Ely Gold -- Update on Recent Financing Activities for the Mt. Hamilton LLC

VANCOUVER, British Columbia, Aug. 28, 2012 /PRNewswire/ -- Ely Gold & Minerals Inc. ("Ely Gold") (TSX: ELY)  is providing an update and clarification on recent financing activities by the Mt. Hamilton LLC ("MH-LLC") and its joint venture partner Solitario Exploration & Royalty Corp. ("Solitario"). MH-LLC was formed in December 2010 and holds 100% interest in the Mt. Hamilton gold project in White Pine County, NV. On February 22, 2012 Solitario and Ely Gold released a 43-101 compliant bankable feasibility study showing robust economics for the development of an open pit heap leach mine at Mt. Hamilton. The study and the press release can be viewed on Ely Gold's website www.elygoldandminerals.com. It has also been filed on SEDAR by Ely Gold and Solitario. By funding all expenditures to produce the study, Solitario earned an 80% interest in MH-LLC. Ely Gold holds a 20% interest through its wholly owned subsidiary DHI Minerals (US) Ltd ("DHIU"). Solitario's interest is subject to dilution if it does not meet certain Continuing Payment Obligations to DHIU, Ely Gold and MH-LLC.

2011 Royalty Purchase and the Sandstorm NSR Sale

In May 2011, MH-LLC purchased a 2% NSR from the underlying Mt. Hamilton leaseholders for $2,500,000. The NSR purchase was fully funded by Solitario and resulted in a loan from Solitario to Ely Gold for $504,000.

On June 11, 2012, MH-LLC announced the sale of a 2.4% NSR to Sandstorm Gold Ltd. ("Sandstorm") (TSX-V: SSL) for total proceeds of $10,000,000 of which $6,000,000 were received in cash on the sale of the royalty and $4,000,000 will be received cash in January 2013. MH-LLC has the right to repurchase 100% of the NSR for $12 million, provided that MH-LLC enters into a gold stream agreement with Sandstorm that has an upfront deposit of not less than $30 million. In addition, MH-LLC has provided Sandstorm with a right of first refusal on any future royalty or gold stream financing for the Mt. Hamilton project. The press releases for both transactions can be viewed on Ely Gold's website and the agreements are available for viewing under the Company's profile on SEDAR at www.sedar.com.

MH-LLC Distribution and Amendments to the Operating Agreement

On June 28, 2012, subsequent to the sale of the Sandstorm NSR, Ely Gold and Solitario entered into an agreement whereby MH-LLC distributed $2,500,000 to its partners. Solitario received $2,000,000 for reimbursement of its share of the 2011 royalty purchase. Ely Gold received $500,000 which was paid to Solitario in full satisfaction of the $504,000 loan from Solitario, inclusive of accrued interest. In addition, Ely Gold and Solitario amended the operating agreement for MH-LLC to extend certain continuing payment obligations of Solitario to better correspond with the underlying lease payments. Both Agreements can be viewed under the Company's profile on SEDAR.

RMB Loan and the MH-LLC Side Agreement

On August 13, 2012 Solitario entered into a $5,000,000 secured credit facility with RMB Australia Holdings Limited ("RMB"). The loan is a corporate obligation of Solitario and is secured by its 80% interest in MH-LLC. Ely Gold, Solitario and RMB also entered into a Side Agreement to set out the terms on which Ely Gold would consent to the creation of an encumbrance on Solitario's Interest and permit Solitario to borrow the Funds from RMB. It clarifies, in relation to the loan, the MH-LLC Operating Agreement and Solitario's continuing payment obligations. The Side Agreement stipulates that the loan does not encumber Ely Gold's 20% interest in any way, give RMB control or liens over any assets of MH-LLC or restrict any of Ely Gold's rights under the MH-LLC operating agreement. The Side Agreement also amends the terms by which Solitario will subscribe to Ely Gold shares for future property payments on Mt. Hamilton. Both Agreements can be viewed under the Company's profile on SEDAR.

Both Sandstorm and RMB completed full due diligence on the Mt. Hamilton project, including site visits, prior to the financings.

John Brownlie, Ely Gold's Executive Chairman, commented on the recent financing activities. "The Sandstorm Royalty payments fund the MH-LLC with $7,500,000 after the distribution to the partners. These funds will not only help fast track the permitting process, but allow us to further explore the Seligman Pit area adjacent to the Centennial reserves. There are inferred resources at Seligman that could expand the reserves which would then significantly improve the mine plan with ore that won't require pre-strip capital. During its drill campaign this summer, Solitario had three drill rigs onsite, so shareholders can expect some good news flow this fall."

"Mt. Hamilton is proving to be a very solid project," stated Trey Wasser, Ely Gold's President & CEO. "Solitario is doing an excellent job securing strategic financings with well known resource lenders and advancing the property through the drill bit."

This press release has been read and approved by Stephen Kenwood, P. Geo, a director of the Company and the Company's Qualified Person.

On Behalf of the Board of Directors

Signed "Trey Wasser"
Trey Wasser, President & CEO

For further information, please contact Ely Gold & Minerals Inc. at 604-488-1104.
E-mail: [email protected]; Website: www.elygoldandminerals.com

Neither 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. This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.

SOURCE Ely Gold & Minerals Inc.