Salmon River Resources Ltd. (Salmon River or the Company, TSX-V:SAL) is pleased to announce that it will undertake a non-brokered private placement of up to 3,437,500 common shares at CDN$0.32 per common share for gross proceeds of up to CDN$1,100,000 (the Private Placement).

The net proceeds of the Private Placement will be used entirely for the payment of the initial Pre-Completion Payment (described below). In connection with the Private Placement, Salmon River may pay finders' fees to certain finders, including cash commissions equal to up to 8% of the proceeds from the sale of the common shares and options to acquire that number of common shares equal to up to 8% of the number of common shares sold to subscribers introduced to the Company by such finders. The common shares issued in the Private Placement will be subject to a four-month hold period in accordance with the policies of the TSX Venture Exchange and applicable securities legislation. Insiders in the Company have indicated their intention to acquire an aggregate of 25% of the Private Placement, consistent with the maximum allowable under TSX Venture Exchange policy. The Private Placement remains subject to the approval of the TSX Venture Exchange.

Background

On June 16, 2010, Salmon River, Treppo Grande Iron Pty Ltd. (Treppo Grande) and Melville Raymond Dalla-Costa (the Seller) entered into an option agreement (the Option Agreement) pursuant to which the Company was granted an option to acquire a 100% interest in all of the issued and outstanding share capital of Treppo Grande (the Option). All issued and outstanding shares of Treppo Grande are held by the Seller. Treppo Grande is the holder of five tenements in the Yilgarn Craton of southwestern Australia, including the highly prospective Mt. Manning iron ore prospects (the Tenements) (see Exploration Updates of 26 August 2010, 2 August 2011, 1 September 2011 and 11 October 2011).

The Option Agreement provided that in order to exercise the Option the Company was required to pay the Seller a minimum of A$100,000,000 for the Treppo Grande shares. Under the terms of the Option Agreement, the purchase price was subject adjustment based upon the identification of iron ore resource on the Tenements. The Company was required to exercise the Option Agreement by no later than December 16, 2011 (See the full text of the Option Agreement filed on SEDAR on December 16, 2011).

On November 4, 2011, Salmon River announced that it entered into a non-binding Memorandum of Understanding (the MOU) with General Steel Holdings Inc. (NYSE:GSH) (GSH), for itself and on behalf of certain subsidiaries and affiliates (GSH Group) regarding rights to (i) purchase part of any future iron ore production from properties currently under the Option (ii) acquire 60 million common shares at C$.50 per share for an aggregate investment of C$30million and (iii) provide assistance to Salmon River in raising an additional C$80 million through an offering of Convertible Debentures by acquiring a minimum of C$30 million of the Convertible Debentures. In addition, GSH further indicated that it is willing to fund future capital expenditures and other strategic Initiatives of the Treppo Grande iron ore project (the Treppo Grande Project) to a maximum amount of a further C$200 million. The MOU also provides that, in consideration of the GSH Group funding such future capital requirements as well as providing project management and co-ordination services to the Company, they would receive an amount of up to 51% profit interests in the Treppo Grande Project, on terms to be mutually agreed in the final definitive agreements. Readers should refer to the full text of the press release of the Company dated November 4, 2011 for more information on the MOU.

On November 4, 2011, Salmon River also announced a part & parcel private placement for up to $1,500,000 (up to 5,000,000 common shares at $0.30 per share) and subsequently increased the offering to $2,100,000 (up to 7,000,000 common shares at $0.30 per share) (the Part & Parcel Private Placement). Salmon River closed the Part & Parcel Private Placement on December 14, 2011, issuing a total of 4,800,006 common shares for gross proceeds of $1,440,000. The Company considers that such funding is sufficient to cover its costs involved in closing of the transaction with GSH Group.

On December 9, 2011, the Company exercised the Option and concurrently entered into an amendment to the Option Agreement (the Option Amendment) with the Seller which provided, among other things, an extension to the time for the closing of the purchase of the shares of Treppo Grande to April 30, 2012. Pursuant to the Option Amendment, the Company is required pay to the Seller A$1,000,000 each month after the execution of the amendment until the Completion Date (the Pre-Completion Payments). The first Pre-Completion Payment is due on December 30, 2011. On the Completion Date, the Company will pay to the Seller the Purchase Price (which is A$100,000,000 and is not subject to any adjustment) less all amounts paid as Pre-Completion Payments. If the Company does not complete the payment of all of the Purchase Price by April 30, 2012, the Pre-Completion Payments will be retained by the Seller. In addition, pursuant to the Option Amendment, Salmon River will grant to the Seller a royalty of A$0.50 per tonne of iron ore produced from the Tenement area from the commencement of first commercial mining on the Tenements. Further details of the Option Amendment are available in a press release dated December 15, 2011. The full text of the Option Amendment is also available on SEDAR (filed on December 16, 2011).

Salmon River is currently negotiating the terms of a binding investment framework agreement with GSH (the Framework Agreement). The Framework Agreement will set out the material terms and conditions of certain definitive agreements to be entered into pursuant to the MOU and is intended by the parties to be a legally binding agreement. The Company expects that the Framework Agreement will be entered into in January 2012. The Framework Agreement will be subject to approval of the TSX Venture Exchange and may be subject to approval by the shareholders of the Company.

Mount Manning and Mount Manning North Properties

The Mount Manning and Mount Manning North properties comprise five tenements in the Yilgarn Province of South Western Australia approximately 210 km northwest of Kalgoorlie. In November, 2010, the Company filed on SEDAR a technical report on four of the tenements, the Barlee Project (prospective for iron ore), the Mount Manning Project (consisting of one tenement and one tenement application which are prospective for iron ore), and the Riverina Property (prospective for nickel) dated August 10, 2010 and entitled Geological Evaluation, Mount Manning And Barlee Iron Prospects And Riverina Nickel Prospect Southern Cross And Eastern Goldfields Provinces Western Australia. The Company has provided a number of Exploration Updates on 26 August 2010, 2 August 2011, 1 September 2011 and 11 October 2011 outlining developments in its exploration programmes. On December 20, 2011 the Company announced a resource estimate on the Mount Manning Property (See the Company's news release dated December 20, 2011).

Use of Proceeds of Private Placement

The use of proceeds for the Private Placement and payment of the Pre-Completion Payments is subject to shareholder approval, which the Company intends to seek through the written consent of shareholders holding a majority of the common shares of the Company. As noted, the net proceeds of the Private Placement will be used entirely for the payment of the initial Pre-Completion Payment. The Company expects to make further arrangements for payment of the remaining Pre-Completion Payments and will make further announcements in this regard once such arrangements have been finalized.

About Salmon River Resources Limited (TSXv: SAL)

Salmon River Resources Limited is a mineral exploration company engaged in the exploration for and development of commercial deposits of iron ore in Western Australia. It exercised its option to acquire five tenements in the Yilgarn region of Western Australia including the Treppo Grande iron ore project, approximately 210 kilometres northwest of Kalgoorlie, comprising two tenements covering Mt Manning (298 km2) and the Barlee tenement (98.7 km2). Completion of the acquisition of the tenements is subject to certain conditions, including payment of A$100 million to the optionor. Salmon River believes the Treppo Grande project has the potential to be a world-class iron ore deposit with early development potential. Salmon River has recently announced the signing of a Memorandum of Understanding with General Steel Holdings Inc. (General Steel, NYSE:GSI) providing for substantial future financing, off-take arrangements and the provision of management oversight (see press release dated 4 November 2011). The shares of Salmon River are listed on the TSX Venture Exchange under the symbol SAL.

On behalf of the Board of Directors of

SALMON RIVER RESOURCES LTD.

J.G. Stewart

J.G. Stewart, President

For further information, please contact:

Salmon River Resources Ltd.
Jim Stewart
President
Tel : +1 (604) 633.4290 (Vancouver)
eMail: jstewart@salmonriverresources.com.au

or

Salmon River Resources Ltd.
Garry Stein
Director
Tel: +852 9858.0029 (Hong Kong)
eMail: gstein@salmonriverresources.com.au

Forward-Looking Statements: This press release contains forward-looking statements that are based on the beliefs of management and reflect Salmon River's current expectations. The forward-looking statements in this press release includes information relating to the intended Private Placement and use of proceeds, the intended commitments by GS Group, the Company's intention to fund certain development expenses and to fund development of the Treppo Grande Project. The forward-looking statements are based on certain assumptions, which could change materially in the future, including the assumption that the non-binding MOU will lead to definitive agreements, that the transactions contemplated in the MOU will be completed, and that Salmon River will exercise its rights under the Treppo Grande Option. By their nature, forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include the risk that the MOU may be terminated, that the transactions contemplated in the MOU may not result in a binding agreement and any agreements may have terms and conditions different from those contemplated in the MOU, that the Investment Framework Agreement may not be concluded with GSH, that any agreement may not be completed, that GS Group may not invest a portion, or any of the amount contemplated, that the Company may not complete the intended financings, including the Private Placement, and that the Company may not exercise its rights under the Treppo Grande Option. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, investors should not place undue reliance on forward-looking information. Forward-looking information is provided as of the date of this press release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as required in accordance with applicable laws.

There is no guarantee that Salmon River will complete the option exercise before April 30, 2012, or at all. The completion of the option exercise is subject to the satisfaction of certain regulatory requirements and other conditions. In addition, the Company will have to complete additional financings for approximately A$110,000,000. There can be no certainty, nor can the Company provide any assurance, that these conditions will be satisfied or, if satisfied, when they will be satisfied, or if the additional financings will be completed. The Option Agreement represents substantially all of the Company's assets, and if the Company is unable to complete the option exercise, shareholders of Salmon River will have suffered significant dilution without the Company having received the Treppo Grande shares or acquired the Mount Manning and Mount Manning North Properties.

NEITHER 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.