Salmon River Announces $1 Million Private Placement

Salmon River Resources Ltd. ("Salmon River" or the "Company") (TSX VENTURE:SAL)
is pleased to announce that it will undertake a non-brokered private placement
of up to 3,437,500 common shares at CDN$0.32 per common share for gross proceeds
of up to CDN$1,100,000 (the "Private Placement"). The net proceeds of the
Private Placement will be used entirely for the payment of the initial
Pre-Completion Payment (described below). In connection with the Private
Placement, Salmon River may pay finders' fees to certain finders, including cash
commissions equal to up to 8% of the proceeds from the sale of the common shares
and options to acquire that number of common shares equal to up to 8% of the
number of common shares sold to subscribers introduced to the Company by such
finders. The common shares issued in the Private Placement will be subject to a
four-month hold period in accordance with the policies of the TSX Venture
Exchange and applicable securities legislation. Insiders in the Company have
indicated their intention to acquire an aggregate of 25% of the Private
Placement, consistent with the maximum allowable under TSX Venture Exchange
policy. The Private Placement remains subject to the approval of the TSX Venture
Exchange.


Background 

On June 16, 2010, Salmon River, Treppo Grande Iron Pty Ltd. ("Treppo Grande")
and Melville Raymond Dalla-Costa (the "Seller") entered into an option agreement
(the "Option Agreement") pursuant to which the Company was granted an option to
acquire a 100% interest in all of the issued and outstanding share capital of
Treppo Grande (the "Option"). All issued and outstanding shares of Treppo Grande
are held by the Seller. Treppo Grande is the holder of five tenements in the
Yilgarn Craton of southwestern Australia, including the highly prospective Mt.
Manning iron ore prospects (the "Tenements") (see Exploration Updates of 26
August 2010, 2 August 2011, 1 September 2011 and 11 October 2011). 


The Option Agreement provided that in order to exercise the Option the Company
was required to pay the Seller a minimum of A$100,000,000 for the Treppo Grande
shares. Under the terms of the Option Agreement, the purchase price was subject
adjustment based upon the identification of iron ore resource on the Tenements.
The Company was required to exercise the Option Agreement by no later than
December 16, 2011 (See the full text of the Option Agreement filed on SEDAR on
December 16, 2011). 


On November 4, 2011, Salmon River announced that it entered into a non-binding
Memorandum of Understanding (the "MOU") with General Steel Holdings Inc.
("GSH"), for itself and on behalf of certain subsidiaries and affiliates ("GSH
Group") regarding rights to (i) purchase part of any future iron ore production
from properties currently under the Option (ii) acquire 60 million common shares
at C$.50 per share for an aggregate investment of C$30million and (iii) provide
assistance to Salmon River in raising an additional C$80 million through an
offering of Convertible Debentures by acquiring a minimum of C$30 million of the
Convertible Debentures. In addition, GSH further indicated that it is willing to
fund future capital expenditures and other strategic Initiatives of the Treppo
Grande iron ore project (the "Treppo Grande Project") to a maximum amount of a
further C$200 million. The MOU also provides that, in consideration of the GSH
Group funding such future capital requirements as well as providing project
management and co-ordination services to the Company, they would receive an
amount of up to 51% profit interests in the Treppo Grande Project, on terms to
be mutually agreed in the final definitive agreements. Readers should refer to
the full text of the press release of the Company dated November 4, 2011 for
more information on the MOU. 


On November 4, 2011, Salmon River also announced a part & parcel private
placement for up to $1,500,000 (up to 5,000,000 common shares at $0.30 per
share) and subsequently increased the offering to $2,100,000 (up to 7,000,000
common shares at $0.30 per share) (the "Part & Parcel Private Placement").
Salmon River closed the Part & Parcel Private Placement on December 14, 2011,
issuing a total of 4,800,006 common shares for gross proceeds of $1,440,000. The
Company considers that such funding is sufficient to cover its costs involved in
closing of the transaction with GSH Group. 


On December 9, 2011, the Company exercised the Option and concurrently entered
into an amendment to the Option Agreement (the "Option Amendment") with the
Seller which provided, among other things, an extension to the time for the
closing of the purchase of the shares of Treppo Grande to April 30, 2012.
Pursuant to the Option Amendment, the Company is required pay to the Seller
A$1,000,000 each month after the execution of the amendment until the Completion
Date (the "Pre-Completion Payments"). The first Pre-Completion Payment is due on
December 30, 2011. On the Completion Date, the Company will pay to the Seller
the Purchase Price (which is A$100,000,000 and is not subject to any adjustment)
less all amounts paid as Pre-Completion Payments. If the Company does not
complete the payment of all of the Purchase Price by April 30, 2012, the
Pre-Completion Payments will be retained by the Seller. In addition, pursuant to
the Option Amendment, Salmon River will grant to the Seller a royalty of A$0.50
per tonne of iron ore produced from the Tenement area from the commencement of
first commercial mining on the Tenements. Further details of the Option
Amendment are available in a press release dated December 15, 2011. The full
text of the Option Amendment is also available on SEDAR (filed on December 16,
2011). 


Salmon River is currently negotiating the terms of a binding investment
framework agreement with GSH (the "Framework Agreement"). The Framework
Agreement will set out the material terms and conditions of certain definitive
agreements to be entered into pursuant to the MOU and is intended by the parties
to be a legally binding agreement. The Company expects that the Framework
Agreement will be entered into in January 2012. The Framework Agreement will be
subject to approval of the TSX Venture Exchange and may be subject to approval
by the shareholders of the Company.


Mount Manning and Mount Manning North Properties 

The Mount Manning and Mount Manning North properties comprise five tenements in
the Yilgarn Province of South Western Australia approximately 210 km northwest
of Kalgoorlie. In November, 2010, the Company filed on SEDAR a technical report
on four of the tenements, the Barlee Project (prospective for iron ore), the
Mount Manning Project (consisting of one tenement and one tenement application
which are prospective for iron ore), and the Riverina Property (prospective for
nickel) dated August 10, 2010 and entitled "Geological Evaluation, Mount Manning
And Barlee Iron Prospects And Riverina Nickel Prospect Southern Cross And
Eastern Goldfields Provinces Western Australia". The Company has provided a
number of Exploration Updates on 26 August 2010, 2 August 2011, 1 September 2011
and 11 October 2011 outlining developments in its exploration programmes. On
December 20, 2011 the Company announced a resource estimate on the Mount Manning
Property (See the Company's news release dated December 20, 2011).


Use of Proceeds of Private Placement

The use of proceeds for the Private Placement and payment of the Pre-Completion
Payments is subject to shareholder approval, which the Company intends to seek
through the written consent of shareholders holding a majority of the common
shares of the Company. As noted, the net proceeds of the Private Placement will
be used entirely for the payment of the initial Pre-Completion Payment. The
Company expects to make further arrangements for payment of the remaining
Pre-Completion Payments and will make further announcements in this regard once
such arrangements have been finalized.


About Salmon River Resources Limited (TSX VENTURE:SAL) 

Salmon River Resources Limited is a mineral exploration company engaged in the
exploration for and development of commercial deposits of iron ore in Western
Australia. It exercised its option to acquire five tenements in the Yilgarn
region of Western Australia including the Treppo Grande iron ore project,
approximately 210 kilometres northwest of Kalgoorlie, comprising two tenements
covering Mt Manning (298 km2) and the Barlee tenement (98.7 km2). Completion of
the acquisition of the tenements is subject to certain conditions, including
payment of A$100 million to the optionor. Salmon River believes the Treppo
Grande project has the potential to be a world-class iron ore deposit with early
development potential. Salmon River has recently announced the signing of a
Memorandum of Understanding with General Steel Holdings Inc. ("General Steel")
providing for substantial future financing, off-take arrangements and the
provision of management oversight (see press release dated 4 November 2011). The
shares of Salmon River are listed on the TSX Venture Exchange under the symbol
"SAL".


On behalf of the Board of Directors of SALMON RIVER RESOURCES LTD.

J.G. Stewart, President

Forward-Looking Statements: This press release contains forward-looking
statements that are based on the beliefs of management and reflect Salmon
River's current expectations. The forward-looking statements in this press
release includes information relating to the intended Private Placement and use
of proceeds, the intended commitments by GS Group, the Company's intention to
fund certain development expenses and to fund development of the Treppo Grande
Project. The forward-looking statements are based on certain assumptions, which
could change materially in the future, including the assumption that the
non-binding MOU will lead to definitive agreements, that the transactions
contemplated in the MOU will be completed, and that Salmon River will exercise
its rights under the Treppo Grande Option. By their nature, forward-looking
information involves known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking information. Such factors include the risk that
the MOU may be terminated, that the transactions contemplated in the MOU may not
result in a binding agreement and any agreements may have terms and conditions
different from those contemplated in the MOU, that the Investment Framework
Agreement may not be concluded with GSH, that any agreement may not be
completed, that GS Group may not invest a portion, or any of the amount
contemplated, that the Company may not complete the intended financings,
including the Private Placement, and that the Company may not exercise its
rights under the Treppo Grande Option. There can be no assurance that
forward-looking information will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
Accordingly, investors should not place undue reliance on forward-looking
information. Forward-looking information is provided as of the date of this
press release, and the Company assumes no obligation to update or revise them to
reflect new events or circumstances, except as required in accordance with
applicable laws.


There is no guarantee that Salmon River will complete the option exercise before
April 30, 2012, or at all. The completion of the option exercise is subject to
the satisfaction of certain regulatory requirements and other conditions. In
addition, the Company will have to complete additional financings for
approximately A$110,000,000. There can be no certainty, nor can the Company
provide any assurance, that these conditions will be satisfied or, if satisfied,
when they will be satisfied, or if the additional financings will be completed.
The Option Agreement represents substantially all of the Company's assets, and
if the Company is unable to complete the option exercise, shareholders of Salmon
River will have suffered significant dilution without the Company having
received the Treppo Grande shares or acquired the Mount Manning and Mount
Manning North Properties.