DPM Enters Into Option Agreement With Queensland Minerals Ltd. Covering Balance of Serbian Properties

TORONTO, ONTARIO -- (Marketwire) -- 10/12/10 -- Dundee Precious Metals Inc. (TSX: DPM)(TSX: DPM.WT)(TSX: DPM.WT.A) ('DPM' or 'the Company') is pleased to announce it has entered into an option agreement with Queensland Minerals Ltd. ('QML'), an exploration company listed on the TSX Venture Exchange ('TSXV'), in respect of DPM's Serbian properties, namely its Surdulica molybdenum, Tulare copper/gold and the Karmanica gold projects directly held by its Serbian subsidiary, Dundee Moly Company d.o.o. ('Molyco'), (the 'Agreement'). Pursuant to the Agreement, QML is entitled, subject to the terms and conditions of the Agreement, to exercise its option to acquire 100% of DPM's interest in all of the issued and outstanding shares of Molyco upon: (i) QML having raised in one or more financings aggregate gross proceeds of $10 million ('Combined Financings'); (ii) QML having expended aggregate exploration expenditures of $3 million on the Serbian properties; and (iii) QML obtaining all requisite regulatory, shareholder, stock exchange or governmental authorizations and consents. The option is valid for one year from the date of the Agreement, October 4, 2010.

'This arrangement allows for the steady advancement of these exciting exploration properties by Queensland's experienced team while giving DPM and its shareholders the opportunity to continue to participate in their future success,' said Jonathan Goodman, President and CEO of DPM.

Upon exercise of the option under the Agreement, DPM will receive a number of units ('Vendor Units') in the capital of QML, such that, upon completion, DPM will hold 47.5% of the issued and outstanding capital of QML, post-closing on a non-diluted basis (subject to adjustments under certain circumstances). Each Vendor Unit will be comprised of one QML common share and that number of warrants (but not less than half a warrant per Vendor Unit) as is equal to the number of warrants forming part of units sold in various tranches of the Combined Financings on a pro rata basis of each of the tranches of the Combined Financings. Each whole warrant will be exercisable for one common share of QML for a period of not less than two years and at an exercise price not greater than $0.42 per warrant.

For further information, please refer to the news release issued by QML on October 12, 2010.

Dundee Precious Metals Inc. is a Canadian based, international mining company engaged in the acquisition, exploration, development, mining and processing of precious metals properties. The Company's operating interests include its 100% ownership of Chelopech Mining EAD, its principal asset being the Chelopech mine, a gold, copper, silver concentrates producer located east of Sofia, Bulgaria, a 100% ownership of Namibia Custom Smelters (Pty) Ltd., a concentrate processing facility located in Tsumeb, Namibia, and a 95% interest in Vatrin Investment Limited ('Vatrin'), a private entity which holds 100% of Deno Gold Mining Company CJSC, its principal asset being the Kapan mine, a gold, copper, zinc, silver concentrates producer located south east of the capital city of Yerevan in southern Armenia. DPM's interests also include a 100% interest in the Krumovgrad development stage gold property located in south eastern Bulgaria, near the town of Krumovgrad, through its wholly-owned subsidiary, Balkan Mineral and Mining EAD, and certain exploration and exploitation properties in Serbia.

FORWARD-LOOKING STATEMENTS

This news release may contain certain information that constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as 'plan,' 'expect,' 'project,' 'intend,' 'believe,' 'anticipate' 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 projected in the forward-looking statements. These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other geological data, fluctuating metal prices and other factors described above and in the Company's most recent annual information form under the heading 'Risk Factors' which has been filed electronically by means of the Canadian Securities Administrators' website located at www.sedar.com. The Company disclaims any obligation to update or revise any forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.

Contacts:

DUNDEE PRECIOUS METALS INC.

Stephanie E. Anderson

Executive Vice President & Chief Financial Officer

(416) 365-2852
sanderson@dundeeprecious.com


DUNDEE PRECIOUS METALS INC.

Lori Beak

Vice President, Investor Relations & Corporate Secretary

(416) 365-5165
lbeak@dundeeprecious.com