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Bob Moriarty
August 18, 2005

There are some people in this business that you just can't help but like. They are just naturally likable. (and a few of the other kind are around, too, I suppose) I just got back from a trip with one of those guys. The ones easy to like.

I'm not a geologist or a mining engineer, actually I don't have any technical degree. So if you are looking for drill results to the 1/1000th of a gram per centahectrillions, you may be looking at the wrong guy. When I look at a project, I look for a simple way to describe it. I spend hours thinking about how to sum up a deposit in a few sentences or paragraphs. Less is more.

So when I went on a trip to Northern BC for Pinnacle Mines, I was searching for that perfect use of words to describe their massive deposit called the Silver Coin project near Stewart. I was with Paul Saxton, Chairman of Pinnacle Mines, Andy Bowering, President of Pinnacle and Ed Kruchkowski, the project geologist.

We drove through some of the most beautiful country in North America on the way to the deposit with mountains climbing all the way to the sky all around us. No one had ever told me the project was located in such a beautiful area and the pictures on their website don't do the project justice.

Andy Bowering and I flew into Terrace from Vancouver and drove up to Stewart. We met Paul Saxton and Ed Kruchkowski at their core shack in town before driving along the Alaska/Canada border to get to the project. While the project is barely in Canada, you have to drive into and out of Alaska just to get to it.

click on images for large photos

Since we were getting to the project well into the day, about 2:00 PM or so, the four of us just jumped into a truck and drove out to the site. There really wasn't time to conduct a comprehensive brief so I didn't have much of a feel for the project before I actually saw it. I had seen the spectacular assay results which had been drifting in over the past few weeks and I knew they were on to something but little did I suspect it was so impressive.

Once we got to the road leading to the project Ed got on the radio and called in a helicopter which he had arranged earlier. The tiny chopper landed on the road and picked us up. We lifted off and Ed tried to explain what it was that we were seeing but it really was difficult to hear what he was saying.

We circled the top of the hill where the drill rig was turning and most of the work had been done and then flew halfway down the hill so we could see visually where the outcrop from the top of the hill continued down the hill. After seeing the project from below where all the drilling has taken place, we again boarded the chopper and flew out to the middle of the Salmon Glacier so we could see the entire project from below.

The entire area has been mined and explored for a hundred years and more. At one point before World War II dozens of mines were in production. Eskay Creek, the fabulously rich gold mine of Barrick is only 60 KM NorthWest of the Silver Coin deposit.

The structure of the deal Pinnacle has is a little confusing. They are in a JV with Mountain Boy Minerals on the Silver Coin project where Pinnacle can earn up to a 60% interest. Pinnacle also can earn up to a 70% interest in the adjoining Kansas property and a 33% interest in the Dauntless property. The entire project is about 1500 hectares.

I believe that the project can be far easier to understand visually than through drill results. Basically Ed and his drill crew are working the top of the Big Missouri ridge. They have extended the strike length to 1.9 KM just this last week. From where we were sitting on the glacier, it appears that the strike goes all the way down the ridge, some 800 meters from the top of Big Missouri to the level of the glacier. And since it appears to be 10 to 30 meters wide, it's possible to come up with some back of the envelope numbers for tonnage which are quite high. In my humble (yea right) opinion, I think we are going to see 50 million to 100 million tons of 4-6 grams gold, one ounce silver and up to 3% zinc when they finish drilling. It's a polymetallic deposit containing gold, silver, zinc and copper as economic values.

While we were sitting on the Salmon Glacier looking at the project from below, I began to muse on the subject or primary focus of my piece about the visit and the project. I like it when it's really simple to express a basic concept about a deposit. I casually mentioned to the group that for an article to be easy for ordinary investors to understand, I needed a central focus and I was searching for the perfect phrase or sentence to express that simple focus.

"Big," spouted Paul Saxton. He's one of those guys easy to like, a basically nice guy. "Big," he repeated just in case I had missed it. And since that was exactly the same word I had already come up with, I told Paul, "Can't use it. You came up with it not knowing that it was exactly what I came up with first and didn't have time to say before I was so rudely interrupted." 'Come up with something better," I continued.

"Big" he mumbled.

"You can't use it, I thought of it before you said it," I repeated "You have to think of something different than me. I can't have you writing my piece for me."

"Big," he mumbled under his breath.

I was both disgusted and disappointed. There are basically two forms of communication from mining technical types. With one of the groups, you have to pry information and it's easier to drill for oil in mid-ocean than to actually get real information from them. And with the others if you ask what time it is, they tell you in great detail just how to build a watch. But when I asked Paul for a simple concept, he persisted in handing me a simple answer even though I probably though of it first.

So big it is. This deposit is flipping big. Even the people working on the top of the Big Missouri ridge only barely understand just how big it is. You have to fly over and land on Salmon Glacier and look up the hill to see just how big it really is.

I suppose they will continue to release spectacular drill results but I'd like to see them come down the hill and start testing lower down. When they do, their 43-101 numbers are going to climb off the page they are going to be so high. Remember the concept, BIG.

Pinnacle has a Chinese presence in the Yang Wen Chong property in Yunnan province. They have a 25% interest in the property. They are in the process of completing a Sino-foreign joint venture company where they can earn up to a 70% interest by investing $1.9 million Canadian over a five year period.

And Pinnacle has just announced a major, $2 million dollar private placement with the Zijin Mining Group Company after a week long tour of the Silver Coin property by major executives of the Zijin Company. Zijin already has members of their company as directors and hold a large position in Pinnacle shares.

I like the fact Pinnacle has succeeded in building an important bridge between Pinnacle and a major Chinese mining company. Each country excels in certain things and brings important elements to the table. The Chinese believe in mining rather than drilling and counting ounces. I like that a lot. Pinnacle has built a very strong team of three very experienced mining engineers and they intend to build a mine. With teamwork, this project can be in production sooner than most people would guess.

There is a facility near the Silver Coin where a mine was in production up until 1993, now owned by Boliden (of Sweden). Some of the equipment has been removed but by buying or leasing the property, Pinnacle can save a year or two of permitting issues. I believe that at some point Pinnacle or anyone wanting to take them over will make a run at Mountain Boy and/or the other JV partners. It makes more sense to have single ownership but that's something the future will bring.

I really like the management of Pinnacle. They are in simple terms, very nice people to deal with. I think they are way ahead of most of the Vancouver juniors I know of in their relationship with the Chinese. Every civilization has its century, the Spanish had the 17th, the French had the 18th, the English had the 19th, the US had the 20th and leadership of the world's economy is in transition to a Chinese led 21st Century. It makes a world of sense to get into bed with the leaders of tomorrow. Pinnacle is way ahead of the crowd.

Pinnacle is way undervalued. Part of the reason might be the convoluted structure of the deal at Silver Coin but with so many properties under different management, they have done the best they could do. The drill results have been spectacular and the market has ignored them. With only 15 million shares fully diluted, I suspect that will change very soon, they are cheap at twice the price.

We own Pinnacle shares, we have for a long time. I have always liked Pinnacle management. They have not paid for this piece and before you invest in any company, you really owe it to yourself to conduct your own due diligence. Pinnacle does advertise on 321gold.com.

Pinnacle Mines Corp.
PNL-V $.91 Canadian; 11.1 million shares issued, 15.5 million shares fully diluted.
website: http://www.pinnaclemines.com/

I am currently in Greenland looking at a fabulously-rich ruby property. I have a 4hr 'cold for hot-weather bag swap' turnaround in Miami next Sunday, and then I'm straight off to Peru to seek my Fortuna.

I'll be back at the end of August. Getting email is nigh on impossible so please don't write to me.

Bob Moriarty
President: 321gold Inc

321gold Inc

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