Pinnacle Closes Agreement to Acquire up to 80% of the Silver Coin Gold Deposit near Stewart, B.C.

VANCOUVER, July 20 /PRNewswire-FirstCall/ – Pinnacle Mines Ltd. (TSX-V: PNL, “Pinnacle”) and Mountain Boy Minerals Ltd. (TSX-V: MTB, “Mountain Boy”) have finalized a formal agreement whereby Pinnacle has increased its interest in the Silver Coin gold deposit to 70% for $440,000 cash. Pinnacle can further increase its interest in Silver Coin to 80% after spending an additional $4,000,000 on exploration expenditures advancing the project.

As part of the agreement, Pinnacle was also granted the exclusive right to manage the project through feasibility as well as being granted by Mountain Boy an irrevocable right to negotiate on behalf of the parties the 100% sale of the property’s interests to a major should this option present itself and prove beneficial to the companies.

The acquisition by Pinnacle represents a significant turning point in the evolution of the Silver Coin project, which, since its initial discovery, has had diversified ownership. In 2008, Pinnacle took the first step in consolidating the property by acquiring Tenajon Resource Corp.’s interest in the project. Pinnacle management feel the further consolidation of ownership not only provides Pinnacle with more flexibility in orchestrating the project’s advancement, but it also sends a clear message to the market that one company can now determine the future and direction of the project.

Background

The Silver Coin project is located in the emerging Stewart District where numerous companies are currently exploring for, and drilling, for precious and base metals deposits. A long history of exploration at Silver Coin has seen various drill and underground exploration campaigns, including the 2008 drill program which consisted of 88 surface diamond drill holes totaling 12,200 meters.

The results from the 2008 program continue to build on the size and significance of earlier Silver Coin drill results. Drilled widths of up to 54.87 meters grading 4.45 gpt gold and 77.72 meters grading 2.41 gold are included in the results. Much higher grades were intersected over narrower widths such as: 4.57 meters grading 15.57 gpt gold; 1.52 meters grading 15.01 gpt gold; 6.09 meters grading 9.0 gpt gold; 12.19 meters grading 12.66 gpt gold; 42.37 meter grading 6.26 gpt gold; 45.72 meters grading 3.78 gpt gold, etc.

Silver Coin is 13 km north of the historic Silbak-Premier Mine which produced approximately 1.8 – 2.0 million ounces of gold, is crossed by the Granduc Road, and is in an excellent situation for an open pit operation. An NI 43-101 Resource Calculation carried out for Silver Coin in 2007 by Mine Fill Services (which did not include the latest 88 holes) showed a resource of 423,002 ounces of gold in the Measured and Indicated category (9.7 million tonnes grading 1.355 gpt) plus 947,988 ounces of gold in the Inferred category (15.95 million tonnes grading 1.849 gpt) for a total of 1.37 million ounces of gold before considering the base metals credits.

Current Work

Currently, detailed analysis of the 2008 drill results are being analyzed and incorporated into a new resource calculation. The geological consulting firm Bitteroot LLP of Denver, Colorado, is working along side Pinnacle geologists to incorporate all geological data towards a new geological model and resource calculation incorporating all of the drill holes and geochemical data (over 800 holes). Concurrently, Snowden Consultants is assisting in QA/QP and geo-statistical tasks, while F.W. Wright Consulting Inc. is continuing with metallurgical studies (for which initial flotation recoveries averaged 94% for gold in test work completed to date). The results of these studies, which will also include first-pass environmental assessments, will be compiled in a pre-scoping study due to be completed within the next quarter. Once completed, more detailed economic assessments including capital costs estimates, and preliminary engineering studies, are planned to take the deposit closer to eventual production.

This press release was reviewed by Lawrence A. Dick, Ph.D., P.Geo, a Director of Pinnacle, who is recognized as a Qualified Person under the guidelines of National Instrument 43-101. All aforementioned resource estimates were measured at a cut-off grade of 0.75 gpt. Metallurgical recoveries and net smelter returns were assumed to be 100%.

    On Behalf of the Board:

    Lawrence A. Dick, Ph.D., P.Geo

    President & CEO

FORWARD LOOKING STATEMENTS: This document includes forward-looking statements as well as historical information. Forward-looking statements include, but are not limited to, the continued advancement of the company’s general business development, research development and the company’s development of mineral exploration projects. When used in this document, the words “anticipate”, “believe”, “estimate”, “expect”, “intent”, “may”, “project”, “plan”, “should” and similar expressions may identify forward-looking statements. Although Pinnacle Mines Ltd. believes that their expectations reflected in these forward looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include the potential that fluctuations in the marketplace for the sale of minerals, the inability to implement corporate strategies, the ability to obtain financing and other risks disclosed in our filings made with Canadian Securities Regulators.

    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

SOURCE Pinnacle Mines Ltd.