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Pele Mountain closes Highland project sale, to focus on Eco Ridge

Published: 15:44 15 May 2012 EDT

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Pele Mountain Resources (CVE:GEM) said Tuesday it has closed the first part of its divestiture agreement for its Highland gold projects to Golden Goose Resources, a subsidiary of Prodigy Gold (CVE:PDG), for $1.775 million in cash and a net smelter return royalty on certain portions of the asset.

Prodigy Gold's subsidiary acquired some crown leases and patented mining claims comprising the vast majority of Pele’s Highland gold projects in Sault St. Marie, Ontario.

Of the $1.775 million cash price, $100,000 was placed in escrow pending the closing of the second part of the sale agreement for the licensed area at Highland, Pele said. The second sale agreement is expected to be completed later this month, for a cash consideration of $25,000.

Additionally, Pele has retained a net smelter return royalty for some areas within the Highland project ranging from 1.0 to 1.5-percent, subject to Golden Goose's right to acquire between 0.5 and 1.0-percent of that royalty upon payment to Pele Gold of $1-million.

Golden Goose has assumed all royalty and other obligations under existing agreements affecting the Highland Gold project.

"The divestiture of Highland will allow us to better focus our efforts on advancing development at Eco Ridge," chief executive Al Shefsky said in a statement.

"We are currently preparing our updated project description, which is already well advanced, and is the lead document required to begin the licensing process."

The CEO added that its updated preliminary economic assessment for Eco Ridge reveals that Pele is one of the "clear leaders in the ongoing race to develop new sources of critical rare earths outside of China."

Pele Mountain Resources is focused on the development of its 100-percent owned Eco Ridge Mine rare earths and uranium project, located in Elliot Lake, the only Canadian mining camp to have ever achieved commercial REO production.

Pele has also entered into an agreement to purchase the Simon rare earth claims in Mountain Pass, California.

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