SOURCE: Drake Gold Resources, Inc.

October 16, 2006 13:53 ET

Drake Gold Announces Strategic Review of Potential Naked Short Selling Utilizing a Combination of Tools Including the ADP: NOBO and OBO Lists

SCOTTSDALE, AZ -- (MARKET WIRE) -- October 16, 2006 -- Drake Gold Resources, Inc. (PINKSHEETS: DKGR) is pleased to announce the company has been ordering a combination of tools to completely determine the extent of the potential naked short selling problem that is involved with Drake Gold Resources Inc. trading under the symbol of PINKSHEETS: DKGR.

The company has suspected a naked short selling attack on Drake Gold Resources Inc. since the previous company did a 1 for 10 forward-split in December of last year. Although only a minor amount of restricted shares have been issued, the company has experienced an abnormally large amount of trading relative to its low float over the past 10 months. This issue has become a growing problem in the stock markets, even more so in the small cap stocks where regulation is not enforced as strictly as big board companies residing on the NYSE and NASDAQ exchanges. The company has suspicions that this may be causing the difficulty the market has had in moving past 52-week highs.

THE PROCESS

The company will determine the possible short positions and naked short selling by utilizing a number of different tools. By comparing the actual free trading float as issued from the company since its inception against the float currently registered at the CEDE & CO, Drake will be able to determine any discrepancy and thereby determine how many shares are short against the company.

--  Request the complete shareholder list and CEDE & CO totals from
    Drake's transfer agent to reveal how many shares are shown as tradable on
    the street.
--  Request the compilation of the NOBO (Non-Objecting Beneficial Owners)
    list from ADP: Investor Communication Services™.
--  Request the Share Range Analysis from ADP: Investor Communication
    Services™, which will provide both NOBO and OBO shareholder totals.
--  Compare the tradable totals provided by CEDE & CO to the totals
    provided by the Share Range Analysis to determine the extent of the short
    position against Drake.
--  Take action such as share buyback and cancellation of shares to
    further reduce the tradable float.
    
THE SOLUTION

Determining the extent of the naked short problem will allow Drake Gold to assess the potential impact it has on the company's available resources and market cap as it relates to successfully achieving a cash flow positive entity using an asset driven, low-dilution business model.

The first step in combating a problem like this is to make the problem clear to the SEC and NASD. Shareholders are encouraged to research the issue and to voice their opinions to the commission.

--  Call the SEC's office of Investor Education and Assistance at 1-800-
    SEC-0330.
--  File complaints at http://www.sec.gov/complaints.shtml.
--  Send specific enforcement-related information to enforcement@sec.gov.
    
The second step is to prepare the market to squeeze out short positions that have been formed by these naked shorting activities. The company is already working on a plan that will tighten the free trading public float, which will remove stock and the amount of stock that may be purchased or borrowed against.

This can be accomplished by forming strategic alliances with accredited investors who can purchase securities directly from our market and then have them removed from CEDE & CO™ via reverse DWAC (Deposit/Withdrawal At Custodian). In addition the company can use upcoming cash flows to buy back shares and reverse DWAC them to the treasury.

Another strategy is to cancel shares available that are purchased or available for retirement. This will strengthen the market cap and potentially force a short position to have to cover. By also performing mandatory share certificate swabs with a new issuer's CUSIP number from the CUSIP Service Bureau™ (http://www.cusip.com) it is thought you can force naked and non-naked shorts to have to cover their positions.

Investors are encouraged to view additional information on naked short selling and a detailed description of how Drake Gold will obtain this information and what will be done to combat any naked short position on its website at http://www.drakegold.com/default.asp?Page=InvestorInfo_ShortSelling.

Interim CEO and President, Clayton Smith was quoted saying, "In my experience I have seen many potentially great companies held back from real achievement due to lack of education related to naked short selling. Drake's management team will not allow this to happen to DKGR. We are preparing an initiative to counter any naked short selling threat that continues to damage small cap companies."

Continuing to say, "I personally think this is a real opportunity for Drake Gold and its shareholders as it provides us a chance to strengthen the market and force buy-ins and short squeezes with upcoming acquisitions, placer production and our near term move to the OTCBB."

COMPANIES TAKING ACTION AGAINST NAKED SHORT SELLING

Here is a list of other companies that are taking action against naked short selling and its problems on the small cap markets or OTCBB and PINKSHEETS: American Way Business Development Corporation, Cal-Bay International, Inc., Equitable Mining Corp., EZ2companies, Inc., FSBO Media Holdings, Inc., Grand Entertainment & Music, Inc., InRob Ltd., KMA Global Solutions International, Inc., Maverick Energy Group Ltd, PayPro, Inc., Quantum Bit Induction Technology Inc., Quantech Electronics Corp., Silver Screen Studios, Inc., Tamija Gold & Diamond Exploration, Inc. and VoxBox World Telecom Inc.

Current and potential shareholders are encouraged to sign up for e-mail updates. The new Company website provides: short shelling issues, current news releases, reports, interviews, industry news and market related information. To sign up, click on the link located under the main menu at www.drakegold.com.

ABOUT DRAKE GOLD RESOURCES, INC.

Drake Gold Resources, Inc. (DKGR) is an early-stage mining and energy company that focuses on the exploration and production of precious metals and energy, such as petroleum and coal. Drake Gold has acquired the rights to the Jackpot Placer Project (JPP) in a southwestern section of Arizona. Estimated reserves on the JPP are 205,000 oz. Operations to recover gold are planned as soon as possible.

DKGR intends to be a diversified company by operating in the natural resource, petroleum, and alternative energy markets. As a result of ever-increasing scarcity, the market for natural resources is clamoring for diversification and innovative exploration tactics. Potential opportunities for diversification include gold, silver and other minerals in areas such as Arizona, Oregon, Alaska, British Columbia, the Yukon Territories, and other affiliated sections throughout gold districts in Northern Mexico. Drake Oil & Gas division has prime targets extending from South Texas to the Barnett Shale in Texas, from California to Louisiana.

This press release contains forward-looking statements involving risks and uncertainties including statements regarding the Company's future performance. Such statements are based on management's current expectations and are subject to certain factors, risks and uncertainties that may cause actual results, events and performance to differ materially from those referred to or implied by such statements. In addition, actual future results may differ materially from those anticipated, depending on a variety of factors which include, but are not limited to, our ability to leverage our technology, manage our growth, protect our intellectual property rights, attract new customers and general economic conditions affecting consumer spending, including uncertainties relating to global political conditions, such as terrorism. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not intend to update any of the forward-looking statements after the date of this release to conform these statements to actual results or to changes in its expectations, except as may be required by law.

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