Mr. Stephen Twyerould reports

EXCELSIOR RELEASES POSITIVE PREFEASIBILITY STUDY DEMONSTRATING $1.24 BILLION PRE-TAX NPV AND 59.7% PRE-TAX IRR FOR THE GUNNISON COPPER PROJECT

Excelsior Mining Corp. is releasing the results of a comprehensive prefeasibility study on the North Star deposit of the Gunnison copper project, located in southern Arizona. The PFS was completed by M3 Engineering & Technology Corp. of Tucson, Ariz., and is effective as of Jan. 13, 2014. The National Instrument 43-101-compliant report summarizing the results of the PFS will be filed on SEDAR and Excelsior's website within 45 days of this news release. Results of the PFS disclosed in this news release are in United Stated dollars and pretax (except where otherwise indicated).

Highlights of the North Star Gunnison copper project PFS acid plant option include:

• Pretax net present value of $1.24-billion (after tax $826-million) at a 7.5-per-cent discount rate (using a copper price of $2.75 per pound);
• Pretax internal rate of return of 59.7 per cent (after tax 44.7 per cent);
• Pretax payback period of 1.8 years (after tax 2.4 years);
• Initial estimated capital cost (excluding sustaining capital) of $284.74-million;
• Average life-of-mine operating costs of 68 U.S. cents per pound;
• Other costs of 12 cents per pound, including royalties of 2.9 cents per pound;
• Annual production rate of 110 million pounds of copper for the first 14 years, then declining for a 20-year mine life, with a total of 1,682 million pounds of copper produced over the life of the mine.

"The completion of a positive prefeasibility study is a significant derisking event in Excelsior's development, and we are very pleased with the results. The results surpass the robust economic potential indicated by the 2011 preliminary economic assessment and support copper extraction of the North Star deposit through in situ recovery with the potential to generate exceptional financial returns," said Mark Morabito, chairman of Excelsior. "With initial production expected to commence in Q4 2016, we are looking forward to beginning the next phase of development."

Commenting on the results, president and chief executive officer Stephen Twyerould said: "With the completion of this major milestone, the commercial case for the Gunnison copper project has grown even stronger. The prefeasibility study has confirmed the robust economics and technical viability for what has the potential to be one of the lowest-cost copper producers in North America."

Financial analysis

As highlighted in the tables, the PFS demonstrates robust project economics in both the acid plant and non-acid-plant scenarios, with the acid plant option adding an additional $174.2-million to the project's pretax NPV. Based on an initial annual production rate of 110 million pounds, the PFS indicates that including an acid plant as a component of the project generates a pretax NPV of $1.24-billion at a cash flow discount rate of 7.5 per cent. The pretax IRR for this option is 59.7 per cent with a payback period of 1.8 years. On an after-tax basis, the PFS shows an NPV7.5 of $825.83-million, IRR of 44.7 per cent and a payback period of 2.4 years.

Without an acid plant, the project still has a significant pretax NPV7.5 of $1.06-billion and an IRR of 61.4 per cent (after tax NPV7.5 of $721.41-million and an IRR of 46.1 per cent). The after-tax analysis is based on a number of assumptions, which will be fully set out in the report. The level of accuracy of the PFS is considered to be plus/minus 20 per cent.

Both scenarios used the following parameters over the 20-year life of the project:

• Copper selling price of $2.75 per pound;
• Total copper recovery of approximately 47 per cent (based on a combination of metallurgical recovery and sweep efficiency);
• Average of 8.14 pounds of acid consumed for every pound of copper produced;
• Acid price of $45.70 per ton for the acid plant option and $125 per ton for the non-acid-plant option;
• State tax rate of 6.97 per cent;
• Federal tax rate of 35 per cent.

Pretax                     Acid plant option      Non-acid-plant option

IRR                                    59.7%                      61.4%
Payback (years)                          1.8                        1.5
NPV (million $)
Discount rate
0%                                   2,377.9                    1,961.7
5%                                   1,525.7                    1,295.1
7.5%                                 1,238.6                    1,064.3
10%                                  1,013.4                      880.8

After tax                  Acid plant option      Non-acid-plant option

IRR                                    44.7%                      46.1%
Payback (years)                          2.4                        2.0
NPV (million $)
Discount rate
0%                                   1,625.4                    1,360.0
5%                                   1,028.8                      887.2
7.5%                                   825.8                      721.4
10%                                    666.0                      588.8

Total initial capital expenditures for the acid plant option (including contingency) are estimated at $284.74-million. Sustaining capital, which includes the acid plant built in year three, water treatment facilities and production well field, are estimated at $602.4-million. Net closure costs are estimated at $44.5-million. For the non-acid-plant option, total initial capital expenditures (including contingency) are estimated at $284.74-million. Sustaining capital, which includes the water treatment facilities and production well field, are estimated at $528.8-million. Net closure costs are estimated at $42.3-million.

The PFS assumes a copper selling price of $2.75 per pound. Average life-of-mine operating direct cash costs are estimated at 68 cents per pound for the acid plant option and 98 cents per pound for the non-acid-plant option.

                            Acid plant option  Non-acid-plant option

Copper cathode sold (MMlb)              1,682                  1,682
Copper price ($/lb)                      2.75                   2.75
Gross revenue (million $)             4,625.9                4,625.9

                                       Acid plant option Non-acid-plant option

Operating costs                    (Million $)   Cost/lb (Million $)   Cost/lb

Production (well field)                  449.3      0.27       935.5      0.56
SXEW                                     355.7      0.21       367.6      0.22
Water treatment plant                    198.5      0.12       198.5      0.12
General and administrative               147.3      0.09       147.3      0.09
Direct operating cash costs            1,150.7      0.68     1,648.8      0.98
Royalties                                 48.3      0.03        48.3      0.03
Other production expenses                161.8      0.09       153.5      0.09

Initial capital costs              (Million $)   Cost/lb (Million $)   Cost/lb

Production (well field)                   75.3      0.04        75.3      0.04
SXEW plus infrastructure                 186.3      0.11       186.3      0.11
Owner's costs                              3.2      0.01        23.2      0.01
Subtotal initial capital costs           284.7      0.17       284.7      0.17

Sustaining capital costs           (Million $)   Cost/lb (Million $)   Cost/lb

Production (well field)                  440.2      0.26       440.2      0.26
Plant plus infrastructure                162.2      0.10        88.6      0.05
Subtotal sustaining capital              602.4      0.36       528.8      0.31
Costs
Taxes                                    752.5      0.45       601.7      0.36

Mineral resources and mineral reserves

Mineral resource estimate

The mineral resource estimate for the North Star deposit is based on results from 88 drill holes totalling 129,272 feet. The estimate is consistent with the CIM definitions referred to in National Instrument 43-101. Herb Welhener, RM-SME, of Independent Mining Consultants Inc. of Tucson, Ariz., is a qualified person as defined by NI 43-101 and is responsible for reviewing and approving the mineral resource and mineral reserve estimates and the quality assurance/quality control associated with the estimates. Mr. Welhener is independent of the company. He has verified, reviewed and approved the technical disclosure contained in the mineral resources and mineral reserves section of this news release and the underlying sampling, analytical and test data. The mineral resource estimate has been prepared using a 0.05-per-cent total Cu cut-off grade and is effective as of Jan. 13, 2014.

        NORTH STAR RESOURCES (OXIDE AND TRANSITION AT 0.05% CUT-OFF)        

                                                                Pounds of Cu
Category       Short tons (millions)      Total copper %          (millions)

Measured                         158                0.38               1,205
Indicated                        525                0.26               2,704
Total M+I                        683                0.29               3,909
Inferred                         338                0.21               1,397

The mineral resource estimate is contained within a block model of the North Star deposit covering a surface area of 3.30 square miles and to a maximum depth of 2,575 feet below the topographic surface.

The major geologic formations and oxidization types are incorporated into the block model based on the drill hole intercept data. The total copper grades are estimated using an ordinary kriging estimation technique from 25-foot drill hole composite data. The grade estimate for the sedimentary units uses a 700-foot-circular-by-50-foot search distance dipping 30 degrees east to parallel, the general dip of the sedimentary units. The grade estimation respected the contacts of the various sedimentary units. The 700-foot distance is 70 per cent of the variogram range. The total copper grades in the non-sedimentary units were estimated using a 500-foot spherical search. No copper grades are estimated in the overburden or unmineralized rock units. Copper grade estimates based on eight or more holes are classified as measured, grades based on three to seven holes are indicated, and grades based on less than three holes are inferred.

All samples are prepared from manually split half-core sections on site in Arizona. Split drill core samples are then sent to Skyline Assayers & Laboratories in Tucson, Ariz., for total copper and sequential copper analyses. Standards, blanks and duplicate assays are included at regular intervals in each sample batch submitted from the field as part of a continuing quality assurance/quality control program.

Mineral reserve estimate

The PFS mineral reserve is based on an economic analysis of the mineral resource using the costs developed during the 2011 PEA, test work to estimate the recovery factors and a $2.75-per-pound copper price. The economic optimization was performed on measured and indicated resources. EBIT (earnings before interest and tax) was calculated on a block-by-block basis based on economic parameters. Consistent blocks (in vertical and horizontal directions) at a cut-off grade of 0.05 per cent total Cu with positive EBIT values that were greater than the capital cost of drilling and establishing the wells required for each column of blocks were included in the reserve. Total Cu per cent was selected for the mineral reserve estimate. The mineral reserve was estimated after applying engineering and operational design parameters that removed the thinner and deeper portions of the mineral resource. Internal dilution has been included in the final mineral reserve estimate. IMC is of the opinion that the mineral reserve estimate derived in this PFS reasonably quantifies the economical ore mineralization of the North Star deposit. The reserve estimate is as of Jan. 13, 2014, and the mineral reserves presented in the table are included in the mineral resource estimate set out above.

     NORTH STAR MINERAL RESERVES (OXIDE AND TRANSITION AT 0.05% CUT-OFF)        

                                                                Pounds of Cu
Category       Short tons (millions)      Total copper %          (millions)

Probable                         632                0.29               3,614

Excelsior is not aware of any environmental, permitting, legal, title, taxation, socio-political, marketing or other issues that may materially affect the mineral resource and mineral reserve estimates. The production schedule of the PFS recovers approximately 47 per cent of the mineral reserve.

Project summary

The Gunnison copper project is located in a remote section of Cochise county about 65 miles east of Tucson, Ariz., in the Johnson Camp mining district. The property is within the copper porphyry belt of Arizona. The focus of the project is the North Star deposit, which currently hosts a total measured and indicated mineral resource of 3.91 billion pounds of copper (683 million tons at 0.29 per cent) and an inferred mineral resource of 1.40 billion pounds of copper (338 million tons at 0.21 per cent). The probable mineral reserves for the North Star deposit are 3.61 billion pounds of copper (632 million tons at 0.29 per cent). This oxide and transition portion of the mineral reserve has the potential to be mined using in situ recovery methods.

The proposed project, as stated in the PFS, includes the following components:

• The North Star copper deposit;
• The well field, including injection, recovery, observation and perimeter wells, and related infrastructure;
• The acid plant, including sulphur and sulphuric acid handling and cogeneration plant;
• Processing infrastructure, including a solvent extraction/electrowinning (SXEW) plant and pipe corridors;
• Water treatment facility and facility ponds;
• Ancillary infrastructure to support the mine and process plant (electrical substation, administration/office buildings and transmission lines);
• The rail infrastructure and railcar storage.

The proposed project will produce 110 million pounds of copper per year for the first 14 years, then declining to year 20. Processing will take place at the Gunnison site and will involve solvent extraction and electrowinning to produce pure copper cathode sheets.

Technical report and qualified person

A National Instrument 43-101 technical report will be filed on SEDAR and on Excelsior's website within 45 days of the date of this news release. The report will consist of a summary of the prefeasibility study. The report is being prepared under the supervision of Conrad Huss, PE, of M3 Engineering & Technology, Tucson, Ariz., who is a qualified person that is independent of the company. The report will also receive contributions from the following additional qualified persons, who are also independent of the company:

• Dr. Ronald Roman of Leach Inc., Tucson, Ariz. (metallurgy and leaching recovery);
• Peter Lenton, PE, of Haley & Aldrich, Phoenix, Ariz. (hydrology, extraction methods, production schedule);
• Peter Lemke, PE, of Golder Associates Inc., Lakewood, Colo. (water treatment and related facilities);
• Herb Welhener, RM-SME, of IMC, Tucson, Ariz. (geology, mineral resource and reserve).

Each of the qualified persons has reviewed and approved the technical information contained in this news release that is relevant to his area of responsibility and verified the data underlying such technical information.

We seek Safe Harbor.