War Eagle Announces Reverse Take Over

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 08/16/10 -- War Eagle Mining Company Inc. (TSX VENTURE: WAR) ('War Eagle' or the 'Company') has entered into a letter of intent dated August 16, 2010 with Andromeda Resources Inc. ('Andromeda'), which is a private company incorporated under the laws of Ontario, pursuant to which the shareholders of Andromeda will exchange all of the issued and outstanding common shares of Andromeda for common shares of War Eagle (the 'RTO') such that the current shareholders of War Eagle will own approximately 41% of the outstanding shares of the combined company resulting from the RTO (the 'Resulting Issuer') and shareholders of Andromeda (other than War Eagle) will own the remaining 59% of the Resulting Issuer. This transaction is based on a deemed valuation of the Resulting Issuer of approximately C$12 million at an estimated price of C$0.65 per Resulting Issuer share post-RTO giving effect to a proposed ten for one share consolidation of War Eagle (and a current pre-consolidation price of War Eagle's shares of C$0.065). The holders of convertible securities of War Eagle will receive equivalent securities in the Resulting Issuer, adjusted as required, to account for the changes to the share capital resulting from the RTO.

Completion of the transaction is conditional upon, among other things, receipt of all required regulatory and shareholder approvals, the negotiation and execution of definitive documentation and the completion of a financing to raise gross proceeds of at least C$5,000,000. Terms of this financing have not yet been determined.

Andromeda, which is at arm's length from War Eagle, has negotiated an agreement to purchase the Terrazas zinc-copper property ('Terrazas') for cash consideration of US$5,000,000 payable in installments over two years, of which Andromeda has paid US$1,000,000, and a 2.0% NSR, sliding up to 3.0% at $2.00/lb zinc. The Terrazas zinc-copper property is located near Chihuahua City in Mexico.

The Terrazas property was previously optioned to Constellation Copper Corporation ('Constellation'), but ownership reverted to the underlying owner in 2008. Constellation was a publicly listed company on the TSX. Andromeda plans to expand on Constellation's work, which Andromeda considers to be of high quality. Andromeda expects, over a period of two to four years, to generate a feasibility study and to advance the project toward production. All mineralization on the Terrazas property is almost entirely comprised of oxide minerals of zinc and copper. In addition to the mineralization at Terrazas, there are several oxide zinc and smelter slag resources in Chihuahua and neighbouring states that could benefit from the presence of a treatment plant at Terrazas, not the least of which is War Eagle's Tres Marias project. Compatibility of other ores with the proposed process at Terrazas has not yet been examined. The project site, close to the city of Chihuahua, has extensive infrastructure in place including railway, power, water and a nearby four lane-highway. It is expected that this will allow for the low cost transport to site of other ores and slags together with the raw materials for the possible manufacture of low cost acid on site.

The synergies between Andromeda and War Eagle are expected to provide a strong base for developing the Resulting Issuer into an emerging zinc producer. The management and board of the Resulting Issuer will be comprised of current members of management and the boards of both Andromeda and War Eagle which represent many years of Mexico-specific exploration and mine development experience. It is expected that Chris Davie, the current Chief Executive Officer of Andromeda, will become the Chief Executive Officer of the Resulting Issuer and that the Resulting Issuer will have a board of directors comprised of five members, two being nominees of War Eagle and three being nominees of Andromeda.

Completion of the transaction is subject to a number of conditions, including TSX Venture Exchange (the 'Exchange') acceptance and disinterested shareholder approval. The transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the transaction, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the securities of War Eagle should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

About War Eagle

War Eagle Mining Company Inc. is an experienced mineral exploration company publicly traded since 1987 and listed on the TSX Venture Exchange under the symbol WAR. The Company is in the exploration phase of the Tres Marias zinc-lead project in Mexico. Tres Marias is a former producing high-grade zinc and germanium mine that first produced ore in 1949.

This news release was prepared by management of War Eagle, which takes full responsibility for its contents. Legal Notice Regarding Forward Looking Statements

This disclosure contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control including: the impact of general economic conditions in the areas in which the Company operates, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with mining operations, therefore the Company's future results, performance or achievements could differ materially from those expressed in these forward-looking statements will transpire. All statements included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements include references to a future drill program and related plans. These statements are based on assumptions made by the company based on its experience, perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.

Neither the 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

Contacts:

War Eagle Mining Company Inc.

Simon Anderson

President

604-681-7010
info@wareaglemining.com
www.wareaglemining.com