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Hinterland To Spin Off Yukon Gold Assets Into New Public Company

Thursday, January 20, 2011

VAL D'OR, QUEBEC--(Marketwire - Jan. 20, 2011) -

NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES OR FOR DISSEMINATION TO U.S NEWS WIRE SERVICES

Hinterland Metals Inc. (TSX VENTURE:HMI) is pleased to announce that it intends to spin off its Yukon gold assets by a plan of arrangement (the "Arrangement") that will involve the incorporation of a new company ("Newco") and the distribution of Newco shares pro rata to existing Hinterland shareholders. Included in the assets to be spun off are the Ballarat, Culvert, Erin, Divide and Coffee gold properties. It is expected that Hinterland will retain a certain number of Newco shares and a net smelter return royalty on any future mineral production from the transferred assets. The Arrangement will also involve a consolidation of Hinterland's share capital on a ratio to be determined. The proposed transaction is subject to a number of conditions, including the execution of a definitive agreement between Hinterland and Newco for the transfer of the Yukon gold assets, shareholder approval at a special meeting of shareholders, Court approval of the Arrangement, and regulatory approval.

Hinterland has mandated its legal counsel, Miller Thomson LLP, to prepare the necessary documents to complete the transaction including an Information Circular that will provide, among other things, a detailed summary of the Arrangement and information on Newco and its business. The consolidation ratio of Hinterland shares, the number Newco shares to be distributed to Hinterland shareholders and other details of the proposed transaction have yet to be determined and will be announced by Hinterland as soon as possible.

Hinterland has engaged Greg Davison, P.Geo to prepare an independent qualifying report on the Ballarat property in accordance with National Instrument 43-101 standards. Mr. Davison has also agreed to consult on a continuing basis, providing continuity to Newco's subsequent exploration efforts in Yukon. Mr. Davison brings more than 35 years of experience in exploration and project management to Newco and in particular has unique experience in Yukon, Nunavut and Greenland with respect to land use permitting and First Nations relations.

Hinterland and its professional advisers are working to facilitate an efficient execution of the proposed transaction. The spin off of the Yukon gold assets into a new company is an effort by Hinterland to realize the true value of these assets and Hinterland's remaining assets in Quebec and Ontario by providing a specific geographic focus for Newco and Hinterland respectively. By unlocking the value of these disparate assets, Hinterland endeavors to grow existing shareholder value and attract new investment at both the retail and institutional level.

In Yukon, Newco will be primarily focused on the 200-claim (4140ha) Ballarat property located approximately 100km due south of Dawson City in the White Gold district of Yukon and located approximately 15km south of Kinross's White Gold deposit. Work done to date on Ballarat has identified two very strong, deep auger-type gold-in-soil anomalies, each trending east-west for a minimum distance of 1000m on the property (Hinterland News Release - October 28, 2010). The southern anomaly is the best defined with maximum values up to 796ppb Au. The northern anomaly has numerous high values up to 188ppb Au.

In Quebec Hinterland will be primarily focused on the 306-claim (17,826ha) Kipawa rare earth element ("REE") property located 140km south of Rouyn-Noranda, Quebec and 90km north-east of North Bay, Ontario. The Kipawa area has long been known for its REE-zircon-yttrium potential. The Kipawa property is situated approximately 30km due west of the Zeus REE-zircon-yttrium deposit held by Matamec Explorations Inc. In 2010 Hinterland identified significant REE-in-soil anomalies on its Atwater and Lachine claim blocks (Hinterland News Release - April 20, 2010). On Atwater three linear anomalies were detected with combined REE values up to 1091ppm. On Lachine one strong, circular anomaly was detected with combined REE values up to 1835ppm as well as five other spot anomalies.

"For the last 18 months we have found that Hinterland's shareholder base is strongly divided between those interested in the White Gold area properties in Yukon or those interested in the REE properties in Quebec. This reorganization of assets will remove the confusion by giving Hinterland shareholders a stake in two distinct, well structured companies each with a clearly defined exploration focus" comments Mark Fekete, P.Geo: President, CEO and designated "qualified person" as defined in Section 1.2 in and for the purposes of National Instrument 43-101 responsible for the technical content of this release. Mr. Fekete will discuss the proposed spin-off in a taped interview that will be available to Hinterland's website early next week.

The offered securities will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or applicable state securities laws, and may not be offered or sold in the United States or to "U.S. persons", as such term is defined in Regulation S promulgated under the U.S. Securities Act, absent registration or an applicable exemption from such registration requirements.

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Some statements in this release may contain forward-looking information. All statements, other than of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future (including, without limitation, statements regarding potential mineralization) are forward-looking statements; this includes the completion of the spin off. Forward-looking statements are generally identifiable by use of the words "may", "will", "should", "continue", "expect", "anticipate", "estimate", "believe", "intend", "plan" or "project" or the negative of these words or other variations on these words or comparable terminology. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's ability to control or predict, that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements. Factors that could cause actual results or events to differ materially from current expectations include, among other things, without limitation, failure to establish estimated mineral resources, the possibility that future exploration results will not be consistent with the Company's expectations, changes in world gold markets or markets for other commodities, the inability of the Company to complete the spin off on the terms and conditions disclosed above, and other risks disclosed in the Company's public disclosure record on file with the relevant securities regulatory authorities. Any forward-looking statement speaks only as of the date on which it is made and except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement.

Shares Issued 79,322,538

FOR FURTHER INFORMATION PLEASE CONTACT:

Mark Fekete
Hinterland Metals Inc.
Toll Free: 1-877-874-8182 Ext. 210
[e-mail]
www.hinterlandmetals.com


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.

http://www.theglobeandmail.com/globe-investor/news-sources/?date=20110120&archive=ccnm&slug=201101200668079001