NEWS RELEASE

DNI METALS INC. -  October 24, 2011

DNI ANNOUNCES AN INITIAL 250 MILLION TON INFERRED RESOURCE FROM THE BUCKTON MINERALIZED ZONE ON ITS ALBERTA POLYMETALLIC BLACK SHALE PROJECTS

DNI METALS INC. (DNI:TSX-Ven)( DG7:FSE) is pleased to announce the initial mineral resource from the Buckton Mineralized Zone, on its Alberta polymetallic black shale Property, Athabasca region, northeast Alberta. This Zone, with an inferred resource of 250,092,000 short tons which is being announced, is one of six mineralized systems, or zones, identified on the 2,720 square kilometer Property, and it is the most advanced with sufficient drilling to enable estimation of mineral resources over a portion of it.

As outlined in the technical report for the Property dated Oct28/2008 (announced Nov10/2008, revised in press release of Jul15/2011), the Buckton Mineralized Zone is a conceptual target for further exploration based on surface sampling and historic widely spaced drilling. This Zone is projected to extend over 26 square kilometers and is open in three directions. Sufficient drilling was completed over a portion of this Zone by DNI to classify a portion of it to an inferred resource relating to base metals, Uranium and Lithium. 

The Buckton resource study (the “Study”) was prepared by Apex Geoscience Ltd (“Apex”), Edmonton, under the supervision of Mr.Michael Dufresne PGeol, who is the Qualified Person in connection with its preparation and is independent of DNI. The Study relies on drilling completed during the past winter by DNI over the Zone, together with historic drilling from the area, all of which drilling campaigns were implemented by Apex under the supervision of Mr.Dufresne. DNI completed verification sampling and analysis of archived core from some of the historic drilling in 2008 and 2009. The Study complies with National Instrument 43-101 and CIM resource estimation guidelines. This press release is a summary of salient conclusions of the Buckton resource study report which is being filed to SEDAR concurrently with this announcement. The report will also be available from DNI’s website www.dnimetals.com once it is filed.

The Buckton inferred mineral resource reported by the Study is classified as an inferred resource consisting of 250,092,000 short tons (226,880,000 metric tonnes) of mineralized Second White Speckled black Shale, beneath less than 75m of overburden cover, which is mineralized with recoverable molybdenum (Mo), nickel (Ni), uranium (U), vanadium (V), zinc (Zn), copper (Cu), cobalt (Co) and lithium (Li). The inferred resource includes 124,031,000 short tons which are under less than 50m of overburden cover and 19,847,000 short tons which are under less than 25m of overburden cover. Silver and gold were assessed but omitted from the resources, as were also rare earth elements and specialty metals except Li. An estimate of specialty metals and rare earth elements contained within the Buckton resource will be announced in an addendum to the Study.

Details of the Buckton inferred resource reported by the Study are tabulated below.

Buckton Inferred Resource
Mineralized Shale (tons)
250,092,000
  MoO3 Ni U3O8 V2O5 Zn Cu Co Li2CO3
Raw Grade (ppm) 115 148 37 1288 302 76 23 302
Recovery % 50% 90% 90% 40% 90% 60% 90% 50%
Recoverable Grade (ppm) 57 133 33 515 272 46 21 151
Recoverable Grade (lbs/ton) 0.115 0.266 0.066 1.030 0.544 0.091 0.042 0.302
Metal/Oxide Price* (US$/lb) 21.6 11.1 73 8.1 1.1 3.2 25.3 3
Recoverable metal/oxide (lbs) 28,656,000 66,454,000 16,513,000 257,604,000 136,065,000 22,832,000 10,412,000 75,507,000
*Metal/Oxide commodity prices are the five year average to Aug/2006 used to establish bulk recoverable values for cut-off grade thresholding tests.
ton(s)=short ton(s); lb(s)=pound(s); The 2011 drilling included an appropriate number of analytical standards, blanks and duplicates, and no analytical issues were identified. Numbers may not add due to rounding.

Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no guarantee that all or any part of the mineral resource reported herein will be converted into a mineral reserve. An 'Inferred Mineral Resource' is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no guarantee that all or any part of the mineral resource reported herein will be converted into a mineral reserve. An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. 

This is the first mineral resource estimate for the Buckton Mineralized Zone and it has been classified as an inferred resource according to CIM standards. This classification is based on a number of factors, namely; limited number of drill holes and their wide spacing, good continuity of mineralization and geological control between drill holes and from section to section along approximately 6 km of strike.

The Study concludes that the Buckton inferred mineral resource is mineralization that is believed to have a reasonable prospect for extraction in the future. It represents material which is at a depth of less than 75m from surface, at a US$7.5 per tonne lower cut-off, whose value is represented by the collective value of contained recoverable Mo-Ni-U-V-Zn-Co-Cu-Li, relying on the average 5 year metal prices to Aug/2006 and relying on the best achieved metals recoveries as reported from the collective of DNI’s leaching testwork (see also press September 8, 2011). Testing and iteration of the Buckton resource model at a higher cut-off of US$10 per tonne reported a similar tonnage as the US$7.5 per tonne cut-off base case scenario save for approximately 100,000 tonnes which did not meet threshold criteria.

The Buckton resource is open to the north and northeast, and for approximately 300m eastward to the erosional edge of the Birch Mountains over a large area with thin overburden cover where mineralization intermittently outcrops at surface or is intermittently exposed throughout several kilometres of valley walls. 

The Study relies on an aggregate of eleven vertical core holes distributed over an area of approximately 5.7 square kilometres, and spaced approximately 240m-2400m apart (averaging 1000m). Notwithstanding systematic vertical grade variations or zonation within the Second White Speckled Shale Formation, bulk averaged grades across the Formation show good uniformity over large distances across the Property. Considering this uniformity, the spacing and number of holes are considered sufficient for the determination of inferred resources, and extrapolation of grades between the drill holes is supported by statistical variography examined during the Study.

The Study estimates that the resources reported are overlain by 762,678,000 short tons (691,890,000 metric tonnes) of overburden cover material consisting of LaBiche Formation shales and overlying till. The foregoing overburden material is barren of base metals and uranium, and is, accordingly, considered to be “waste” by the Study for the purposes of estimating the base metals and uranium resources being reported. The overburden material does, however, contain Li and rare earth elements which have not yet been fully evaluated even though, based on partial analytical data, their grades are comparable to grades from the Buckton Mineralized Zone (see press September 8, 2011). All samples from all available drill core are being re-analyzed for the complete suite of rare earth elements and will be announced when completed. DNI has not yet completed the necessary leaching testwork to determine recovery of specialty metals and rare earth elements from the overburden material.

The Buckton inferred resource comprises an approximately 5.7 square kilometer, 13m to 23m thick, near-horizontal tabular zone hosted entirely within the Second White Speckled Shale Formation, bounded by its upper and lower contacts. This Formation is exposed throughout the erosional edge of the Birch Mountains but is overlain westward by progressively thicker sequences of other shales and till. Given the uniformity of metals grades within the Shale, the resource is laterally delimited based on depth criteria rather than continuity of metallic mineralization which extends well beyond its limits. Presence of the Speckled Shale for at least 6km to its north and south, and beyond, has been confirmed by oil/gas downhole well logs in the area which report sections of this Shale over a large area extending well beyond the current boundaries of the resources.

The Buckton mineral resource study consisted of modeling and tonnage estimation using a 3-dimensional block model based on geostatistical applications using commercial mine planning software MICROMINE. The sample file comprised 872 samples of variable length for all lithologies but, when composited in MICROMINE, yielded a database of 197 sample composites for the Second White Speckled Shale which were used for the mineral resource estimation. All drill holes are short vertical holes and, as such, there are no down-hole surveys.

Variography was conducted on the composited drill hole data within the Second White Specks shale domain to produce spherical semi variograms. Each metal was modeled individually to determine the continuity and orientation of mineralization. As a result of the wide drill hole spacing a parent model block size of 200mx200mx2m was chosen for the resource estimate, with sub-blocking down to 20mx20mx1m. The block model was extended far enough past the mineralized wireframe to encompass the entire mineralized shale domain. The recoverable grades for the metals were translated into a US$ value for each block and sub-block relying on the five year average metal/oxide price to Aug/2006, and the collective values aggregated to enable testing against a block value base case cut-off of US$7.5 per tonne. According to the foregoing method, the Study concluded that the reported resource represents an average value of US$21.5 per short ton (US$23.7 per tonne) representing the aggregate value of recoverable grades for the eight metals reported in the resource. This cut-off is considered to be a reasonable benchmark which has been utilized by recent mineral resource estimates for open pit mineable poly-metallic black shales in Sweden as the break-even point and lower cut-off. 

Testing and iteration of the Buckton resource model at a higher cut-off of US$10 per tonne reported a similar tonnage as the US$7.5 per tonne cut-off base case scenario save for approximately 100,000 tonnes which did not meet threshold criteria. The US$10 per tonne cut-off is considered to be a reasonable benchmark which has been utilized by recent mineral resource estimates as the break-even point and lower cut-off for open pit mining of a poly-metallic black shale and its processing by bioheapleaching in Finland. Considering a scenario of possible open pit mining in northeast Alberta along the eastern edge of the Birch Mountains, with potential for a low strip ratio at startup, the likely free-dig nature of the poorly consolidated Speckled Shale, the potential for easy access to multiple working faces, the location of the project with respect to access, power and other important infrastructure, a lower cut-off value for the mineral resource estimate of US$S7.5 per tonne is considered reasonable by the Study as a base case cut-off threshold which also captures a relatively continuous mineralized zone with favourable bulk mining configuration. 

In addition to testing the Buckton resource model at different value based cut-offs, the resource model also iterated various scenarios to estimate tonnages constrained by different overburden thicknesses at a US$7.5 per tonne cut-off, including tonnages which are less than 100m-125m of the surface. The Study concluded that mineralized tonnages ranging 401,703,000-551,130,000 short tons can be blocked, with similar grades as the Buckton inferred resource being reported, which are under less than 100m-125m of the surface, which are overlain by 1,410,086,000-2,299,891,000 short tons of overburden. The foregoing tonnages are not resources and cannot currently be classified as resources since it is unclear, in the absence of a rigorous economic assessment, whether they have a reasonable prospect for extraction in the future given the large tonnages of overburden cover rocks overlying them. Intentions are to evaluate significance of the foregoing tonnages in the context of a Preliminary Economic Assessment Study (Scoping Study) in 2012 and until such time they are considered to be mineralized material which is a target for further work whose ultimate quantity and grade are conceptual in nature as there has been insufficient exploration to define a mineral resource and it is uncertain whether further exploration will result in discovery of a mineral resource.

The Study makes recommendations to implement certain additional mineralogical and leaching work, in addition to a 5,000m diamond drilling program intended to expand the Buckton inferred resource northward and eastward, and to upgrade a portion of it into an Indicated or higher resource classification. This drilling also includes initial holes to test the Buckton South Zone located approximately nine kilometres to the south of the Buckton inferred resources, and which may represent its southerly extension or an entirely separate similar Zone which has not yet been drilled (cored) by DNI, although 12m-23m thick intercepts of the Speckled Shale Formation are reported in downhole logs from approximately twenty historic oil/gas wells throughout a 100-150 square kilometre area. Permitting for the foregoing drilling is in progress.

In a statement Mr.S.Sabag, DNI’s president & CEO, commented: “… this is the first resource study from the Buckton Mineralized Zone, or from any of the other Zones at the Property for that matter. It represents a significant milestone in development of the Property. While DNI is excited about continuing work to further expand and upgrade the reported resource through additional drilling, we are especially keen to evaluate the potential of specialty metals and rare earth elements contained in the Buckton resource and Zone and in the overlying overburden cover material thus far considered to be waste rocks”.

The Qualified Person in connection with the preparation of the Buckton resource study is Mr.Michael Dufresne PGeol who is independent of DNI. The Qualified Person in connection with this press release and in respect of the Alberta polymetallic black shale projects is S.F.Sabag PGeo, President and CEO of DNI, who is responsible for verification and quality assurance of the exploration information disclosed in connection with the projects and this release.

Ton(s)=short ton(s); lb(s)=pound(s); tonne = metric tonne = 1000kg. The 2011 drilling included an appropriate number of analytical standards, blanks and duplicates, and no analytical issues were identified. Metal/Oxide commodity prices are the five year average to Aug/2006 used to establish bulk recoverable values for cut-off grade thresholding tests. Analyses by Activation Labs, Ancaster, ON; Analytical results from the 2011 drilling were announced on July 15, 2011, along with details of DNI’s analytical quality assurance and quality control parameters. Archived drill core from some of the historic drilling was examined, re-sampled and re-analyzed by DNI as part of its verification sampling program in 2008-2009. For additional detailed information see the resource study report “Technical Report, Maiden Resource Estimate, Buckton, Mineralized Zone, SBH Property, Northeast Alberta”, October 18, 2011, Effective date September 30, 2011, by APEX Geoscience Ltd. The report will shortly be available from www.sedar.com and from DNI’s website www.dnimetals.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.

DNI - TSX Venture
DG7 - Frankfurt
Issued: 60,100,284

For further information, contact:
DNI Metals Inc. - Shahe Sabag, President & CEO or Denis Clement, Chairman - 416-595-1195
email ir@dnimetals.com. Also visit www.dnimetals.com

We seek Safe Harbour. This announcement includes forward looking statements. While these statements represent DNI’s best current judgment, they are subject to risks and uncertainties that could cause actual results to vary, including risk factors listed in DNI’s Annual Information Form and its MDS&A’s, all of which are available from SEDAR and on its website.