SOURCE: Pinnacle Resources, Inc

August 22, 2006 10:17 ET

Pinnacle to Develop Its Vanadium Property via Joint Venture

ENGLEWOOD, CO -- (MARKET WIRE) -- August 22, 2006 --Pinnacle Resources, Inc (PINKSHEETS: PNRR) announced today that the Company is seeking to place its 95-percent owned South African subsidiary, Vanadium and Magnetite Exploration and Development (Pty) Limited ("VanMag"), into a joint venture with a major mine developer. VanMag holds a 19,100-acre mineral lease covering a 17-kilometer outcrop of magnetite containing vanadium, titanium, and iron minerals in the Northern Province of South Africa. This body of mineralization has recently been licensed by the South African Department of Minerals to initiate mining operations.

The drill-indicated tonnage of the magnetite mineralization was estimated at 419 million tons to a depth of 200 meters containing 6.4 million tons of vanadium pentoxide. The primary value of the mineralization is vanadium with iron and titanium constituting valuable co-products. Vanadium's main industrial use is in the production of high-strength steel and other metallurgical applications. The current price of vanadium pentoxide is $10 per pound.

A preliminary feasibility study projected a capital investment of US$106,000,000 to build a plant and mine to process 2,100 tons of magnetite ore per day to produce 6,000 tons per year of vanadium pentoxide. Because of the magnitude of the project, Pinnacle's management is convinced that finding an industry joint venture partner is necessary to advance the project to the production stage in the shortest time possible. From such a joint venture relationship Pinnacle expects to realize some immediate cash and a carried shareholding in a public company that will serve as the operating company for VanMag.

The Company's CFO, RA. "Dutch" Hildebrand, indicated that "management has been in negotiations with potential partners who are looking at listing the JV company either on the Alternative Investment Market in London, the Johannesburg Stock Exchange in South Africa, and/or the Toronto Exchange in Canada."

Contact Information