Pele Mountain Resources Inc.
TSX VENTURE : GEM

Pele Mountain Resources Inc.

August 22, 2005 09:44 ET

Goldcorp Accelerates Funding to Earn 50-Percent Interest at Pele Mountain's Festival Diamond Project

TORONTO, ONTARIO--(CCNMatthews - Aug. 22, 2005) -

PELE MOUNTAIN COMMENCES 500-TONNE BULK SAMPLE PROGRAM AT FESTIVAL

Pele Mountain Resources (TSX VENTURE:GEM) ("Pele" or the "Company") announced today that a 500-tonne bulk sampling program is underway at its Festival Diamond Project near Wawa in northern Ontario. Exploration at Festival is funded by Goldcorp (TSX:G; NYSE:GG) which, upon program completion, will have earned a vested 50-percent interest in the project from Pele.

The 500-tonne sampling program is larger than all previous sampling efforts at Festival combined. It will consist of a 300-tonne sample from the Cristal occurrence and two 100-tonne samples from the Deutz occurrence. Both occurrences lie along a 5-kilometre long stratigraphic horizon where diamond-bearing ultramafic rocks appear in intermittent outcrop. Cristal was the site of past sampling efforts that recovered commercial size and gem quality diamonds, including a 0.72-carat stone. Deutz was the site of a recent drill program that confirmed subsurface continuity of Festival's South Zone and demonstrated that significant diamond concentrations are recoverable from multiple ultramafic rock types. The two Deutz samples will include one each from the top and the base of the targeted stratigraphic sequence.

The samples will be processed in Lakefield, Ontario by DRA Americas, Inc., a wholly owned subsidiary of Dowding, Reynard & Associates (DRA), a South African engineering firm with world-renowned mineral processing expertise. The processing procedure will include standard crushing and screening followed by magnetic separation to produce a diamond concentrate. The procedure will follow a flowchart that has proven effective in recovering diamonds from the metamorphosed host rocks of the Festival property.

The bulk sampling program is expected to be completed during November 2005 at a total cost of $700,000, underscoring the ability to work quickly and cost-effectively at Festival. The property is located along the Trans Canada Highway, just north of Wawa, in an established mining district with excellent infrastructure and a qualified work force.

In conjunction with the bulk sampling program, Pele and Goldcorp have entered into an amending agreement relating to the Festival option agreement. Goldcorp may now earn a 50-percent interest at Festival from Pele by funding minimum project expenditures that have been reduced from $2-million to $1.5-million by year-end 2006 and, upon the completion of the bulk sampling program, will have satisfied that requirement. Goldcorp maintains the right to earn an additional 10-percent interest in the project by incurring additional expenditures of $1-million by year-end 2007. Goldcorp will elect whether to pursue this additional interest by the earlier of year-end 2006 or sixty days following the receipt of a project technical report for the 2005 bulk sample program completed to the satisfaction of the Joint Management Committee. All other terms of the option agreement remain unchanged.

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.

Pele Mountain Resources is an exploration play on the abundant mineral wealth of northern Ontario. Pele has acquired and developed a diverse portfolio of diamond, gold, and base metal properties which provide exposure and leverage both to discovery and to the increased global demand for natural resources. Pele is active on six project fronts, including diamond exploration at Festival, Alliance and Attawapiskat River with partners Goldcorp and Trigon Exploration Canada, gold and base metal exploration at Ardeen with partners Maple Minerals Corp and East-West Resource Corporation, and in-house exploration at its Highland Gold and Timmins Nickel properties. Pele stock trades on the TSX Venture Exchange under the symbol "GEM".

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. None of the Company's properties have any known ore body of economic or commercial value.

Common Shares Outstanding: 46,744,237

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information