ronto,Ontario - Feb 18, 1997

South American Gold and Copper Company Limited Announces Initial Results of Drill Program at Pimenton

Toronto, Ontario - South American Gold and Copper Company Limited ("SAGC") announced today that it has completed three diamond drill holes totaling 1,004 meters of a planned 2,100 meter program in the Lucho area of its Pimenton Gold Copper Mine. The drill program which commenced in December of 1996 is designed to test veins and associated stockworks which were encountered in the 3430 and 3470 levels. The first two drill holes were drilled on the same section at the southern end of the stockwork zone and are believed to have cut the outer limits of the ore zone. These two holes TDDH-5 and 6 encountered three veins 6 to 15 centimetres wide with up to 11 grams of gold per tonne and two stockwork structure one of which was 8.03 metres wide and averaged 0.32 grams of gold per tonne and the other 9 metres wide gave a trace of gold. The third hole TDDH-4 was drilled underground from the 3430 level 130 metres to the north and showed the following intercepts.

n/a = Not assayed
(a) = Pyrite, chalcopyrite, quartz, speculatire, silicified tuff
(b) = Some pyrite veinlets, chalcopyrite, silicified tuff
(c) = Pyrite veinlets, quartz, silicified tuff
(d) = Pyrite, quartz, disseminated and in stockwork silicified tuff
(e) = Pyrite veinlets, chalcopyrite, quartz, silicified tuff
(f) = Pyrite veinlets and stockworking, chalcopyrite, quartz, silicified tuff
(g) = Pyrite veinlets, quartz, silicified propylitized breccia
(h) = Feldspar porphryr - silicified propylitized
(i) = Pyrite, chalcopyrite, quartz in silicified porphryr
(j) = Silifified and propylitized tuff passing to feldspar porphryr

Figure I shows the relationship of the drill intercepts of TDDH-4 to the known veins on the 3430 level. The gold values are persisting with depth and the stockworking with disseminated gold mineralization associated with the central group of veins in the Lucho area, the Manterola, Leyton and the newly discovered Gina vein has become more pronounced beneath the 3430 suggesting we are approaching in depth stronger, more extensive mineralization. Over 85 metres of the drill hole TDDH-4 averaged 1.10 grams of gold per tone including the veins within this length which further emphasizes the possibility of stronger mineralization with depth.

Figure II illustrates the increase in size of the low grade mineralization envelope around the veins with increasing depth. Drill hole TDDH-4 intersected the Lucho vein approximately 130 metres below the 3430 level and returned 50.63 grams of gold per tonne and 2.26% copper over 62 centimetres showing the high grade mineralization is persisting at depth. The known vertical extent of high grade veins in surface and underground workings now exceeds 300 metres in the Lucho area.

At least two additional holes will be drilled on two sections between drill holes TDDH-1 and TDDH-3 which have already been completed. These drill holes have been planned to test the known extent of the veins and stockworks with associated disseminated mineralization to approximately the 3185 level, which is 245 metres below the 3430 level. Further drilling is planned based on the final interpretation of results from the current program.

Recent driftings on the Manterola and Michele veins on the 3430 level are encouraging. Manterola heading south over the last 31 metres has averaged 21.6 grams gold per tonne, 0.44% copper over 1.27 metres. Michele heading south over the last 45 metres has averaged 15.6 grams gold per tonne, 1.43% copper over 1.12 metres.

The Company also announced that it has recently completed initial geochemical (talus) sampling along a contour located approximately 500 metres to the north of the Pimenton ridge line as shown by Figure III. This program has confirmed in more precise detail the existence of a very strong 600 metre wide gold/copper anomaly trending northeast which was originally located by Cominco geologists in 1982. Assay results just received who average geochemical gold values of 9.352 grams of gold per tonne over the entire 600 metre distance. Cominco also demonstrated that the anomaly extends about 1000 metres to the southwest with high to very high geochemical gold of up to 16.9 grams of gold per tonne to the south of the Pimenton ridge. Values of one plus one gram per tonne are common. The target here would be steeply dipping notheasterly trending veins and stockworks. The Company is presently determining if it will be possible to initiate and complete a drill program on this target before the onset of winter.

Reconnaissance work by SAGC geologists has located two northeasterly trending veins in a steep cliff 800 metres to the northeast of the recent contour geochemical traverse. These gave up to 1.18 grams gold and 2.3% copper over 50 centimetres at an altitude of 3850 metres. A pronounced very steep cirque of glacial valley extends to the southeast from these veins and there is extensive alteration colors over a distance exceeding 1500 metres. A further geochemical talus sampling program is underway. If this program shows positive results it will open the possibility that the Lucho group of veins will extend in as much as two kilometers to the northeast of where they are presently being explored.

The pilot mill at Pimenton has been operated at up to 140 tonnes per day using diluted material from the development headings averaging 4 to 8 grams of gold per tonne as mill feed. The Company is currently installing a regrind system and a Knelson Concentrator in the mill circuit which is expected to significantly increase the recovery of coarse gold much of which is currently being lost in the circuit.

Proven and Probable Ore reserves at Pimenton now stand at: 92,048 tonnes averaging 18.59 g/t gold and 1.55% copper, or 63,900 ounces of contained gold including the copper equivalent. Over the last four months we have been adding an average of 15,000 tonnes per month containing approximately 9,600 ounces of contained gold and copper equivalent.

Once the present drill program testing the region below the 3430 level is completed a drill inferred reserve of lower grade ores in stockwork can be estimated in addition to high grade vein reserves. Results to date are substantiating inferred resource potential in high grade veins of over 900,000 ounces contained in 1,800,000 tonnes. The resource potential for low grade stockwork material at Pimenton is currently estimated to exceed a further million ounces.

Continued emphasis will be placed on exploration and development at Pimenton.

The Company also reported that during 1996 it was invited to submit its Halcon Program for a technical review by the Geological Department of the University of Chile working in conjunction with several Chilean and International funding sources to assist in developing new mining districts in Chile. In competition with numerous other projects, SAGC's Chilean subsidiary was awarded grants totaling US $1,900,000 to fund salaries and field support of five senior geologists and five geologists working for higher degrees as well as the full technical resources of the University of Chile.

During the initial four week work period, which is currently suspended for a four week summer vacation period, the University perfected geochemical stream sediment techniques to match local conditions and started work in a geological drainage survey in the northern portion of the Halcon project area.

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, VP and CFO (odonnell@sagc.com). Telephone: (212) 983-9300, fax: (212) 983-9314.