PGXPF Pelangio Exploration Inc (PK)

Pelangio announces further discoveries at Pokukrom East

Steven Ralston, CFA

Pelangio Exploration (V.PX: TSX-V and PGXPF: OTCBB) continues to announce important discoveries on its Manfo property in Ghana. The drilling program has been expanded again, now to 30,000 meters. Having added a second drilling rig in July, a third drilling rig is expected in 2012. All told, Pelangio has completed 111 drill holes totaling 22,195 meters. In addition, an initial NI 43-101 technical report by SRK upgraded the Manfo property to a resource delineation stage gold exploration project from an early stage exploration project. The evidence is mounting that Pelangio Exploration has a 100% interest in a world class, multi-million ounce gold prospect.

In the last three weeks, Pelangio has announced the results of 30 drill holes totaling 6,685 meters on the Manfo property in Ghana. The in-fill drilling at Pokukrom East continues to confirm and expand the bulk tonnage gold zone. In addition, seven holes intersected zones of gold mineralization in sections which had not previously been drilled. Management plans further in-fill drilling at 50 meter intervals, along with step-out drilling in hope of extending the strike length to at least 1,000 meters. The recent drilling results expanded the vertical depth to 277 meters from 175 meters. Currently, drilling results at Pokukrom East imply a strike length of 850 meters, which is open to the north with the geochemical anomaly being much longer at approximately 1,200 meters in length.

Broader widths are being seen at Pokukrom East with seven of the 30 drill holes assaying 1.0 g/t or greater over at least 20 meters. Importantly, a drill hole along the footwall of the mineralization graded at 2.24 g/t gold over 19 meters to a depth of 277 meters. Given the aggressive drilling program this year and the significant results announced, a resource report on the Manfo property is expected to be completed sometime in 2012.

Also, Pelangio Exploration filed an initial NI 43-101 on Manfo.  According to the SRK report, which is effective as of June 30, 2011, at Pokukrom East, a zone with broad intervals of moderate grade (1.0 to 2.0 g/t Au) extends at least 660 meters and to a depth of 200 meters. The NI 43-101 pre-dates the announcements results that have extended the strike length to 850 meters. In addition, a narrower high grade zone (3.0 to 5.0 g/t Au) occurs along 400 meter strike length. At Pokukrom West, near surface gold mineralization over a 100 meter strike length and to a depth of 300 meters has been identified that remains open along strike. At Nfante West, also open along strike, a zone of gold mineralization over a 280 meter strike length has been identified. SRK recommended a Phase 2 program of primarily in-fill and step-out drilling at 25 meter spacing to a depth of 300 meters on Nfante East, Nfante West, Pokukrom East and Pokukrom West.

We reiterate our Outperform rating based upon the expectation of continued announcements of drilling results, both at Manfo and Obuasi, throughout 2011 and into 2012, along with the attractive valuation level of the stock. Our target is $1.00.

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