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Golden Phoenix and Scorpio Gold Agree to Form a Joint Venture to Restart Gold Production at Mineral Ridge

Friday, May 29th, 2009

SPARKS, Nev., May 28 /PRNewswire-FirstCall/ — Golden Phoenix Minerals, Inc.
(BULLETIN BOARD: GPXM) is pleased to announce that it has entered into a “Standstill” agreement with Scorpio Gold Corporation for the purpose of completing due diligence prior to entering into a definitive joint venture
(JV) between the parties and potentially restarting gold and silver production at the Mineral Ridge mine, located in Esmeralda County, Nevada.

The Standstill calls for an initial review period of 15 days for which Scorpio Gold has paid Golden Phoenix a nonrefundable payment of $50,000.
Under terms of the Standstill, Scorpio Gold may extend the due diligence period for a secondary review period of 45 days in exchange for an additional non-refundable payment of $200,000 to Golden Phoenix.

Historical records indicate that Mineral Ridge has produced over 700,000 ounces of gold from open pit and underground mining operations since its discovery in 1864. The property, comprising 65 patented and 130 unpatented mining claims covering 2,590 acres, is currently bonded and holds permits for commercial heap leach gold production. It features a well-developed infrastructure consisting of roadways, power grid, heap leach pad, crushing circuit, ADR plant, water supply, maintenance shop, refueling and storage facilities and administrative buildings. A pre-feasibility study is currently in process to re-establish compliant gold reserves, which were last reported by Behre Dolbear to be approximately 200,000 ounces when production at the mine was suspended and the project placed on idle status by Golden Phoenix in 2005.

If the parties enter into a definitive JV, it is anticipated that Scorpio Gold would acquire an initial 70% vested interest in Mineral Ridge through payment of cash and stock, and serve as operator of the mine. Golden Phoenix would retain a direct and undivided 30% interest in the property, and have an estimated 15% interest through its ownership of shares in Scorpio Gold. This would represent an aggregate 45% direct and indirect exposure to the upside of the project as it advances toward production.

Additionally, Scorpio Gold would have the right, but not the obligation, to increase its joint venture interest in the property by 10%, to a total of 80%, by providing all project financing needed to bring the mine into commercial production (“the earn-in”). Upon exercise of the earn-in option by Scorpio Gold, Golden Phoenix’ remaining 20% interest would be carried.

If conditions for an earn-in are satisfied, Scorpio Gold would have the right to acquire Golden Phoenix’ remaining 20% direct equity interest in the property for a price equal to 90% of its Net Asset Value at the time of purchase as determined by a mutually selected independent mining expert.
The purchase price would be payable by Scorpio Gold in cash, and the right to purchase would expire 24 months after execution of the definitive JV agreement.

If Scorpio Gold elects to proceed with the JV, the parties expect to formalize the final terms and conditions in a Rocky Mountain Form 5A Joint Venture Agreement. Prior to entering into any such agreement, Scorpio Gold has agreed to make advance payments to Golden Phoenix of $100,000 per month until such definitive agreement is signed. However, it should be noted that although a JV may be entered into on or prior to completion of due diligence, no assurances can be given that the Standstill will result in an eventual JV.

David A. Caldwell, CEO of Golden Phoenix commented, “We are pleased to be moving Mineral Ridge toward a properly capitalized restart of production with a joint venture partner that has a proven operational history and a strong track record for securing capital. Mineral Ridge represents the initial phase of an impressive plan for ramping Scorpio’s operational capacity. The structure of the proposed JV would preserve our shareholders’
exposure to Mineral Ridge with potentially minimal dilution. Further, we believe our direct ownership in Scorpio Gold would offer robust and diverse exposure to gold through their portfolio of development-stage projects, at a time when precious metals may be emerging as a market force.”

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