Pinnacle Mines Ltd.
TSX VENTURE : PNL

Pinnacle Mines Ltd.

October 02, 2009 09:00 ET

Pinnacle Mines Update: Advancing the Silver Coin Gold Project-Stewart District, British Columbia

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 2, 2009) - Pinnacle Mines Ltd. (TSX VENTURE:PNL) ("Pinnacle" or "the Company") announces current progress and future plans for their advanced-stage Silver Coin gold project located near the town of Stewart, British Columbia. The "Stewart Camp" comprises highly-altered and mineralized terrain and is the location of increasing exploration activities, including recent drill discoveries of gold-bearing mineralization by others in the vicinity of Silver Coin. Silver Coin is one of the most important gold-bearing projects in the Stewart area, and is situated 5 km north of the past-producing Silbak-Premier gold deposit. Silbak-Premier is hosted in a similar geological environment to Silver Coin, produced 2 million ounces of gold and 43 million ounces of silver over its mine life, and is the subject of renewed exploration.

Currently-ongoing work is directed to taking Silver Coin closer to a full feasibility study. The most significant activities include: geologic modeling and interpretations; three-dimensional modeling of the ore body, along with potential open pit morphologies; preliminary engineering studies, including pit configuration, infrastructure, tailings impoundment and waste rock management; preliminary costing of the project; power and water requirements; baseline environmental studies; and metallurgical testwork.

1. Background

To date, 763 drill holes totaling over 91,000 meters have been completed at Silver Coin, and have partially outlined a gold-silver-zinc mineralized body that remains open to depth and to the north. According to a resource calculation completed in 2007 by Minefill Services Inc., Silver Coin hosts a NI 43-101 compliant resource of 488,202 ounces of gold in the Measured + Indicated category and 1,000,499 ounces of gold in the Inferred category at an average grade of 2.317 g/t and 6,179,000 ounces of silver (grade 7.49 g/t) at cut-off grade of 0.75 g/t. The following table breaks down the Silver Coin resource:



Summary of the 2007 Mineral Resource by Resource Category
(Above a Cut-off Grade of 0.75 g/t Gold-Equivalent)
---------------------------------------------------------------------
Gold Eq. Gold-Eq.
(all (oz)
metals) Gold Silver Zinc Gold (Gold-Silver
Class Tonnes g/t g/t g/t % (oz) only)
---------------------------------------------------------------------
Measured 1,073,891 4.487 3.481 14.191 0.432 120,181 129,513
---------------------------------------------------------------------
Indicated 8,633,606 1.832 1.091 10.567 0.288 302,822 358,689
---------------------------------------------------------------------
M+I 9,707,497 2.126 1.355 10.968 0.304 423,002 488,202
---------------------------------------------------------------------
Inferred 15,947,629 2.433 1.849 5.377 0.273 947,988 1,000,499
---------------------------------------------------------------------
(i) Gold Equivalent values calculated using $525/oz for Gold, $10/oz
for Silver, $2.4/lb for Copper & $2/lb for Zinc.
Metallurgical recoveries and net smelter returns are assumed to be 100%.


Specific zones, as defined by diamond drilling, returned much higher grades of gold than the average grade calculated in the resource estimation above. Below are listed selected intersections from the 2008 diamond drilling program which are not incorporated into the 2007 Technical Report:



-----------------------------------------------------------
Hole No. From (m) To (m) Core interval (m) Gold (g/t)
-----------------------------------------------------------
SC08-232 66.45 78.64 12.19 12.70
including 66.45 71.02 4.57 32.11
and 69.49 71.02 1.52 81.57
-----------------------------------------------------------
SC08-233 63.09 105.46 42.37 6.25
including 69.19 81.38 12.19 18.16
-----------------------------------------------------------
SC08-234 76.2 105.16 28.96 2.05
including 96.01 99.06 3.05 8.88
-----------------------------------------------------------
SC08-237 53.95 99.67 45.72 3.78
including 82.91 96.62 13.71 8.24
and 87.48 90.53 3.05 22.58
-----------------------------------------------------------
SC08-238 60.05 96.62 36.57 1.08
-----------------------------------------------------------
SC08-239 72.85 85.04 12.19 3.62
-----------------------------------------------------------
SC08-240 78.33 114.91 36.58 2.27
-----------------------------------------------------------
SC08-243 93.88 136.55 42.67 4.13
-----------------------------------------------------------
SC08-245 68.88 130.15 61.27 1.78
including 70.71 72.54 1.83 31.07
-----------------------------------------------------------
SC08-246 110.03 117.65 7.62 3.94
-----------------------------------------------------------
SC08-247 94.18 118.57 24.39 2.96
including 107.9 114 6.1 8.13
-----------------------------------------------------------
SC08-248 117.96 154.53 36.57 1.20
-----------------------------------------------------------
SC08-249 93.27 138.99 45.72 1.27
-----------------------------------------------------------
SC08-250 54.56 85.04 30.48 1.38
-----------------------------------------------------------
SC08-254 27.13 36.27 9.14 1.98
and 75.9 95.71 19.81 1.08
including 75.9 78.94 3.04 4.09
-----------------------------------------------------------
SC08-256 69.49 142.34 72.85 1.55
including 122.83 142.34 19.51 4.23
-----------------------------------------------------------
SC08-258 57.3 154.84 97.54 1.15
including 135.03 153.31 18.28 3.72
-----------------------------------------------------------
SC08-259 69.49 118.26 48.77 0.85
-----------------------------------------------------------
SC08-260 151.79 191.41 39.62 0.98
-----------------------------------------------------------
SC08-262 57.61 70.1 12.49 2.35
-----------------------------------------------------------
SC08-264 51.21 78.64 27.43 5.43
including 54.25 58.52 4.27 18.68
-----------------------------------------------------------
SC08-267 44.81 47.85 3.04 3.80
and 87.48 114.91 27.43 1.26
-----------------------------------------------------------
SC08-270 93.88 123.75 29.87 0.88
-----------------------------------------------------------
SC08-271 57 175.87 118.87 1.05
-----------------------------------------------------------
SC08-272 70.71 75.29 4.58 1.78
and 116.43 145.39 28.96 1.89
-----------------------------------------------------------
SC08-274 123.44 205.74 82.3 2.14
including 163.07 190.5 27.43 4.39
-----------------------------------------------------------
SC08-279 27.13 30.18 3.05 23.51
and 100.28 106.38 6.1 4.36
-----------------------------------------------------------
SC08-280 17.68 32.92 15.24 1.52
including 17.68 20.73 3.05 4.11
and 131.98 157.28 25.3 3.60
including 151.79 156.36 4.57 15.57
-----------------------------------------------------------
SC08-281 85.04 200.86 115.82 1.66
-----------------------------------------------------------
SC08-282 135.64 181.36 45.72 8.86
-----------------------------------------------------------
SC08-285 38.71 44.81 6.1 1.91
and 121.01 157.58 36.57 1.89
-----------------------------------------------------------
SC08-286 22.56 37.8 15.24 1.70
and 62.18 80.47 18.29 1.25
-----------------------------------------------------------
SC08-287 15.24 73.15 57.91 1.20
-----------------------------------------------------------
SC08-288 50.9 66.14 15.24 1.84
including 57 60.05 3.05 4.26
-----------------------------------------------------------
SC08-294 21.34 106.68 85.34 0.91
including 21.34 36.58 15.24 2.64
-----------------------------------------------------------
SC08-295 51.82 88.39 36.57 1.87
including 60.96 62.48 1.52 15.01
-----------------------------------------------------------
SC08-298 0 64.01 64.01 3.73
including 0 36.58 36.58 5.82
-----------------------------------------------------------
SC08-299 0 77.72 77.72 2.41
including 9.14 10.67 1.53 20.47
and 48.77 51.82 3.05 12.58
-----------------------------------------------------------
SC08-302 57.3 60.35 3.05 16.69
-----------------------------------------------------------
SC08-306 3.05 18.29 15.24 1.53
and 70.1 124.97 54.87 4.45
including 103.63 105.16 1.53 36.76
-----------------------------------------------------------
SC08-309 27.43 36.58 9.15 2.98
and 64.01 82.3 18.29 1.43
-----------------------------------------------------------
SC08-310 11.28 26.52 15.24 4.43
including 11.28 17.37 6.09 9.00
-----------------------------------------------------------


2. Engineering Studies

The Company is in discussions with a well-known engineering consulting firm to complete a new 43-101 compliant Preliminary Economic Assessment ("PEA") on the Silver Coin project. It is anticipated the PEA will proceed in two stages that will include a complete review of the Silver Coin drilling data base from which they will generate a new block model of grade, lithology, and resource classification (Measured, Indicated, and Inferred). The block model in turn will be the basis for designing a hypothetical open pit and estimating the tonnage and grade of the resource, along with the volume of waste rock. In sequential fashion they will optimize a mine plan and then apply site-relevant economic parameters to develop a cash flow model and estimate the potential economic return expected from mining the deposit. Their review and report will also incorporate the metallurgical and environmental studies already underway (see below) as well as propose a layout of the required infrastructure to develop the project.

3. Environmental Studies

Pinnacle has engaged Cambria Gordon Ltd., an environmental consulting firm based in Terrace, B.C. to complete environmental base line studies of the Silver Coin project with the goal of assessing existing water quality, fauna and flora concerns, and potential sites for tailings disposal. Specifically, their work will include:

- Preliminary limnology of No-Name lake, a proposed site for tailings disposal;

- Stream flow measurements to commence hydrological database and provide information for year-round water supply for the project;

- Preliminary base line water quality monitoring plan to determine sampling locations for sample collection sites for chemical analyses;

- Assessment of the presence, or absence, of rare and/or endangered species.

4. Metallurgical studies

Metallurgical testing at Silver Coin has been ongoing for nearly two years by Frank Wright of F. Wright Consulting Inc. Mr. Wright will continue in his capacity of chief metallurgical investigator. His results to date have shown that Silver Coin exhibits very favourable metallurgical characteristics. The laboratory test program to date has investigated flotation and cyanide leaching procedures.

Depending on the sample and procedures that were used, the gold recoveries varied from 85% to 95% for cyanidation. However, due to anticipated considerations in using cyanide on site, most of the process evaluation has focused on flotation. Initial open cycle flotation tests provided an excellent bulk yield of over 95% gold into a rougher concentrate. The results from a locked cycle test provided gold and silver recoveries of approximately 90%. Future metallurgical work will focus on optimizing flotation procedures for rejecting pyrite to produce a cleaned bulk gold-silver concentrate. The nearby deep water port and loading facility at Stewart is ideally located for transport of Silver Coin concentrate.

During September 2009, bulk samples were collected from trenches in the mineralized zone at Silver Coin to provide samples for work index studies.

5. Conclusion

Silver Coin is a significant gold resource which has yet to be fully delimited by drilling. Potential to significantly expand the resource exists with depth, and along strike, particularly to the north. It is located in a district which contains widespread and abundant alteration and mineralized prospects, including one of B.C.'s most important past-producers, the Silbak-Premier mine. The project work outlined above should take approximately six months to complete. Based on the results of the currently-progressing work, a decision will be made whether or not to carry on with feasibility and/or further drilling to take Silver Coin closer to production.

This press release was reviewed by Lawrence A. Dick, Ph.D., P.Geo, who is recognized as a Qualified Person under the guidelines of National Instrument 43-101.

On Behalf of the Board:

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

President & CEO

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.

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