Yellowhead Mining Inc. Announces the Granting of Stock Options

VANCOUVER, Jan. 18, 2012 - Yellowhead Mining Inc. today announced that, pursuant to its stock option plan and subject to regulatory approval, it has granted 200,000 options to Mr. Saurabh Handa who was recently appointed Chief Financial Officer of the Company. The stock options have an exercise price of $1.25 per share, will vest quarterly over a period of three years and are exercisable for a period of five years.


About Yellowhead Mining Inc. and the Harper Creek Project

The Harper Creek Project is a copper-gold-silver volcanogenic sulphide deposit with a Measured and Indicated Resource of 563.2 million tonnes grading 0.31% Cu (3.6 billion pounds of copper) plus 0.032 g/t gold and 1.08 g/t silver, plus an Inferred Resource of 117 million tonnes grading 0.29% Cu (0.7 billion pounds of copper). The Harper Creek Project is located in south-central British Columbia, approximately 150 kilometers by highway north of Kamloops.  Yellowhead has a 100% interest in the Harper Creek development project((1) ). A Preliminary Economic Assessment Report ('PEA'), which demonstrated the technical and economic viability of the Project, was completed at the end of March and filed on SEDAR on April 1, 2011 and can be viewed on www.sedar.com. The PEA demonstrated a 22 year project life at a milling rate of 70,000 tonnes per day, a planned production of 149 million lbs. copper in concentrate per annum for years one to eight, (132Mlb/y LOM), a life-of-mine stripping ratio 0.88:1, a pre-tax IRR of 19.8% with a base case copper price of US$2.66/lb., an NPV8 of US$598 million and a capital cost of C$759 million in Q4 2010 dollars, including contingency with a 4 year payback((2)).

(1) (Subject to the payment of a 3% NSR royalty capped at $2.5 million, adjusted for inflation and an additional 2.5% NSR royalty on an estimated 3.3 million tonnes of ore which is expected to be mined beginning in year nine within the NI 43-101 resource.)

(2) Mineral resources are not mineral reserves and do not have demonstrated economic viability.


FORWARD-LOOKING STATEMENTS AND CAUTIONARY DISCLAIMER

Except for statements of historical fact, this news release contains certain 'forward-looking information' within the meaning of applicable securities laws. Forward-looking information is frequently characterized by words such as 'plan', 'expect', 'project', 'intend', 'believe', 'anticipate', 'estimate' and other similar words, or statements that certain events or conditions 'may' or 'will' occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements, including, among others, the accuracy of mineral grades and related assumptions, inherent operating risks, planned expenditures, proposed exploration and development at the Harper Creek Project, operating and economic aspects of the Harper Creek Project, as well as those risk factors identified in the Company's Annual Information Form filed under the Company's SEDAR profile. Yellowhead undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Yellowhead.

This news release includes disclosure of scientific and technical information, as well as information in relation to the calculation of re-sources, with respect to the Harper Creek Project. Yellowhead's disclosure of mineral resource information is governed by National Instrument 43-101 - Standards of Disclosure for Mineral Projects ('NI 43-101') under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the 'CIM') Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as may be amended from time to time by the CIM ('CIM Standards'). There can be no assurance that mineral resources will ultimately be converted into mineral reserves. Mineral resources are not mineral reserves and do not have demonstrated economic viability. This news release uses the terms 'measured', 'indicated' and 'inferred' resources. U.S. persons are advised that while such terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. 'Inferred Resources' have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resources will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred resources may not form the basis of feasibility or other economic studies. U.S. persons are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves. U.S. persons are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.

Neither the TSX Venture Exchange Inc. 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.



CONTACT:

Yellowhead Mining Inc.
Ronald Handford, Executive Vice President, Corporate Development
rhandford@yellowheadmining.com
Tel. 604.681.1709 ext. 204
Website: www.yellowheadmining.com
Twitter: http://twitter.com/YMI_Mining