January 2005

El Capitan Precious Metals signs joint venture agreement

Phoenix, AZ— El Capitan Precious Metals, Inc. announced that it has entered into a Definitive Joint Venture Agreement with MG East, LLC on a 50-50 basis to install a portable screening and crushing plant on the Company's Rainbow Valley Mine site in Arizona. The project will produce iron and its by-product, sand and gravel.

MG East brings to the joint venture a contract to supply 140,000 tons of crushed stone for a highway project in Arizona, which begins in January 2005. El Capitan will contribute $100,000 in working capital to the joint venture.

"The sand and gravel produced on the Rainbow Valley Mine site will be marketed by MG East to the Arizona and California markets with any profits split 50-50 between the two companies. The iron ore, separated out by magnetic separators, will remain the property of El Capitan. We anticipate the iron ore will be shipped to the Chinese market to be sold on long term contracts or on the spot market. Our drilling and testing should be completed by the end of December 2004. We are presently expecting certain Chinese steel company executives to inspect the Rainbow Valley mine and meet with railroad representatives some time in January 2005. Any shipments of iron ore are subject to execution of sales agreements as well as rail car availability," continued Mr. Mottley.

"Up to this point El Capitan has been an exploration and development company and now that we are entering into production and anticipating positive cash flow, we are very optimistic about the future of El Capitan Precious Metals, Inc," stated Mr. Mottley.


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