect) cut-off at the beginning and the end of the intercept, and allowing for no more than three consecutive metres of less than 0.1 gram per tonne gold (the Kaniago (Adansi) prospect, the Afiefiso prospect and the 513 prospect) or 0.5 gram per tonne gold (the Fromenda prospect) internal dilution. True widths are estimated at 60 per cent to 70 per cent of the stated core length.

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