Mr. Brian Groves reports

SPANISH MOUNTAIN PROVIDES CLARIFICATION ON PRELIMINARY ECONOMIC ASSESSMENT (PEA) FOR THE SPANISH MOUNTAIN GOLD PROJECT

Spanish Mountain Gold Ltd. and AGP Mining Consultants are providing clarification of details with respect to the National Instrument 43-101-compliant preliminary economic assessment (PEA) study for Spanish Mountain's 100-per-cent-owned Spanish Mountain project in south-central British Columbia. The results of the study were initially disclosed by the company in Stockwatch Nov. 23, 2010.

As a precursor to the PEA study, a new global mineral estimate was prepared by AGP, the details of which will be presented in the formal report to be filed under the profile of the company on SEDAR later this month. A base-case pit design was developed for the purpose of the PEA study using assumptions of a gold price of $950 (U.S.) per ounce and on costs derived within the PEA study. The amount of gold contained within such a pit is dependent on the assumptions used and should those assumptions change, the contained gold will also change. This can be seen in Figure 1, which includes the outline of the PEA pit design at $950 (U.S.) per ounce gold and the outline of a conceptual pit shell at $1,100 (U.S.) per ounce gold.

Figure 1 shows a vertical section oriented north-south through the Main and North zones of mineralization. The company believes that some of the mineralized material that currently lies outside of the PEA pit design using the assumption of $950 (U.S.) per ounce of gold may fall into a future pit design as the company continues to optimize the pit based on a refinement of operating costs and assuming an appreciating gold price. Gold contained within conceptual pits will be presented in the formal report as a sensitivity analysis and will include the pit shell based on a gold price of $1,100 (U.S.) per ounce.

In the news release in Stockwatch Nov. 23, 2010, the company disclosed a statement of an NI 43-101-compliant inventory of mineralized material. This should properly have been referred to by AGP as the mineral resource contained within the PEA pit design. That information is reprinted here in the table.

     MINERAL RESOURCE WITHIN THE PEA PIT DESIGN ($950 (U.S.) PER OUNCE)

Classification                Tonnes     Gold grade (g/t)  Gold contained (oz)

Measured                   4,875,900                1.05              164,600
Indicated                 72,498,800                0.52            1,207,500
Measured and indicated    77,374,700                0.55            1,372,100
Inferred                  39,531,300                0.48              611,100

The company and AGP are working expeditiously to file the formal report during December, 2010. The following information is provided for clarification purposes:

The term mineral resource presented in the table now refers to the gold contained within the pit design that is envisaged to be mined and processed in the conceptual mining plan described in the PEA study.

The mineral resource is contained within the base case $950 (U.S.) per ounce gold PEA pit and represents the portion of the inventory of mineralized material within the PEA pit above the cut-off grade of 0.2 g/t gold. The inventory of mineralized material will be described fully in the formal report. This inventory refers to mineralization both inside and outside of the PEA pit boundary. Some of this material may be reclassified as a resource should further optimization of pit designs include such material.

The mineral resource in the table was calculated at a cut-off of 0.2 g/t gold, which is based on all mining and processing costs contained within the PEA. This cut-off grade was determined to be the break-even point for the inclusion of mineralization in the mineral resource using a gold price assumption of $950 (U.S.) per ounce.

The news release issued in Stockwatch Nov. 23, 2010, also presented details of the process used by Michael Waldegger, PGeo, to arrive at the new resource estimate. Specific references to gold grade shells of 0.6 g/t relate to a modelling methodology employed by Mr. Waldegger to identify areas that demonstrate consistent lateral continuity within the total resource model. The reference to a grade shell of 0.6 g/t gold does not refer to a gold cut-off grade for the project as a whole.

The updated resource was estimated by Mr. Waldegger, PGeo, an independent qualified resource evaluator, with an effective date of Nov. 19, 2009, and complies with NI 43-101. Mr. Waldegger of AGP Mining Consultants of Barrie, Ont., is a qualified person within the meaning of NI 43-101. The methodology employed by Mr. Waldegger in preparing the updated resource estimate was previously disclosed by the company on Nov. 23, 2010.

Areas of opportunity

The PEA results provide clear drill targets for the company to potentially enhance the project's mineral resources and project economics. The focus of the drilling program in early 2011 will include:

• Targeting mineralized material located below and outside of the base case PEA pit design that are considered to be areas of high potential to supplement the current mineral resource;

• Improving the level of confidence in areas of gold mineralization that currently fall into the inferred resource category;

• Generating drilling targets on the Cedar Creek property which was acquired earlier this year and commencing drilling on these targets early in 2011.

In addition, refinement of operating cost estimates will be continuing and any reduction in these costs may expand the conceptual pit boundaries with an attendant increase in the mineral resources within the pit shell.

NI 43-101 statement in respect of PEA and qualified persons

The company cautions, in accordance with National Instrument 43-101-Standards of Disclosure for Mineral Projects as adopted by the Canadian Securities Regulators, that the PEA referred to herein is preliminary in nature, includes inferred mineral resources that are considered too speculative geologically to have the economic consideration applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

Mr. Waldegger and Gordon Zurowski, PEng, of AGP Mining Consultants of Barrie, Ont., are qualified persons within the meaning of NI 43-101.

Mr. Waldegger and Mr. Zurowski have reviewed and approve the contents of this news release.