War Eagle Mining Company Inc.: Shareholder Update

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 17, 2011) - War Eagle Mining Company Inc. (TSX VENTURE:WAR) ("War Eagle" or the "Company") announces an update on its activities. Working with Andromeda Resources Inc. ("Andromeda") the Company was successful in obtaining a provisional offer of financing. The Company's board of directors concluded, however, that the terms of the financing were not fair to War Eagle's shareholders in view of the share consolidation demanded by the financing group, which was different from that proposed in the letter of intent with Andromeda. Consequently, on December 23, 2010, the Company received notice of termination of its letter of intent with Andromeda. The Company intends to dispose of its investment in Andromeda in due course and use the proceeds for general corporate purposes.

War Eagle continues to assess the feasibility of mining at its Tres Marias zinc-germanium-lead property and has also been modelling ore structures at its tantalum-tin-lithium MAC property. The Company has not reached a final decision regarding development plans for these properties, if any, but intends to do so as soon as practicable. The Company is considering an exploration program while it seeks a joint venture partner for its George's Lake gold property in Saskatchewan.

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.

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 exploration and 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.