NONDA and ANGUS - Frac Sand Projects Update

TSX-V: SKY

VANCOUVER, June 28, 2011 /PRNewswire/ - Stikine Energy Corp. (TSXV: SKY) ("Stikine" or the "Company") announces the following updates on work-in-progress for its two frac sand projects; Nonda and Angus.  These activities include substantial advancement of its pilot plant operations, exploration and geology, engineering and preliminary economic assessment, environmental baseline and community engagement activities.

NONDA Project
Pilot Plant
Sepro Services Corp. is currently installing the new attrition scrubbers at Stikine's frac sand pilot plant operation located in Abbotsford, BC.  The scrubbers are expected to provide greater efficiency than the original units and have produced excellent lab-scale results from this manufacturer, including; ISO/API crush fines contents of 7.8%, 7.2% and 7.6% for the Nonda -40+70 sand - consistently passing the suggested maximum value of 8% at 5,000 psi.

During the month of June 2011, the plant was readied to receive the new equipment in order to expedite commissioning of the entire process operation.  New pilot plant samples will be generated by the end of this week and sand testing will be completed by Stim-lab, as previously described.  After confirming initial results from the new plant and equipment, the remainder of the Nonda sample will be processed and tested.  Also, much of the sand already bagged at the site will be re-processed to generate as much API/ISO spec material as possible from the Nonda pilot plant operation.

Engineering and Preliminary Economic Assessment
The Company's engineering consultants, including; Wardrop (a Tetra Tech company) of Vancouver, BC and Sepro Services Corp. of Langley, BC, are preparing a preliminary economic assessment for the Nonda frac sand project.  The team includes mining, process, access, infrastructure, financial analysis and cost estimating professionals. Independent market assessments are also being completed to provide input to the size and pricing of delivered frac sand to northeast British Columbia, and broader markets in North America.  The various components to the study will be completed and reported in July 2011.

Environmental Baseline Studies and Permitting
Ecosystems North, a subsidiary of Wildlife Infometrics Inc. of Mackenzie, B.C., has commenced environmental assessment and baseline studies for the Nonda project. The fieldwork component to this has focused on aquatic, terrestrial, climate, noise, social and other aspects of the project environment.   Recent fieldwork includes; water quality and stream flow measurements, ongoing vegetation sampling, and the collection of climate data.  Because the Nonda site has had little prior assessment or review, Ecosystems North has also deployed 35 caribou collars to determine caribou range, conducted caribou calving surveys, established hair traps for grizzly/wolves/wolverines, and commenced a bird and butterfly inventory.

Stikine intends to file the Nonda Project Description and to begin the project permitting process shortly after receiving the engineering and design information from its engineers.  The Company has met with various government and regulatory staff to discuss the Nonda project prior to the submission of the Project Description to the BC Environmental Assessment Office.

Community Engagement
Stikine is committed to seeking First Nation input and advice into the Nonda Project and is working with First Nations on designing and planning the environmental, socio-economic, and cultural aspects of the Project.  The engagement will also help to identify and secure economic opportunities at an early stage so that communities benefit directly from the economic activity generated by the Project.

The Company has recently announced an agreement with the Kaska Dena Council and is in project discussions with the Fort Nelson First Nation and the Acho Dene Koe First Nation.  Stikine has also made presentations to the Northern Rockies Regional District located in Fort Nelson.

ANGUS Project
Pilot Plant
A small quantity of the Angus pilot plant sample was processed in June using the original attrition scrubbers installed at the plant.  It was observed that the operations successfully produced -20+40, -40+70 and 100 mesh sizes, samples of which were sent for testing at Stim-lab.  The initial results from that work indicate that the samples were approaching the recommended specifications for crush tests. Management has elected to wait to continue process trials for the Angus material using the new scrubbers, currently planned for July, rather than spend additional time and energy to optimize the original process equipment.

Diamond Drilling and Geology
Radius Drilling Corporation of Prince George has now completed 10 diamond drillholes (in excess of 1500m) of a planned 11-hole program.  The drill program is expected to be completed by June 30, 2011 and results will be used to generate a resource estimate for the Angus quartz-pure sandstone.

The drill program covers a strike length of approximately 2500 m by approximately 400 m wide with hole depths of up to 200m.  Core logging and sampling has been carried out concurrently with drilling and will also be completed shortly. Drilling has successfully intersected massive to thickly bedded quartz sandstone with occasional thin silty interbeds.  Surface mapping has also continued and will be used to update geological maps of rock types and structures in the project area.

Engineering and Scoping Level Studies
The Angus and Nonda projects have many similarities and the Company's engineering consultants are preparing scoping level studies for the project.  Similar teams include; mining, process, access, infrastructure, financial analysis and cost estimating professionals. Once a resource estimate has been completed (see diamond drilling above) the Scoping Level work will be transitioned into a Preliminary Economic Assessment.

Environmental Baseline Studies and Permitting
Ecosystems North has also commenced environmental assessment and baseline studies for the Angus project. Similar to Nonda, the work will focus on aquatic, terrestrial, climate, noise, social and other aspects of the project environment. Recent fieldwork includes; water quality and stream flow measurements, ongoing vegetation sampling, and the collection of climate data. The Angus site benefits from a substantial historical environmental record and database.  Caribou have been extirpated in the area according to the Provincial records and there is no requirement for studying that species in the project area.

Similar to the Company's approach for Nonda, Stikine intends to file the Angus Project Description and to begin the permitting process shortly after receiving the engineering and design information from its engineers.  The Company has met with various government and regulatory staff to discuss the Angus project prior to the submission of the Project Description to the BC Environmental Assessment Office.

Community Engagement
The Angus project is within the traditional territories of the McLeod Lake Indian Band, the West Moberly First Nations and is in close proximity to the neighboring Lheidli T'enneh Nation.  Stikine is committed to seeking their input and advice into designing and planning the environmental, socio-economic, and cultural aspects of the Angus Project and to identify and secure economic opportunities at an early stage so that communities benefit directly from the economic activity generated by the Project.  The Company is engaged in project discussions with all of the First Nations listed above.

Background
Stikine is focused on becoming a dominant frac sand supplier to British Columbia's developing shale gas industry. The Horn River, Liard and Montney Basins are large-scale gas plays led by major producers who currently rely on frac sand transported over great distances. Stikine's Nonda project is located in close proximity to the Horn River and Liard Basins and the Angus project lies in close proximity to the Montney Basin. The projects were identified in 2009 through a systematic search for raw material sources possessing the different frac sand sizes used in each basin and the potential for large-scale resource development.  Stikine is currently completing resource estimates, engineering and baseline environmental work in addition to community consultation for both projects.

Scott Broughton, P.Eng. is the qualified person as defined by national instrument 43-101 responsible for the preparation of this news release.

STIKINE ENERGY CORP.

"Scott Broughton"

Scott Broughton, P.Eng. - President and CEO

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that terms is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Stikine Energy Corp.