Pinnacle Mines Ltd.
TSX VENTURE : PNL

Pinnacle Mines Ltd.

August 17, 2005 15:59 ET

Pinnacle Mines and Zijin Mining Group Enter Cooperation Agreement

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 17, 2005) - Pinnacle Mines Ltd. (TSX VENTURE:PNL)("Pinnacle") reports, subject to regulatory approval, that it has entered into a Cooperation Agreement with Zijin Mining Group Co., Ltd. of Fujian Province, China ("Zijin"). Pursuant to the Cooperation Agreement, the Companies have agreed to terms as outlined herein.

Private Placement in Pinnacle

Zijin, or one of its subsidiaries, (Collectively referred as "Zijin"), will complete a private placement of 3,000,000 units in Pinnacle at the price of $0.65 per unit, for total proceeds of CDN $1,950,000. Each unit will consist of one common share and one-half share purchase warrant. The warrants will be exercisable by the holder for a two-year period on the basis of one whole warrant and $0.83 for each common share.

Proceeds from the financing will be used to accelerate Pinnacle's Silver Coin exploration program, to expand Pinnacle's activities and/or review other potential mining projects in China or elsewhere and for general working capital.

Concurrent with the private placement, Pinnacle has agreed to appoint two members of Zijin to the Board of Directors of the Company.

The issuance of shares as a result of the private placement will result in the creation of a control block, requiring the need for shareholder approval. This approval was received by shareholders at Pinnacle's 2005 Annual General Meeting on June 22, 2005.

Participation in Mining Projects in China and Overseas

Zijin has agreed to select suitable projects located in China to offer to Pinnacle for joint venture. To date no specific arrangements have yet been made. If and when a specific project is determined suitable by both Companies, public disclosure will be made at that time.

Pinnacle has agreed to offer Zijin a right of first refusal to directly participate in any projects it currently holds, including the Silver Coin Project in Canada. In addition, Pinnacle has agreed to assist Zijin in looking for and evaluating prospective mining projects outside of mainland China for participation by Zijin together with Pinnacle.

Commenting on the Cooperation Agreement and the future relationship of the two Companies, Zijin Chairman, Mr. Chen Jing He, states, "We look forward to Zijin's future as an international mining company and Pinnacle will be one of the bridges for our goal."

Zijin, a Hong Kong Stock Exchange listed company, Security Code #2899, is a comprehensive mining conglomerate in China primarily engaged in gold and copper production, processing and refining of gold, non-ferrous metals and other mineral resources, as well as, the sale of mineral products. According to its website (www.zjky.com.cn/english) Zijin operates mines across China and invests in and controls 14 subsidiaries which resulted in production of approximately 420,000 ounces of gold alone in 2004. By the end of 2004 Zijin reported proven reserves of approximately 312 tonnes of gold metal, 3,450,000 tonnes of copper metal, 600,000 tonnes of zinc metal and 187,890,000 tonnes of iron metal. Zijin also holds exploration rights to approximately 1,612.79 square kilometers across China. Zijin reported income of RMB 1,507,679,000 (approximately CDN $228,000,000) in 2004, for a gross profit of RMB 824,346,000 (approximately CDN $124,000,000).

Pinnacle Mines Ltd. is a Canadian based mineral exploration and development company with assets in Canada and China. In Canada, Pinnacle holds several properties in Northwestern British Columbia, in proximity to numerous past and producing mines including the Silbak-Premier Mine and Barrick Gold's famed Eskay Creek Mine. In China, Pinnacle's current focus is in Southeast Yunnan, an area being increasingly considered for its potential to host mineral resources including "Carlin" style gold deposits.

On behalf of the Board of Directors

Andrew W. Bowering, President and CEO


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

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