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Chieftain Announces MOU for Collaboration on Tulsequah Chief Mine Project and Private Placement

TORONTO, ONTARIO -- (Marketwire) -- 09/24/12 -- Chieftain Metals Inc. (Chieftain) (TSX:CFB) is pleased to announce that it entered into a non-binding Memorandum of Understanding (MOU) with China CAMC Engineering Co., Ltd. (CAMCE) and its majority owned subsidiary Procon Holdings (Alberta) Inc. (Procon), for a comprehensive collaboration to build and operate Chieftain's Tulsequah Chief mining project (Project) in Northwestern British Columbia.

The principal features of this proposed collaboration are:

--  CAMCE proposes to acquire a 30% interest in the Project for a cash
    contribution equal to 30% of the Project's net asset value. Chieftain
    will own the remaining 70%. 
    
--  Chieftain will enter into an engineering, procurement and construction
    contract with CAMCE to develop the Project on market terms and upon
    completion of development an underground mining contract with Procon
    renewable for successive three year terms for the "life of mine". 
    
--  CAMCE will seek to arrange senior long-term debt for the development of
    the Project from a Chinese financial institution for 70% of the agreed
    upon Project development costs (Senior Debt Loan). 
    
--  The Project entity will enter into long-term, arm's length offtake
    commitments with CAMCE for 30% of the zinc, copper and lead concentrates
    produced by the Project. 

Private Placement

Procon has agreed to invest $9.9 million in a private transaction to acquire 2,475,000 shares of Chieftain at $4.00 per share and a warrant (Warrant) to acquire additional shares so as to hold a fully diluted 30% interest of Chieftain at $5.00 per share exercisable during the 90 days following closing of the Senior Debt Loan. The issuance of the first tranche of 899,434 shares to Procon was completed today for gross proceeds of $3,597,736, bringing Procon's holding of Chieftain shares to just under 10%. The issuance of the second tranche of 1,575,566 shares and the Warrant for gross proceeds of $6,302,264 will be completed on receipt of TSX approval, expected within three weeks. Exercise of the Warrant is also subject to Chieftain shareholder approval. At Procon's option, one half of the shares issued on exercise of the Warrant will be flow-through shares.

Procon has agreed to certain standstill and resale limitations with respect to its shareholdings until December 31, 2013 (or the closing of the Senior Debt Loan, if earlier, in the case of the standstill). In addition, Procon has the right to participate in any future equity issuance by Chieftain until December 31, 2013 to maintain its fully-diluted equity interest at 30%.

Ed Yurkowski, CEO of Procon, will join the board of Chieftain. Procon has the right to appoint a second director on closing of the Senior Debt Loan.

Mr. Victor Wyprysky, President and CEO stated, "The proposed collaboration will be transformational for Chieftain and the Tulsequah project. The strategic partnership will bring critical construction and mining expertise, and provide a framework to provide for future financing to take the Tulsequah Chief to production. In addition, the investment by Procon provides funding for our 2013 budget, which includes optimization work to complete the feasibility study, on-site project activities, as well as corporate working capital."

Chieftain has received strategic advice on these transactions from Cutfield Freeman and Co. Ltd.

About Procon

Procon is a full service mining contractor, headquartered in Burnaby, British Columbia.

After giving effect to the first tranche of this private placement Procon advises that it will own 1,296,208 common shares of Chieftain, representing 9.9% of the issued and outstanding shares of Chieftain (including 396,774 Chieftain shares already owned by it). After giving effect to both tranches of this private placement Procon advises that it will own 2,871,774 common shares of Chieftain, representing approximately 19.7% of the issued and outstanding common shares of Chieftain and a warrant to acquire additional common shares to hold 30% of Chieftain calculated on a fully diluted basis (including the Chieftain shares already held by it).

Procon has agreed to acquire securities of Chieftain under the private placement for investment purposes and to facilitate the transactions contemplated by the MOU. The parties are relying upon the "accredited investor" exemption from the prospectus requirements of applicable securities laws in connection with the purchase of these securities.

About Chieftain Metals Inc.

Chieftain Metals Inc.'s principal business is the acquisition, exploration and development of mineral properties. Since incorporation, the Company's business has focused entirely on the acquisition, and thereafter the development, of the Tulsequah Chief Polymetallic Project, in north-western British Columbia, Canada. The Tulsequah Project consists of 38 mineral claims and Crown-grants covering approximately 14,220 hectares and covers two previously producing mines. For more information on the Tulsequah Project, please refer to the Company's NI 43-101 compliant technical reports, "Tulsequah Chief Deposit, Tulsequah Chief Property, Northern British Columbia" and "Big Bull Project, Tulsequah Chief Property, Technical Report, Northern British Columbia", each dated as of November 8, 2010 and available under the Company's profile on SEDAR (www.sedar.com).

Forward-Looking Information:

This press release includes certain "forward-looking statements" within the meaning of the Ontario Securities Act or other laws or regulations. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential mineralization, mineral resources or reserves, exploration results, future plans and objectives of Chieftain Metals Inc. are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

Contacts:
Chieftain Metals Inc.
Victor Wyprysky
President & CEO
(416) 479-5411
[email protected]

Chieftain Metals Inc.
Timothy Lee
Director, Investor Relations
(416) 479-5415
[email protected]

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