NEWS RELEASE

ECUADORIAN MINERALS CORPORATION

April 24, 1997

Trading: TSE.EMC

ECUADORIAN ANNOUNCES POSITIVE PREFEASIBILITY STUDY
AT GABY PROJECT IN ECUADOR

NEW DRILL RESULTS INDICATE EXTENSION TO THE WEST

This study will include a full evaluation of all of the optimization factors which, due to the timing of the prefeasibility study, could not be part of that study. Included in this category are assay results from the recent drill hole CAL-7, located 100 meters to the west of the known western margin of the deposit (see attached map), where one intercept reports 96.1 meters at 1.20 g/t gold, including several high grade intercepts. Mineralization remains open to the north, indicating significant potential to add to the existing reserve.

The principal parameters of the project, on a 100% equity basis, as determined by the independent engineering company, MRDI (Mineral Resources Development Inc.) of San Mateo, California, are summarized below on a 100% project basis :

• Total Gold Resource : 165 million tonnes at 0.73 g/t gold (0.5 g/t cut-off), containing 3.91 million ounces gold. Assays greater than 5.0 g/t cut to 5.0 g/t.
• Preliminary Mineable Reserve : 89.8 million tonnes at 0.75 g/t gold (0.87 g/t for first 4 years). Not including silver credits.
• Contained Ounces Gold : 2.18 million (plus silver estimated at 4.6 million ounces)
• Metallurgical Recovery : 89.2%
• Recoverable Mineable Ounces Gold : 1.94 million (plus silver estimated at 2.3 million ounces)
• Waste-to-Ore Ratio : 1.13 to 1
• Mining : Open-pit, 20,000 tpd, 7.2 million tonnes per year with a 13.2 year mine life
• Average Annual Gold Production : 147,000 ounces (178,000 during first 4 years). Annual silver production estimated at 175,000 ounces
• Metallurgical Process : Conventional Milling/Carbon-in-Leach (CIL)
• Initial Capital Cost : US$152 million (including mining fleet)
• Operating Cost : US$256 per ounce (including silver credits)
• Internal Rate of Return (IRR) : 6.4% at $375/oz gold 10.4% at $400/oz gold (Including silver credits)
• Net Present Value (NPV) @ $375/oz gold

• 0% discount rate : US $66.1 million
• 5% discount rate : US $11.0 million

Note: For the economic data above a silver grade of 1.60 g/t with a recovery of 50% and a price of $5.00 per ounce has been estimated, based on statistical data available for silver assays as part of the database.

The main Gaby deposit is contained within two property positions with separate ownership: a northern portion which is 100% held by EMC and a southern portion which is 51% held by EMC (see attached map), in a joint venture with Zappa Resources Ltd, who retain the balance of 49%. Net attributable preliminary contained mineable gold ounces to EMC on a proportionate basis total 1.64 million or approximately 75% of the total 2.18 million ounces.

The preliminary mineable reserve figures, on a 100% project basis, are sub-divided as follows into the Proven/Probable and Possible categories.

Reserves allocated to the Proven/Probable category are defined by MRDI as those kriged ore blocks located within 40 meters of two drill holes or within a 40 x 40 x 25 meter ellipse from any single drill hole. Possible reserves are those located outside of these defined parameters. Infill drilling, to be carried out as part of the upcoming feasibility study, is expected to result in the majority of the reserve in the Possible category to be reclassified as Proven/Probable. Average drill hole spacing for the preliminary mineable reserve is approximately 85 meters, ranging from 70 meters within the northern portion of the deposit (100% EMC) to 100 meters within the southern portion (51% EMC). For the total gold resource of 3.91 million ounces the average drill spacing is about 105 meters. On a pro-rata preliminary mineable ounce basis, EMC’s total of 1.64 million is sub-divided into 0.93 million ounces in the Proven/Probable category (82% of the total) and 0.71 million ounces (68% of the total) in the Possible category, the balance being for Zappa’s account.

PLANNED OPTIMIZATION STUDIES
These studies, which are planned for the next phase of the project, have been sub-divided into two categories below: the first involving ore extension/exploration targets which show promise of increasing the overall size potential of the main Gaby deposit and a second category for specific items which have the potential to enhance the overall long-term economics of the project. The objective in adding additional reserves to the main Gaby deposit is to develop a mineable reserve of sufficient size capable of supporting a higher annual production rate, thereby significantly reducing unit operating and capital costs.

1. Exploration Upside Potential

• In the western part of the deposit, drill assays recently received from drill hole CAL-7, located within 175 meters of two core holes which reported respective gold intercepts of 174 meters at 0.74 g/t (including 48 meters at 1.28 g/t and 34 meters at 1.41 g/t), show a long intercept of 96.1 meters at 1.20 g/t gold, including several shorter, high grade, intervals as indicated below:

The results from this core hole extend the known western portion of the deposit for approximately 100 meters to the northwest into an area covering approximately 1,000 meters x 400 meters that has not yet been drilled by EMC. Additional drilling is planned as soon as possible in this area; one core rig is already on site for this purpose.

• A follow-up drilling program at the high-grade Tama Zone, located only 400 meters east of the main Gaby deposit, is underway to assess the size potential of the plus 600 meter long shear zone with previous values reported by EMC of up to 24.0 g/t gold over 2 meter drill intercepts in 3 holes, together with similar values from surface exposures. To date, 3 additional drill holes have recently been completed with assays pending and another 2 holes are planned.

• Deep drilling (up to 1,000 meters depth) is planned for the main Gaby deposit to accomplish two principal goals: firstly, to test for the presence of deeper mineralized zones, as indicated by the existing data, which may have acted as feeders to the known gold mineralization or which may form part of a more extensive mineralized body; secondly, to test for lateral extensions of mineralization in areas not previously drilled.

• Based on a recent re-interpretation of the western portion of the deposit, EMC plans to carry out additional drilling in the southeastern portion of the Guadalupe concession. This program will test for the eastern extension of the western Guadalupe zone of mineralization in areas that have not yet been drilled.

2. Other Upside Potential

• The prefeasibility study Rates of Return (IRR’s) and Present Values (NPV’s) have been calculated so far on a 100% equity basis, pre-tax and pre-royalty, but without the benefit of detailed "financial engineering" in terms of forward selling of gold and debt-equity scenarios. In addition, the estimated cash flow from the project could qualify, based on presently known banking criteria, for gold-loan project financing to reduce the equity portion of the $152 million initial capital cost by close to 50%. The government of Ecuador has recently indicated that the present 3.0% gross royalty on metal production will be rescinded shortly, together with a willingness to discuss other favorable tax incentives on a "special case" basis. In light of the fact that Gaby is the largest gold project in Ecuador at this time, it is expected that the project would qualify as a "special case".

• The initial capital cost estimate of US$152 million includes US$22.5 million for the cost of a 24 megawatt power generating plant which will be required because local electrical power cannot be assured over the mine life due to problems with Ecuador’s principal government-owned hydro-electric power generating plant. More recently, private companies have begun construction and operation of additional power stations (principally powered by natural gas) in Ecuador and several have indicated that excess power may be available for use at Gaby. Discussions are continuing which, if successful, would reduce the initial capital cost by close to 15% and thus provide a significant positive impact on the overall project economics.

• A new metallurgical technique, recently developed by an Australian company, which may enhance metallurgical recovery and reduce operating costs will be tested on the Gaby ore. This technique, known as the Atomaer process, has been proven to be successful at several gold mines in Australia where it has enhanced overall metallurgical recovery by up to 15%, increased mill throughput, reduced gold leaching time and lowered overall reagent consumption. EMC personnel have recently visited such operations in western Australia. Metallurgical sample composites will be submitted shortly and results can be expected in the summer.

• Initial calculations of open-pit slope angles by Golder Associates of Redmond, Washington indicate that steeper pit slope angles than those used in the prefeasibility study may be possible, subject to further geotechnical engineering studies. With positive results, such steeper slope angles may reduce the overall waste-to-ore ratio from the current 1.13 to 1 ratio and thus reduce operating costs.

• Additional capital and operating cost optimization will be a priority, with particular attention being paid to major cost items such as the crushing/grinding circuit, tailings impoundment, the EPCM contract and the overall contingency level; these items presently account for approximately 56% of the total capital costs. A relatively small amount of contractor mining for waste haulage has been included in years 1 and 11 of the estimated 13 year mine life due to higher than normal mining rates in those years. The viability of utilizing contractor mining over a portion of the entire mine life will also be evaluated in detail during the feasibility study.

EMC plans to commence the final feasibility study as soon as possible, dependent upon availability of drill rigs, but many of these optimization scenarios have already begun. An estimated 15,000 to 17,000 meters of additional core drilling is planned to yield a drill-hole spacing for the final mineable reserve of approximately 50 meters, based on an assessment of the current statistical semi-variograms and ranges. Concurrent with this definition drilling will be the deep drill holes to depths of up to 1000 meters described above, together with follow up drilling, if warranted, at Tama and the western extension area. The final feasibility study is currently expected to be completed by late summer 1998, subject to the availability of suitable financing.

EMC is a mineral exploration and development company with a focus on bulk mineable gold and copper porphyry deposits in the northern Andes of South America, specifically Ecuador and Peru. The Company has 31.4 million common shares outstanding and 34.9 million on a fully diluted basis.

Stephen J. Kay, President and CEO

The Toronto Stock Exchange neither approves nor disapproves the information contained in this News Release.

For additional information, contact Linda North at Tel: (602) 483-9932 or Fax: (602) 483-9926.

Go Back to News Releases

Return to Homepage