DIAMOND RECOVERY J.V.
Pinnacle entered into a Joint Venture with Mr. Chris Wilson's South African company Ocean Options, cc, which has been engaged in the recovery of diamonds from South Africa's West Coast. Ocean Options has been operating for the past five years from a boat rigged with gravel recovery equipment.
The expression "necessity is the mother of all inventions" may very well be applicable here. Because in an attempt to overcome the treacherous conditions provided by the stormy west coast, Mr. Wilson designed and applied for patents on the Ocean Walker™. This unique configuration eliminates the need for a boat as the equipment stands on metal legs above the often-tremulous sea. Because of the difficult sea and weather conditions, a recovery boat may work only 60 days per year. With the Ocean Walker™ design, Mr. Wilson predicts that we will enjoy 300 operating days per year. The platform is stabilized and elevated above the highest of swells. The vulnerability for both men and equipment is minimized. The Ocean Walker™ should produce as much diamond bearing gravels as eight boats.
In light of this opportunity, Pinnacle and Ocean Options formed a South African company called Diamonaire Exploration PTY LTD, which is owned equally by both parties. Diamonaire will hold all patents and technology. Pinnacle agreed to loan $300,000 US to the holding company and Wilson contributed all of the equipment necessary to equip the first Ocean Walker™ platform. In addition, Pinnacle provided 100,000 shares of restricted Pinnacle common stock to Mr. Wilson and the opportunity to receive more shares based upon cash flow performance.
Diamonaire formed a wholly owned operating company, Ocean Exploration cc, in which the first Ocean Walker™ will be assigned and the diamond recovery operation will be conducted. After payout of the monies loaned by Pinnacle, then a back-in (revisionary interest) of 20% of Ocean Exploration will be assigned to Poseidon Divers Group Ltd.
The decision to participate in potential cash flow projects is somewhat of a departure from the company's historical mineral asset ventures. Management was impressed by the potential offered by Ocean Walker™ and pursued the relationship with a view to create monthly cash flow for the company.
