American Gilsonite Company Announces Special Dividend.

PALO ALTO, Calif. -- The Board of Directors of American Gilsonite Company (OTCBB:AGTC) announced today that the Company will spin-off its oil and gas operations to Bonanza Royalties LLC, a Delaware limited liability company currently wholly owned by the Company, to be followed by the distribution by the Company to its shareholders of all of the outstanding limited liability company interests of Bonanza Royalties LLC. The limited liability company interests will be distributed by way of dividend to those holders of the Company's shares on the record date of July 24, 2006. Such distribution will be on the basis of one unit of limited liability company interests for every one share of the Company's common stock held on the record date and 4.147962 units of limited liability company interests for every one share of the Company's convertible preferred stock held on the record date. It is anticipated that the actual distribution of the limited liability company interests will occur on or about August 7, 2006.

The limited liability company interests distributed to the Company's shareholders will not be registered with the Securities and Exchange Commission and will not be freely transferable. No public market exists for any of the limited liability company interests and no public market is expected to develop following the distribution.

No action is required to receive the limited liability company interests except that a shareholder must be a Company shareholder as of the close of business on July 24, 2006. The Company's shareholders will not be required to pay cash or other consideration when the limited liability company interests are distributed to them or to surrender or exchange their shares of the Company's stock in order to receive the distribution. An information statement describing Bonanza Royalties LLC, the distribution and related matters will be mailed to the Company's shareholders following the record date.

Established in 1904, American Gilsonite Co. controls the world's largest known reserves of Gilsonite(R) resin. Gilsonite(R) is a non-hazardous, naturally occurring hydrocarbon resin found in western Colorado and eastern Utah. It is primarily used in printing inks, foundry sands, oil and gas well drilling muds and oil well cements, asphalt, building materials, and paints and protective coatings. The company currently markets its products in over 40 countries. American Gilsonite Company is a former wholly-owned subsidiary of Chevron Resources Company.

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this release that are forward-looking statements are based on current expectations and assumptions that are subject to known and unknown risks, uncertainties, or other factors which may cause actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. All information in this release is accurate as of the date of this release. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.