SOURCE: Pele Mountain Resources Inc.

August 30, 2006 09:42 ET

Pele Mountain Reports Wawa Area Diamond Sampling Results

Talisker Dike Returns Encouraging Diamond Quality and Size Distribution; Festival Bulk Samples All Return Commercial-Sized Diamonds

TORONTO -- (MARKET WIRE) -- August 30, 2006 -- Pele Mountain Resources Inc. (TSX-V: GEM) ("Pele" or the "Company") today announced results from diamond sampling programs at its Highland and Festival projects near Wawa in northern Ontario. Pele controls more than 250 square-kilometres of mining claims and mineral rights interests in the Wawa area, where it has made numerous diamond discoveries over the last several years, and continues to identify new bedrock sources of commercial size and gem quality diamonds.

Pele President and CEO Al Shefsky stated, "These results again demonstrate the widespread presence of commercial size diamonds in a variety of host lithologies north of Wawa. Clearly, our Talisker dike has exciting exploration potential. The high quality and encouraging size distribution of the diamonds recovered have only increased both our enthusiasm for this discovery and our determination to pursue similar targets in the area. Although the Festival samples did not provide the grade and size distribution breakthroughs that we had sought, the property remains an integral part of our regional diamond exploration plans. The Festival property hosts near-surface diamond occurrences along a 5 kilometre long horizon that have previously produced the area's largest diamonds from bedrock. Its close proximity to Highland provides the ideal location for both large Archean-aged deposits as well as the younger kimberlite occurrences."

Mr. Shefsky continued, "We are now reviewing our opportunities for advancing a comprehensive exploration strategy on all of our Wawa area diamond properties. We firmly believe that the area has outstanding potential to host economic diamond deposits and as the area's largest holder of mining claims and mineral rights interests, we are well-positioned to lead the quest for their discovery and development."

Highland Project -- Drill Samples from Talisker Mica Kimberlite Dike

Pele Gold recently discovered a mica kimberlite dike (the Talisker Diamond Occurrence) at Highland that has been drill-tested along a strike length of more than 1,100 metres, to a depth of over 100 metres, across widths of between 4 to 10 metres, and is open in all directions. The Highland Project is 100-percent owned by Pele Gold Corporation, a wholly owned subsidiary of the Company.

A recently acquired sample weighing 1,311 kilograms of HQ-size drill core was processed by Saskatchewan Research Council (SRC) laboratory by caustic digestion to recover diamonds greater than 425-micron square mesh sieve size. A total of 34 diamonds were recovered from the sample, weighing a combined total of 0.15 carats, and described as primarily colorless or white octahedrons as indicated in the table below.

http://www.usetdas.com/maps/pelemountain/TablesAug30-06.pdf

mg = 29.050

Festival Project -- Bulk Samples from Cristal and Deutz Occurrences

A 500-tonne bulk sample program, consisting of a 300-tonne sample from the Cristal occurrence and two 100-tonne samples from the Deutz occurrence (one each from Upper and Lower stratigraphic layers), was conducted at Festival in late-2005. Cristal was the site of past sampling efforts that recovered a 0.72-carat gem quality diamond. Deutz was the site of a drill program that confirmed subsurface continuity of Festival's 1500 metre by 800 metre South Zone. Goldcorp Inc. (TSX: G) (NYSE: GG) has funded sufficient work to earn a 50-percent interest in Festival from Pele, and has the right to increase the interest to 60-percent by funding a further $1.0-million to bring its cumulative funded exploration expenditures to $2.5 million. Goldcorp will elect whether to pursue the additional 10% interest by the earlier of year-end 2006 or sixty days following receipt of a project technical report for the bulk sampling program completed to the satisfaction of the joint management committee.

Results from the Festival bulk sample program again confirm the presence of commercial size, gem quality diamonds within the targeted ultramafic volcanics across an extensive area. Results from Cristal were similar to previous bulk sample data while the Deutz 1 (Upper) and Deutz 2 (Lower) samples indicate for the first time that the South Zone ultramafic mass flow units also contain commercial size, gem quality diamonds.

The 500 tonnes of bulk sample material were processed by DRA Americas of Lakefield, Ontario ("DRA") using magnetic separation followed by dense media treatment of the non magnetic concentrates to recover diamonds greater than 800-micron square mesh sieve size. Results are summarized as follows:

* From the 300-tonne Cristal sample, 648 diamonds were recovered weighing a combined 7.84 carats and with the largest diamond remaining on the 1.70 mm screen.

* From the 100-tonne Deutz Upper sample, 13 diamonds were recovered weighing a combined 0.49 carats and with the largest diamond remaining on the 2.36 mm screen, weighing 0.24 carats.

* From the 100-tonne Deutz Lower sample, 14 diamonds were recovered weighing a combined 0.26 carats and with the largest diamond remaining on the 1.18 mm screen.

The final report from DRA, and a final technical report for the Festival bulk sampling program are still pending. No material variations in the data reported herein are anticipated upon the final completion and reporting of the bulk sample results.

This press release has been reviewed and approved by Dr. Edward Walker, P.Geo., an independent consultant and Qualified Person pursuant to National Instrument 43-101. Saskatchewan Research Council is an independent ISO 17025 accredited laboratory.

About Pele Mountain Resources

Pele Mountain Resources is discovering and developing the mineral wealth of northern Ontario. Pele is focused on the exploration and development of high-grade gold zones at its 100-percent owned Highland project, within the prolific Goudreau-Lochalsh mining camp. Exploration results at Highland indicate outstanding potential for significant near-surface gold resources and existing regional infrastructure provides clear opportunities for revenue generating operations. Pele is a generative exploration company holding a diverse portfolio of gold, diamond, base metal, and uranium projects, providing exposure and leverage to discovery and to the increased global demand for natural resources. Four Pele projects are currently funded through agreements with strategic partners, including Goldcorp, Wallbridge Mining, Trigon Exploration, East West Resources and Maple Minerals (a division of Mega Uranium). Pele stock trades on the TSX Venture Exchange under the symbol "GEM".

For further information please contact Al Shefsky, President, at (416) 368-7224, or visit the Pele website at www.pelemountain.com.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. Some of the statements contained in this release are forward-looking statements, such as estimates and statements that describe Pele's future plans, objectives or goals, including words to the effect that Pele or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.

Contact Information

  • Contact:
    Al Shefsky
    President
    (416) 368-7224