Pinnacle Resources, Inc. (PINKSHEETS: PNRR) is pleased to announce that it has entered into an agreement with an Australian mining company that has indicated that it plans to develop Pinnacle's South African vanadium-bearing magnetite deposit.

The agreement provides for a $9 million cash consideration payable in two $4.5 million installments – the first payment, at a closing in the very near future, and the second installment after Pinnacle's "old-order" mining right is converted to a "new order" mining right in accordance with South Africa's current mining law. Pinnacle to date has received a $300,000 non-refundable earnest payment.

Pinnacle has a non-binding understanding with the buyer that Pinnacle, at its option, may convert part of the sales price into a share ownership in a public mining company that may become the operating company. At closing, Pinnacle will assume the obligations to pay for brokerage commissions, legal fees and minority interest buyouts. Totals are estimated at one million dollars payable out of the first payment and $500,000 out of the second installment.

Pinnacle's vanadium property comprises a resource of 300 million tons of magnetite to a depth of 200 meters from surface, which contain an estimated 25 pounds of V2O5 (vanadium pentoxide) per ton of magnetite. The extent and grade of this mineralization is indicated by 181 percussion drill holes and 29 diamond-drill core holes. The current price of refined V2O5 is $8.25 per pound.