New Pacific Metals Corp. (TSE:NUX) Enters Into an MOU to Acquire a 75% Interest in the Longmenchang Silver-Gold-Lead-Zinc Property

Vancouver, Feb 29, 2012 AEST (ABN Newswire) - New Pacific Metals Corp. (TSE:NUX) is pleased to announce it has entered into an arm's length non-binding Memorandum of Understanding ("MOU") with Fujian Henyuan Mining Co., Ltd. ("Fujian Henyuan" ) to acquire a 75% interest in the LMC silver-gold-lead-zinc Property, Fujian Province, China (the "Property"). The Property is located approximately 100 kilometres to the west of Fuzhou, the capital city of Fujian Province, China, and consists of an exploration permit for an area of 1.54 square kilometres and a 300 ton-per-day flotation mill plant. An area of 1.03 square kilometres has been approved for mining by the local government within the current exploration permit. The applicable mining license for the Property is expected in the near future.

Terms of the MOU

Pursuant to the terms of the MOU, the Company will pay, upon signing of a definitive agreement, a total of RMB210 million to acquire a 75% interest of the Property. The RMB210 million payment consists of an upfront cash payment by the Company of RMB80 million and the issuance of Company shares (the "Shares") equivalent of RMB100 million to Fujian Henyuan. The issue price of the Shares will be based on the date the definitive agreement is executed between the parties, but will not exceed $1.20/Share. In addition, the first RMB30 million in profits from commercial operations at the Property will be paid to Fujian Henyuan. For reference as of February 27, 2012 one RMB = 0.158 Canadian dollars.

Any definitive agreement between the parties (and any payment of cash or issuance of Shares) is subject to the Company completing a confirmation drill program to verify historical drill data and the geological model of the Property mineralization. Also, the definitive agreement is further subject to Fujian Henyuan completing a consolidation for 100% ownership of the Property and obtaining the applicable mining license. The issuance of any Shares and the definitive agreement may be subject to TSX and other regulatory approvals.

To note, the owners of the Fujian Henyuan also operate several other silver polymetallic properties in Fujian Province which the Company is currently reviewing. The parties have orally agreed that the Company be granted a right to acquire any of these properties at the Company's discretion.

Property information

The Property is situated at the southeast margin of the Wuyi mineralization belt, which is one of the 16 prominent metallogeny belts in China. Silver-gold-lead-zinc mineralization is hosted in a sequence of Permian marine clastic sediments and limestone which are overlain by a Jurassic terrestrial sedimentary sequence and underlain by Proterozoic metasedimentary rocks. Numerous porphyritic rhyolite dykes intrude into these sequences. Based on historical Property exploration reports, economic mineralization of the Property is the oxidized silver-gold-lead-zinc mineralization associated with multiple prominent gossanous zones developed in the upper clastic sediments of the Permian sequence close to the unconformity surface with the overlying Jurassic sediments. The oxidized mineralization zones are near surface, sub-horizontal, and stratiform. Exploration of the Property began in the 1980's, and included geological mapping, trenching, diamond drilling, and aditing. 39 holes totalling 6,880 meters were drilled and 379 meters of underground adits were completed.