Toronto,Ontario - AUG 14, 1997

South American Gold and Copper Company Limited Announces Plans for Development of a New Cement Manufacturing Facility in Chile

Toronto, Ontario - South American Gold and Copper Company Limited (TSE symbol "SAG") announced today that its 50.10% owned subsidiary, Compañia Minera Catedral Ltda., will proceed with plans for the development of up to a 1,500,000 ton per year cement manufacturing facility, estimated to cost approximately US $220 million. Penta Engineering Corp., of St. Louis, Missouri, USA, a highly experienced and industry recognized engineering and consulting firm specializing in the design and engineering of cement manufacturing facilities, has been engaged as Project Manager to develop the feasibility study on the project. Dames & Moore, Santiago, Chile, has been retained as the project's consultants on environmental and air quality standards. Construction Technology Laboratories, Skokie, Illinois, USA, will provide laboratory testing services and assist in process design. The decision to proceed with the project is based on the culmination of nearly three years of work on the Catedral/Rino limestone deposit which is located 100 kilometers southeast of Santiago, Chile.

A recently completed diamond drilling program, which included detailed systematic sampling and chemical analysis of the drill core by independent laboratories in the US and Australia, confirmed the results of a previously conducted pre-feasibility study on the project and shows that the Rino deposit contains substantially more than 100,000,000 tons of mineable limestone reserves having a very satisfactory chemical balance for the manufacture of portland cement. The diamond drill program and previously conducted pre-feasibility study on the project were completed under the direction of Behre Dolbear and Company, Inc., an internationally recognized consulting engineering firm with expertise in cement and cement aggregates.

Mine design plans of the Rino deposit show that it can be mined by open pit with practically no stripping ratio in the early years of its development, with an average strip ratio of less than one ton of waste to each ton of limestone mined over the more than 100 year estimated life of the deposit. Production can start with minimal preparation at 2,200 metres, well below significant snow levels, and will continue throughout the year.

Construction Technology Laboratories, a leading construction materials technology laboratory has acted as the Company's principal laboratory and process consultants in conducting chemical, physical and petrographic analyses as well as burnability and strength testing of the limestone from the Rino deposit. These tests have shown that the limestone at Rino is excellent quality cement rock for the manufacture of portland cement with very favorable strength characteristics. The tests also indicated that the limestone has a low burnability index which will reduce fuel kiln costs by 15%.

Compañia Minera Catedral has acquired adequate pozzolan reserves to complement the limestone reserves at Rino for the manufacture of pozzolan portland cement. In addition, there are large reserves of easily exploitable gypsum adjacent to the Rino deposit.

The location of the Rino deposit next to the new Gas Andes pipeline and the alternative plant site locations identified by the Company near Gas Andes' facilities external to the deposit will provide energy at low cost to the various possible plant sites currently under study.

Penta Engineering Corp. has advised the Company that a new plant can be designed to produce cement from the Rino limestone which will meet US environmental standards and exceed by appreciable margins the air quality and environmental standards currently in effect at the alternative plant site locations under consideration. Companies for which Penta Engineering Corp. has or is currently providing engineering services on cement manufacturing facilities include: Cemento Yura S.A.; Arequipa, Peru; Cementos de Chihuahua, Juarez, Mexico; Venezolana de Cementos S.A.C.A., Lara, Venezuela; Trinidad Cement Limited, Trinidad, West Indies; and in the United States, Ash Grove Cement, Lafarge Corp., RMC Lonestar, Medusa Cement, River Side Cement, Southdown, Inc., and many others.

Detailed studies and analysis of the project to date indicate that the new cement manufacturing facility will have a very favorable economic direct cost per ton of manufactured cement compared with domestically manufactured cement serving the Santiago market and highly competitive with announced costs of planned new cement manufacturing facilities. The cost advantages of an immense, easily mined limestone deposit and a modern cement plant located within 100 kilometers of Santiago having immediate access to natural gas pipeline facilities are among the factors which are highly favorable to Compañia Minera Catedral's project economics.

The Company is holding discussions with several international cement companies with substantial marketing and operating experience which have expressed serious interest in joining Compañia Minera Catedral in the development of the new cement manufacturing facility to serve the Chilean market at highly competitive prices. The Company has also received offers, which the Company is currently evaluating, from two Chilean organizations to fund a part of the project's cost.

SAGC is a mineral exploration company with extensive gold properties in Chile and Peru. Its common shares are listed on The Toronto Stock Exchange under the symbol SAG.

For further information, Stephen W. Houghton, President and CEO; William C. O'Donnell, EVP and CFO (odonnell@sagc.com). Telephone: (212) 983-9300, fax: (212) 983-9314.