PINNACLE TO PURCHASE EXPLORATION LICENSE IN YUNNAN PRIVATE PLACEMENT FINANCING FOR $1,137,500 ARRANGED
Pinnacle Mines Ltd. is pleased to announce that it has signed a Letter Agreement with Yunnan Geology and Mineral Resources Co., Ltd. (“YGM”) to acquire a 100% interest in the Yang Wen Chong (‘YWC”) gold property, located in the highly prospective southeast region of Yunnan Province, PRC.
The YWC property is a 51.2 square kilometre mineral exploration license located in Fu Lin County, Yunnan Province, PRC. During the period 1996-2000, YWC was part of a joint venture between YGM and BHP Exploration. Limited work carried out by the joint venture and current field work by YGM, has identified an estimated mineral resource of 10-11 tonnes of gold. To date, 12 holes have been drilled on the property, numerous trenches, test pits and tunneling have been completed. One hole is reported by the BHP/Yunnan Geological team to have a gold mineralized intersection of 1.63 grams/tonne (g/t) over 83 metres. In addition, significant mineralization has been identified over a length of 3 kilometres in the contact/alteration zone between a Devonian siltstone/mudstone and a Cambrian Limestone. Individual trenches chip sampled have widths and grades varying from 3.25 g/t over 10.63 metres to 3.15 g/t over 98.15 metres. The mineralization is open along strike and dip. The contact zone is well defined. These exploration results are not compliant with National Instrument 43-101, and have been obtained from BHP Exploration reports on YWC. Pinnacle management believes the results and calculations were generated using accepted and proven geologic and engineering practices and are reliable and relevant, however, Pinnacle will soon begin an exploration program to bring the current information to National Instrument 43-101 standards. Until such time, the potential quantity and grade of any mineral resource on YWC is conceptual in nature and there can be no assurances that further exploration will confirm the existence of any mineral resource on the property.
Pursuant to the terms of the Letter Agreement, a formal purchase agreement will be executed prior to May 9, 2004. As consideration for YWC, Pinnacle will pay YGM 27,000,000 RMB (CDN $4,437,000) as follows: 270,000 RMB on signing the Purchase Agreement; 13,230,000 RMB on the latter of four months from the signing of the Purchase Agreement or on receipt of regulatory approval; 5,400,000 RMB within twelve months; and 8,100,000 RMB within two years of signing the Purchase Agreement. Subject to regulatory approval, Pinnacle has the option to pay for up to 50% of the total purchase price by way of shares. YGM has agreed to transfer title to YWC upon completion of 70% of the required payments. In addition, Pinnacle has agreed to pay YGM 500,000 RMB for every tonne of gold that is added to the resource currently outlined on YWC, prior to Pinnacle obtaining the property title. YGM is currently trenching and pit testing many of the mineralized zones on the property. In connection with the purchase of YWC, Pinnacle has agreed to pay a finder’s fee of up to 700,000 shares.
Pinnacle has agreed with certain investors, subject to regulatory approval, to complete a private placement of up to 1.75 million units in the Company at $0.65 per unit, for total proceeds of $1,137,500, each unit consisting of one common share and one share purchase warrant. The warrants are exercisable by the holder on the basis of two warrants and $0.80 for one common share for a period of two years. Proceeds from the financing will be used to cover a portion of the property payments for YWC, to evaluate other mining and exploration prospects in China and for general working capital. A finder’s fee of $25,000 will be paid in conjunction with a portion of the financing.
On behalf of the Board
“Andrew W. Bowering” “Paul F. Saxton”
President Chairman
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