|Pele Mountain and Goldcorp Sign Option Agreements|
FOR IMMEDIATE RELEASE
August 12, 2004 - Toronto - Pele Mountain Resources (TSX Venture:GEM) ("Pele" or the "Company") announced today that it has signed two separate formal option agreements with Goldcorp Inc. (TSX:G; NYSE:GG) pursuant to which Goldcorp may earn an interest in Pele’s Ardeen Gold Mine Project (“Ardeen”) and Festival Diamond Project (“Festival”) in northern Ontario. Goldcorp will be the operator at Ardeen and Pele will be the operator at Festival. Goldcorp will fund exploration activities on both projects beginning immediately.
Al Shefsky, President and CEO of Pele, stated, “We are extremely excited to be working with Goldcorp, Canada’s pre-eminent gold mining company. The Agreements signed today will provide the financial and technical resources needed to enable aggressive exploration efforts at Ardeen and Festival. We believe that Goldcorp’s innovative exploration and management team will add substantial value to these important projects to the benefit of our shareholders.”
Pele’s Ardeen Gold Mine Project is located 110 kilometres west of Thunder Bay and was northern Ontario’s first producing gold mine. The property features a three-compartment main shaft sunk to the 1200-foot level, along with numerous high-grade gold occurrences within and in close proximity to the four-kilometre strike length of the Ardeen’s primary vein system. Recent data compilation work at Ardeen has identified numerous high potential exploration targets. Ardeen is 100% owned by Pele Gold Corporation, a wholly owned subsidiary of the Company.
Pele’s Festival Diamond Project is located 25 kilometres north of Wawa, along the Trans Canada Highway. Bulk sampling has confirmed the presence of commercial size and gem quality diamonds at Festival while surface exposure at its many diamond deposits suggests the potential for significant near-surface tonnage. Diamond occurrences at Festival measure up to 800 meters along strike and more than 100 meters across in intermittent outcrop. Festival is 100% owned by the Company.
Details of the two option agreements are as follows:
At Ardeen, Goldcorp may earn a 50-percent interest by incurring expenditures of $3-million by year-end 2007 and may earn an additional 10-percent interest by incurring additional expenditures of $1.5-million by year-end 2008. Minimum annual expenditures required for Goldcorp to keep the option in good standing are as follows:
• 2004: $400,000 by year-end.
• 2005: an additional $700,000 by year-end.
• 2006: an additional $900,000 by year-end.
• 2007: an additional $1-million by year-end.
At Festival, Goldcorp may earn a 50-percent interest by funding expenditures of $2-million by year-end 2006 and may earn an additional 10-percent interest by funding additional expenditures of $1-million by year-end 2007. Minimum annual funding required for Goldcorp to keep the option in good standing are as follows:
• 2004: $400,000 by year-end 2004.
• 2005: an additional $800,000 by year-end.
• 2006: an additional $800,000 by year-end.
Upon Goldcorp satisfying its requirements under each respective option agreement a joint venture will be formed to continue exploration and development of the Property and thereafter each participant will contribute its share of expenditures according to its participating interest. The material terms of the joint venture to be entered into upon fulfillment of the option requirements have been negotiated and form a part of the option agreements signed today. Upon commencement of commercial diamond production at the Festival Diamond Property, each participant will receive its share of diamonds produced in kind.
Details of on-going exploration programs at Ardeen and Festival will be announced in future press releases.
For further information please contact Al Shefsky, President, at (416) 368-7224, or visit the Pele website at www.pelemountain.com.
Pele Mountain Resources is a Canadian mineral exploration company and a leader in the search for economic diamond and gold deposits in northern Ontario. Pele’s stock trades on the TSX Venture Exchange under the symbol “GEM”. This press release has been reviewed and approved by Dr. Edward Walker, P. Geo., of PetroLogic Inc., an independent consultant and Qualified Person.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. Some of the statements contained in this release are forward-looking statements, such as estimates and statements that describe Pele's future plans, objectives or goals, including words to the effect that Pele or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements. None of the Company’s properties have any known ore body of economic or commercial value.