On January 27, 2005, Pinnacle Mines Ltd. ("Pinnacle" or the “Company”) announced that it had renegotiated its agreement with Yunnan Geology and Mineral Resources Co., Ltd. ("YGM") regarding the acquisition by the Company of a joint venture interest in the Yang Wen Chong gold property located in the Southeast region of Yunnan Province, People's Republic of China.

To date, the necessary governmental approvals have not been obtained to incorporate the joint venture or transfer the title of the property as contemplated by the agreement.

YGM has advised Pinnacle that the necessary governmental approvals may take significant additional time.  In view of this, YGM has offered to repay, and the Company has accepted, the full amount of 7,000,000 RMB that the Company has advanced to YGM in connection with the property in exchange for termination of the agreement.

Upon receipt of payment as described above, the Company will have no further interest in the Yang Wen Chong property.  The Company is awaiting payment.

Pinnacle continues to evaluate mineral exploration and mining opportunities in China for potential investment.  In August 2005, the Company entered into a cooperation agreement with China’s largest gold miner, Zijin Mining Group Co., Ltd., pursuant to which both companies agreed to evaluate suitable projects for joint venture between the companies.  While certain projects are currently under evaluation, Pinnacle makes no representations that any particular project will be successfully acquired.  Any planned acquisition will be subject to all necessary regulatory and corporate approvals