Mr. Robert Archer reports

PINNACLE COMMENCES UNDERGROUND DELINEATION DRILLING PROGRAM AT EL POTRERO

The rehabilitation and drill station preparation in the historic underground mines on Pinnacle Silver and Gold Corp.'s high-grade El Potrero gold-silver property in Durango, Mexico, is sufficiently advanced to commence the underground delineation drilling program.

The program is starting at the Pinos Cuates mine, where 10 drill stations have been prepared on the two levels of the mine -- three stations for 21 holes and 409 metres on the upper level and seven stations for 46 holes and 915 metres on the main level -- for a total of 67 holes and 1,324 metres.

As the drilling is conducted at Pinos Cuates, rehabilitation and drill station preparation will be completed at the Dos de Mayo mine, where six drill stations for 35 holes and 887 metres are planned. At La Dura mine, four drill stations for six holes and 205 metres are planned. The entire program currently entails 2,416 metres in 108 NQ-size holes, subject to modifications as it progresses.

"The commencement of the underground drilling program at El Potrero is a major milestone as it will significantly derisk the project on the way towards a formal production decision later this year," stated Robert Archer, president and chief executive officer of Pinnacle. "Our systematic underground channel sampling, consisting of almost 900 samples, gave us a good indication of the location and tenor of gold-silver mineralization, yielding individual assays up to 85.1 grams per tonne gold and 520 g/t over 0.5 metres in the upper level of Pinos Cuates. Now the close-spaced drilling will give us a better sense of the overall size, shape and grade of the mineralized zones.

"Surface drilling is being planned to immediately follow the underground program and will fill in gaps between the mines in addition to testing along strike on the Dos de Mayo vein and other mineralized veins such as El Capulin and La Estrella. The combined results will then be used to generate an internal resource estimate that will, in turn, be used to develop a preliminary mine plan."

Based upon the systematic channel sampling in the three historic mines, Pinnacle geologists have constructed 3-D models for each to lay out the drill program. As the underground workings are mostly within or adjacent to the Dos de Mayo vein, drill holes will be short and designed to cut the vein and establish the contacts and vein thickness. Drill stations are 12.5 metres apart within the better mineralized areas, with spacing increasing as they step out along strike. At each drill station, several holes will be drilled at varying angles in a fan pattern up and down dip on the vein.

Drill core will be logged and split with a diamond saw on site and samples of the half-core will be delivered to the SGS lab in Durango for analysis.

Qualified person

Jorge Ortega, PGeo, a qualified person as defined by National Instrument 43-101, and the author of the NI 43-101 technical report for the El Potrero project, has reviewed, verified and approved for disclosure the technical information contained in this news release.

About the El Potrero property

El Potrero is located in the prolific Sierra Madre Occidental of western Mexico and lies within 35 kilometres of four operating mines, including the 4,000 tonnes per day Cienega mine (Fresnillo), the 1,000-tonne-per-day Tahuehueto mine (Luca Mining) and the 250-tonne-per-day Topia mine (Guanajuato Silver).

High-grade gold-silver mineralization occurs in a low-sulphidation epithermal breccia vein system hosted within andesites of the lower volcanic series and has three historic mines along a 500-metre strike length. The property has been in private hands for almost 40 years and has never been systematically explored by modern methods, leaving significant exploration potential.

A previously operational 100-tonne-per-day plant on site can be refurbished/rebuilt and historic underground mine workings rehabilitated at relatively low cost in order to achieve near-term production once permits are in place. The property is road accessible with a power line within three kilometres.

Pinnacle will earn an initial 50-per-cent interest immediately upon commencing production. The goal will then be to generate sufficient cash flow with which to further develop the project and increase the company's ownership to 100 per cent, subject to a 2-per-cent net smelter return royalty. If successful, this approach would be less dilutive for shareholders than relying on the equity markets to finance the growth of the company.

About Pinnacle Silver and Gold Corp.

Pinnacle is focused on the development of precious metals projects in the Americas. The high-grade El Potrero gold-silver project in Mexico's Sierra Madre belt hosts an underexplored low-sulphidation epithermal vein system and provides the potential for near-term production.

In the prolific Red Lake district of Northwestern Ontario, the company owns a 100-per-cent interest in the past-producing, high-grade Argosy gold mine and the adjacent North Birch project with an eight-kilometre-long target horizon. With a seasoned, highly successful management team and quality projects, Pinnacle Silver and Gold is committed to building long-term, sustainable value for shareholders.