PMI Gold - Latest drilling at Obotan Project confirms recent resource model

/THIS NEWS RELEASE IS NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO U.S. NEWS AGENCIES/

TSX Venture Exchange: PMV
Australian Securities Exchange: PVM
Frankfurt: PN3N.F

Further Robust Results to Help Underpin the Future Potential at Obotan and the Feasibility Resource Update planned for January Quarter 2012

Highlights:

• Results from latest resource extension and in-fill drilling at PMI Gold's flagship Nkran deposit at the Obotan Gold Project (Ghana) continues to confirm the internal continuity of the deposit and the occurrence of a higher grade core with further wide and high grade intersections,  including:
• 30m @ 3.47g/t from 200m
• 8m @ 51.17g/t from 383m
• Confirmation of the steep southerly plunging, higher grade central stockwork zone extending from below the base of the Resolute mined Nkran open pit, down to the lower limit of the drilled resource, indicating deeper underground potential
• Results in accord with the recently updated (October 2011) resource estimate and block model and will be incorporated in a resource re-estimate, planned for January Quarter of 2012
• Pre-feasibility study scheduled for completion at end of calendar 2011
• Three diamond core rigs currently active at Obotan on continued resource definition drilling
• Obotan, Kubi and Asankrangwa Project exploration drilling to accelerate in November with the arrival in country of two additional dedicated drill rigs

VANCOUVER, Oct. 26, 2011 /CNW/ - PMI Gold Corporation (TSX-V: PMV) (ASX: PVM) is pleased to report assays from an additional 35 diamond drill holes for 7,614 metres from its Obotan Project in Ghana (see Table 1). Results for these holes were received after finalization of the 13 October 2011 resource estimate and will be included in the planned January 2012 Quarter revised resource estimate for the bankable Feasibility Study.

Drilling Results, Obotan Project

Obotan, which offers the opportunity for a near-term development project, is the Company's flagship gold project in south-west Ghana (Figure 1). The project comprises four known deposits, the larger Nkran deposit, and the smaller satellite deposits at Abore, Adubiaso and Asuadai (Figure 2).

The current mineral resource estimate for Obotan Project (reported on 13 October 2011¹) comprises:

(All resource numbers are rounded to 2 decimal places- 10,000 tonnes.)

Over three quarters of these resources (2.5Moz Measured and Indicated grading 2.54g/t and 1.02Moz Inferred grading 2.54g/t) fall within the Nkran deposit.

The upper portion of the Nkran, Abore and Adubiaso deposits were previously mined by Resolute Limited before closing in 2002, after producing a total of 730,000 ounces at an average grade of 2.2 g/t gold, during a period of low gold prices of less than US$350 per ounce. Approximately 590,000oz of Resolute's total production was from the Nkran pit with no mining from the Asuadai deposit (Figure 2).

Since acquiring the Obotan Project, PMI Gold has completed 225 resource extension, confirmation and in-fill diamond drill holes for 59,084 metres of drilling, with emphasis on the larger Nkran deposit. Due to laboratory delays, final assay results are still awaited for a large number of holes which will be incorporated in a resource update planned for the January 2012 Quarter as part of a bankable Feasibility Study. New assay data received after the October 2011 resource estimate reinforce confidence in the resource model for each of the deposits and confirms the potential for further conversion of resource ounces from Indicated to Measured and Inferred to Indicated categories.

Nkran

Nkran resources comprise:

Ongoing resource definition drilling is primarily targeting at improving resource confidence down to approximately 350 metres below the surface or 200 metres below the Resolute open pit. Better intercepts for the 8 holes completed at Nkran are:

A cross section of NKR11-063 is provided in Figure 3.

The recent intersections confirm the internal continuity of the deposit (Figure 4) and the capacity of the central stockwork zone to comprise considerable widths of medium to high grade gold mineralization (Figure 5). Further investigation of the resource model and an improved understanding of the geological and structural controls have reinforced the interpretation of a steep southerly plunge of the central stockwork zone which offers longer term underground potential.

The ability to drill the up-plunge portion of the higher grade core of the central stockwork zone, immediately below the base of the Resolute pit, is constrained by the open pit preventing rig access. However re-interpretation of the resource grade model, which includes old Resolute drilling, has revealed that the higher grade mineralization extends down plunge from the base of the pit, which would be an immediate benefit to a future of resumption of open pit mining (Figures 4 & 5). The higher grade shoots persist down plunge to the lower limit of drilling of the resource (approximately 350 metres below the open pit). A lower grade (0.5 to 3.0g/t Au) margin enveloping this zone appears to narrow at depth.

As a second priority in the current drilling campaign, the Company also plans to test the deeper, down-plunge extensions of Nkran mineralization below the lower limit of the current resource to facilitate the future evaluation of the underground potential of the deposit.

Whilst the bulk of the current exploration program has focused on resource drilling, interpretation of the Resolute and PMI geological, geochemical and geophysical databases, supported by a recent external structural analysis, has identified additional targets within the multiple parallel gold bearing shear zones which host the four known deposits. These structures have an interpreted combined strike length of over 30km within the Obotan Project (Figure 2).

Initial success of this brownfields exploration is demonstrated in this current program by diamond drill hole NKR11-067 which was sited 250 metres south of the Nkran pit to test for the presence of a new gold shoot below near-surface Galamsey workings. The hole, intersected 1 metre @ 15.05g/t from 45 metres and 3 metres @ 6.30g/t from 173 metres) before it was abandoned, due to technical difficulties,  prior to reaching its secondary target of testing for a down plunge extension of the Nkran central stockwork. Follow up drilling is planned.

These targets, and other exploration targets within the Kubi Project and the Asankrangwa Project which covers the southern 45 kilometre strike extension of the Obotan Project, will be subjected to sustained drill testing upon the arrival in country in late 2011 of two PMI Gold dedicated rigs (1 RC/Diamond and 1 Air Core/RAB) plus the subsequent arrival of a third rig (Air Core/RAB) later in 2011/early 2012.

Asuadai

Asuadai resources comprise:

The unmined Asuadai deposit is located 10km northwest of Nkran on the same north-northeast trending shear zone which hosts Nkran. Better intercepts from the reported 17 holes testing shallow dipping stacked quartz veins outcropping on a small rise are:

• ASP11-009 24m @ 2.32g/t from 108m
• ASP11-015  7m @ 3.38g/t from 71m
• ASP11-040 11m @ 4.33 from 90m

Adubiaso

Adubiaso resources comprise:

The Adubiaso deposit is located 4km north of Nkran on a parallel western shear zone. Best intercept from the 6 reported holes include:

• ADP11-25 5m @ 3.76g/t from 207m

Abore

Abore resources comprise:

The Abore deposit is located 15km north of Nkran on a shear zone west of the Adubiaso structure which appears to correlate with the structure that hosts Keegan Resources Inc's multi-million ounce Esaase deposit to the north of the project area. Best intercepts from the reported 4 holes include:

• ABP041 7.45m @ 2.74g/t from 120m
• ABP046 22m @ 1.62g/t from 126m

Pre-feasibility Study

The Obotan Pre-feasibility Study remains on target for completion in December 2011 to be immediately followed by a bankable Feasibility Study scheduled for completion mid-2012. These studies have been significantly de-risked by Resolute's successful mining history which was carried out during a period of substantially lower gold prices and reported few mining and processing issues and had a good correlation between the resource model and grade control drilling.

On behalf of the Board,
"Collin Ellison"
Managing Director & CEO

Competent Person Statement

Obotan Resource Estimate 2011:

Information that relates to Mineral Resources at the Obotan Gold Project is based on a resource estimate that has been audited by Mr Peter Gleeson, who is a full time employee of SRK Consulting, Australia. Mr Gleeson is a Member of the Australian Institute of Geoscientists (MAIG) 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 as defined in terms of NI43-101 standards for resource estimation of gold.  Mr Gleeson has more than 5 years' experience in the field of Exploration Results and of resource estimation in general. Mr Gleeson consents to the inclusion of matters based on information in the form and context in which it appears.

This resource statement was prepared by SRK in accordance with the Canadian National Instrument 43-101, Standard of Disclosure for Mineral Projects (the instrument), the summarised Resource Estimates in Table 1 have been compiled as of the 15^th of August 2011 close of drilling database by SRK and are effective as of the 12^th of October 2011. The classification of the Resource Estimates into Measured, Indicated and Inferred Resources is a function of the confidence in the historical data, recent confirmation data and data analysis, geological interpretation, mineralization geometry and geological context within which the estimation has taken place. The classification of resources is consistent with the Australasian Guidelines and Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (Revised December 2007) as prepared by the Joint Ore Reserves Committee of the AusIMM, AIG and MCA (JORC).

SRK accepts responsibility for classifying the current Obotan Resource Estimates as Measured, Indicated and Inferred and the data upon which the estimates are based, including the geological interpretation.

The gold grades used in the resource estimation are based on data obtained from a number of previous explorers, by a range of drilling methodologies, with analysis undertaken at a range of laboratories utilising various analytical methodologies and was supplied to SRK by PMI. To the best of their knowledge, SRK has reviewed all such information and accepts it as reliable and free from any material error.

Exploration Results:

The information in this announcement that relates to Exploration Results is based on information compiled by Collin Ellison, who is employed by PMI Gold Corporation. Mr Ellison, who is a Member Institute of Material, Minerals amd Mining of UK, a 'Recognised Overseas Professional Organisation' (ROPO) included in a list promulgated by the ASX from time to time, 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 Ellison 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 Collin Ellison, C.Eng. a "qualified person" as defined under National Instrument 43-101.  Field work was supervised by Thomas Amoah (Exploration Manager). HQ and NQ core was logged, sawn and sampled on site, with half samples sent to SGS Laboratory in Tarkwa, and analyzed for gold by fire assay-AA on a 50 gram sample charge or by screened metallics AA finish.  Internal QC consisted of inserting both blanks and standards into the sample stream and multiple re-assays 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 QC program suggest that the reported results are accurate. Intercepts were calculated with a minimum 0.5 g/t Au cut off at the beginning and the end of the intercept and allowing for no more than three consecutive metres of less than 0.5 g/t Au internal dilution. Intercepts above 5.0 g/t Au metres are reported separately. Grade x Width intercepts of less than 5.0 g/t Au metres were not reported. True widths are estimated at from 60% to 70% of the stated core length.

Cautionary Note Regarding Forward-looking Statements

This news release includes certain forward-looking statements or information.  All statements other than statements of historical fact included in this release, including, without limitation, statements relating to the potential mineralization and geological merits of the Obotan and Kubi projects and the plans, objectives or expectations of the Company with respect to the advancement of these projects and completion of scoping and pre-feasibility studies, are forward-looking statements that involve various risks and uncertainties.  There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.  Important factors that could cause actual results to differ materially from the Company's plans or expectations include risks relating to the actual results of current exploration activities; fluctuating gold prices; possibility of equipment breakdowns, delays and availability; exploration cost overruns; availability of capital and financing; general economic, market or business conditions; regulatory changes; timeliness of government or regulatory approvals; and other risks detailed herein and from time to time in the filings made by the Company with securities regulators, including in the section entitled "Risk Factors" in the Company's Annual Information Form dated September 20, 2011.  In particular, statements relating to the Company's plans to complete a pre-feasibility study on the Obotan Gold Project by the end of 2011 are subject to various factors, including positive results from ongoing exploration; expansion and upgrading of existing mineral resources (which are currently primarily in the inferred resource category); and completion of favourable geotechnical drilling programs, metallurgical test work, mine plan engineering, environmental and community relations assessments, and preliminary economic assessments.  Due to the uncertainty which may attach to inferred mineral resources, it cannot be assumed that all or any part of the inferred mineral resources at Obotan will be upgraded to indicated or measured mineral resources as a result of continued exploration. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise except as otherwise required by applicable securities legislation.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Table 1 - Significant Gold Intercepts (>5.00 g/t Au metres):

Note: True widths are approximately 60% to 70% of the length of the stated intersection lengths.

PDF with caption: "Figure 1 - PMI Gold Project Locations ". PDF available at: http://stream1.newswire.ca/media/2011/10/26/20111026_C7708_DOC_EN_5624.pdf

PDF with caption: "Figure 2 - Obotan Gold Project, Key Deposits showing reported drill collars ". PDF available at: http://stream1.newswire.ca/media/2011/10/26/20111026_C7708_DOC_EN_5625.pdf

PDF with caption: "Figure 3 - Cross Section Nkran 210050N". PDF available at: http://stream1.newswire.ca/media/2011/10/26/20111026_C7708_DOC_EN_5626.pdf

PDF with caption: "Figure 4 - Nkran Resource Model at >1g/t looking North East (prepared by SRK Consulting Australia)". PDF available at: http://stream1.newswire.ca/media/2011/10/26/20111026_C7708_DOC_EN_5627.pdf

PDF with caption: "Figure 5 - Nkran Resource Model at >3g/t looking North East (prepared by SRK Consulting Australia)". PDF available at: http://stream1.newswire.ca/media/2011/10/26/20111026_C7708_DOC_EN_5628.pdf