Source Gold (SRGL) Provides 3rd Party Gold Industry Outlook

TORONTO, ONTARIO--(Marketwire - Feb. 22, 2012) - Source Gold Corp. SRGL ("Source Gold" or "the Company") is pleased to provide an outlook of the gold industry in the context of the past week's perceived turbulence as well as the past three months' performance in the price of gold made by various industry analysts and experts.

"The past few months, and indeed, the last week, economic data from the world over has been overwhelming," stated Lauren Notar, CEO of Source Gold Corp. "With this compilation of third-party information we're hoping to help put the price of gold and the events of the past few months into context, for our shareholders, as well as anyone thinking about or involved in gold related investments. It's becoming apparent from the data, that not only is the price of gold going to continue to be affected by demand, but also by the amount of supply. And since supply side is something that is rarely discussed, we feel this information deserves discussion."

INCREASE IN DEMAND

As highlighted in a report by the World Gold Council Demand entitled Gold Demand and Trends, Third Quarter 2011, "Third quarter gold demand increased 6% year-on-year to 1,053.9 tonnes, worth a record US$57.7bn. A strong rise in investment demand drove the growth in overall demand, as investors across the globe sought wealth preservation, portfolio diversification and strong returns. Mine supply increased slightly, with mine production and recycling activity both contributing to the rise." (1)

SUPPLY SIDE CONCERNS

While the report noted that supply side risks have been mitigated by a reduction in the concentration of supply to any one region (thereby alleviating political risks as well), it also notes an increasing of exploration budgets without the accompanying mine finds. "Analysis by Metals Economics Group10 shows that the number of new finds in the latter half of the last decade was decreasing even as prices were rising rapidly. A study on the number of new finds by Chris Blain over 50 years from 1950 to 1997 documented a peak in the mid 1980's. One noticeable difference between the two is that as the price was rising in the late 1970s, the number of new finds was increasing. This, as noted, has not been the case over the last few years. The fall in finds cannot be attributed to a lack of exploration spending. In fact, this figure has been rising since 2002 and is now over four times higher than it was at the beginning of the decade, despite the global recession in 2008." (2)

APATHY IN GOLD MARKET SET UP FOR NEXT BULL RUN?

Last week, in the online edition of Forbes, Ken Morrison, founder and editor of online newsletter Morrison on the Markets was quoted as saying, "Futures got close enough to my $1,700 downside target on two recent occasions to call it a successful re-test of support. The chart pattern indicates the path of least resistance is now to the upside." (3) Morrison also noted that the high open interest for Comex gold is a sign of liquidity and growing open interest during a price trend can sometimes give a clue if the trend is sustainable in the short-term.

This sounded like an echo of what Tom Aspray wrote in the online edition of Forbes in January:

"The rather steep decline did not seem to drive headlines like it would have a few months ago...

This is offset by the recent report that the central banks are still wildly bullish on gold. They purchased 148.4 tons of gold in the third quarter, twice as much as they did in the second quarter.

The lack of reaction to gold's drop is what I would expect from a market that is in a consolidation phase. These are typically marked by sharp rallies and sharp declines. It has been almost three months since gold topped in early September, and many of those that were caught up in gold's powerful summer rally appear to have lost interest.

Apathy, of course, is what the gold market needs in order to form a base from which to launch its next rally. An increase in bearish sentiment would also help, but we may not get it. The long-term technical outlook does favor higher prices in 2012." (4)

WHAT IT MEANS FOR SHARES OF GOLD EXPLORERS

Christopher Barker, wrote in the Motley Fool, regarding China's Shandong Gold Group's $1 billion bid this week for Jaguar Mining (JAG), an emerging mid-cap gold producer, "If this offer carries a singular message to resource investors, it's that untapped mineral resources and reserves are just as critical to deriving fair value for mining shares as are the near-term cash flow and earnings metrics that typically drive near-term market sentiment. This won't be the last time we see a gold deal proposed at a 70%-or-higher premium; not only because competition for quality assets is likely to grow quite fierce, but also as a reflection of the market's longstanding failure to properly assess the value of mineral resource inventories within its process of price discovery. This is one reason I consider mining shares a far better bargain than bullion at this stage of the bull market cycle. Of course, forward price expectations for the underlying metals also come into play, and here again I perceive a market that has collectively and systemically failed to anticipate the most likely long-term price scenarios for precious metals.

I'll take it a step further and point out that even reliable exploration upside and exploration successes that have yet to find their way into a 43-101-compliant resource belong at the table among the many factors to consider when assessing valuations of mining stocks. The market, I maintain, has failed to adopt such a nuanced approach to the industry at large, and therein lies the opportunity for long-term investors to find ultra-deep value where those failures are most evident." (5)

"Source Gold already owns the Vulture Mine - at one time the largest producing gold mine in Arizona, shut down only to make way for the war effort - and a big stake in the Southern Beardmore Gold Camp in Western Ontario, Canada. We believe this puts Source on a strong footing to look for other land acquisitions as well as recruit qualified geologists experienced in our geographical areas of interest," stated Lauren.

ADDITIONAL INFORMATION

To learn more about the Vulture Mine project, the Southern Beardmore Area, the KRK West Project, the Company, and regular news updates, visit Source Gold Corp.'s official website: www.sourcegoldcorp.com.

About Source Gold Corp.

Source Gold Corp. is a publicly traded junior mineral exploration company trading under the symbol SRGL.OB. The Company's corporate philosophy is to build shareholder value through the exploration and development of high quality mining and exploration projects in Canada and the USA, concentrating on gold in the prolific Southern Beardmore Gold Camp in North Western Ontario, and expanding using advanced methods of exploration on the once prolific silver and gold producer, the Vulture Mine Site, in Wickenburg, Arizona.

ON BEHALF OF THE BOARD OF DIRECTORS,

Source Gold Corp.

Lauren Notar, CEO

SRGL

Legal Notice Regarding Forward-Looking Statements

Statements in this news release that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined, and assumptions of management. Forward looking statements are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "aims", "potential", "goal", "objective", "prospective", and similar expressions or that events or conditions "will", "would", "may", "can", "could" or "should" occur. Information concerning gold or other mineral reserve estimates may also be deemed to be forward looking statements, as it constitutes a prediction of what might be found to be present if and when a project is actually developed.
Actual results may differ materially from those currently anticipated due to a number of factors beyond the reasonable control of the Company. It is important to note that actual outcomes and the Company's actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially include misinterpretation of data, inaccurate estimates of gold or mineral deposits, the uncertainty of the requirements demanded by environmental agencies, the Company's ability to raise financing for operations, breach by parties with whom we have contracted, inability to maintain qualified employees or consultants because of compensation or other issues, competition for equipment, inability to obtain drilling permits, potential delays or obstacles in drilling operations and interpreting data, the likelihood that no commercial quantities of gold or minerals are found or recoverable, and our ability to participate in the exploration of, and successful completion of development programs on all aforementioned prospects and leases. Additional information on risks for the Company can be found in filings on Edgar of other junior mineral exploration companies with the US Securities and Exchange Commission. This announcement may also contain information about adjacent properties on which we have no right to explore or mine. We advise U.S. investors that the SEC's mining guidelines strictly prohibit information of this type in documents filed with the SEC. U.S. investors are cautioned that mineral deposits on adjacent properties are not indicative of mineral deposits on our properties.

SOURCES:

(1) World Gold Council, World Demand Trends, Third Quarter 2011, November 2011

(2) Ibid.

(3) http://www.forbes.com/sites/kitconews/2012/02/17/metals-outlook-higher-prices-expected-next-week-but-outcome-hinges-on-eurogroup-meeting/2/

(4) http://www.forbes.com/sites/tomaspray/2011/11/18/gold-buy-sell-or-hold/

(5) http://www.fool.com/investing/general/2011/11/17/the-remaining-bargains-in-gold.aspx