PGXPF Pelangio Exploration Inc (PK)

Steven Ralston, CFA

Bulk tonnage gold zones continue to be discovered at Pokukrom East, extending strike length to 660 meters

Today, Pelangio Exploration (PX.V: TSX-V and PGXPF: OTCBB) announced the results of a second phase drilling program at the Pokukrom East gold zone on the company’s Manfo Property in Ghana. Previously, assay results consistently intersected near-surface, bulk gold tonnage mineralization (over 50 meters of 1.06-to-1.64 g/t) over a strike length of approximately 400 meters. Today’s results not only confirm the bulk gold mineralized zone, but also extend it an additional 240 meters to the north so that the strike length now appears to be 660 meters.

The first phase drilling program also consistently intersected near-surface, high-grade gold mineralization (between 10-to-13 meters of 3.05-to-4.18 g/t) over a strike length of approximately 300 meters. Today’s results did not indicate a continuation of that zone; however, an interesting high-grade gold zone (4 meters of 4.52 g/t – hole SPDD 124) was discovered at a geochemical and geophysical anomaly located approximately 200 meters to the northeast.

Including the 10 holes reported today, Pelangio drilled 45 holes totaling 7,219 meters so far in the second phase program on the Manfo Property. Drilling continues at Pokukrom West zone, where drilling was slightly delayed, but is now almost complete. The drilling exploration program at Manfo is fully financed with over $10 million in available cash held by the company, $5.67 million of which was received from the exercise of warrants in April. We also await results from Pelangio’s exploration results at the Nfante West and Nfante East (both also on the Manfo Property), but especially at the Obuasi Property, in late summer/early fall of 2011. The Obuasi Property which is adjacent to AngloGold Ashanti's Obuasi mine (the world’s largest vein hosted gold deposit).

Additional results from the second phase drilling program could potentially increase the stock’s valuation, especially when the drilling program moves to the Obuasi Property and also to where previous drilling encountered high grade intercepts at Pokukrom West. We reaffirm our Outperform rating with a price target of $1.25.

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