Desert Mountain Energy Enters Into Memorandum of Understanding with City of Flagstaff for Strategic Regional Development of Helium & Hydrocarbon Resources

Flagstaff is the largest city in Northern Arizona and serves as the cultural, educational, economic, governmental and community center of the region, as well as the county seat for Coconino County. It comprises over 64 square miles of prospective ground for helium and hydrocarbons at the base of the San Francisco Peaks. The Company presently controls leases aggregating approximately 18,234 acres in Coconino County in its Heliopolis Project. The Company’s aggregate holdings in Arizona’s Holbrook Basin are now approximately 39,742 acres.

The objective of the MOU is to encourage appropriate economic development in the region in order to create cash flow for Flagstaff and local communities, with a view toward furthering local education, job creation, increasing local and regional infrastructure and generally increasing the well-being of the people. At the same time, maintaining and preserving the ecosystem and beautiful Northern Arizona landscape and environment as a long-term legacy is a major priority. Hence, planned economic development will be mindful of preserving the environment and not impinging significantly on the rights and customs of local indigenous communities.

Flagstaff has agreed to work with the Company on a cooperative basis to encourage access to areas identified as highly prospective for helium and hydrocarbon resources so long as those areas are not in designated national or state parks or are otherwise recognized as highly sensitive. The parties agree to work together to limit the environmental impact of the work and production programs whilst allowing for the successful extraction of valuable resources. Flagstaff has granted the Company easements over certain of its ground in order to properly effectuate the Company’s programs, subject to restrictions.

According to Irwin Olian, CEO of the Company, “We are very gratified to have gained the support of the City of Flagstaff for our exploration and development programs in Coconino County, Arizona. We look forward to working with Flagstaff on a cooperative basis to develop plans for strategic development of helium and hydrocarbon resources in the region in a manner which creates a minimal footprint and is highly sensitive to environmental, cultural and community issues. At the same time, we believe Flagstaff can be the beneficiary of significant cash flow, job and infrastructure development from development of these resources. We view this as a “win-win” situation for all concerned.”