Toronto,Ontario - July 17, 2001

South American Gold and Copper Company Limited Announces Renewed Activities on its Pimenton Gold Property

 

Toronto, Ontario, Canada - South American Gold and Copper Company Limited ("SAGC")(TSE Symbol SAG) announced today that it has reviewed the extensive information which has been developed on its Pimenton gold/copper property as a result of its previously conducted exploration and development activities. Pimenton is located 120 kilometers northeast of Santiago, Chile, in the V Region.

Pimenton was operated by SAGC under a combined exploration and development program between 1993 and 1997. During this period 4,100 meters of horizontal and vertical workings were developed and 7,400 meters of surface and underground diamond drilling was completed. A 140 ton per day capacity concentrator plant was also constructed, through which 12,000 tons of low-grade development ore was processed. During the summer of 1996, 350 tons of gold/copper concentrate worth over US $1,000,000 were produced and sold.

In early 1997, operations at Pimenton were curtailed due to the fall in the gold price. Prior to placing Pimenton on care and maintenance a detailed independent Scoping Study was completed which analyzed the potential for a 400 ton per day plant operation producing 50,000 ounces of gold annually with a gold price at US $330.00 per ounce. This study used the 140 ton per day concentrator as a base for systematically building the operation up to 400 tons per day.

In 1999, the Scoping Study was revised to determine the feasibility of re-starting Pimenton with minimal investment through very selective mining of existing reserves to fund further development of the veins at depth leading to significant expansion of reserves. (See SAGC website, www.sagc.com for further details.) This mining plan was developed by an independent consultant, John Selters (Professional Engineer and a Qualified Person), with experience in narrow vein mining. While feasible at gold and copper prices of $260 per ounce and $.80 per pound respectively, SAGC determined that gold prices at the time were not sufficiently stable to undertake the investment. The mine reserves and resources estimated as revised by John Selters at that time were:

 

Note (1): the reserve estimate is based on highly selective mining to limit dilution and increase the mill feed grades. The gold equivalence factor was 1.98 grams gold per one percent copper, based on prices of US $260 per ounce of gold and US $0.80 per pound of copper, with consideration of metal recoveries, smelter terms and refining costs.

Note (2): Inferred resources do not include Proven and Probable Reserves and were calculated based on projections below proven and probable blocks on the known vein systems. A portion of these resources estimates were based on positive drill hole intercepts. Although confined to known ore shoots on known structures, the confidence level of the grade and tonnage estimate of Inferred Resources is lower than the proven and probable reserve.

Note (3): the inferred resources include 24,852 tonnes of ore at a gold equivalent of 21.05 grams per tonne previously categorized as "Possible Ore" under formerly applicable ore reserve definitions at the time calculated by John Selters in 1999. The scoping study prepared in 1996 included 421,094 tonnes of inferred resource at a gold equivalent per tonne of 14.62 grams per tonne utilizing a shrinkage stoping method of mining. The gold equivalence factor was 2.18 gm/t for each one percent copper. This was based on prices of US $330 per ounce gold and US $1.05 per pound copper with no adjustment for metal recoveries or smelter terms.

The total resource potential for Pimenton as validated by independent consultants, Behre, Dolbear & Company, Ltd., in their "Qualifying Report" to SAGC dated November 26, 1996, which was prepared in conjunction with the Company’s 1996 National Policy No. 2-A study, concluded, "Estimates which indicate that gold contents in the order of 1 million ounces or more, therefore, are considered valid for Pimenton." The 1996 National Policy No. 2-A study was based on known vein systems at Pimenton at the time of its preparation.

As a result of the recently completed review of Pimenton and encouraging signs of a further recovery in gold prices, the Directors of SAGC are planning to initiate further exploration. If successful, this initiative could enhance the development of existing reserves and increase the resource base at Pimenton. The exploration program will be concentrated on three areas largely covered by glacial deposits, but from which encouraging preliminary exploration results have been obtained. The program is scheduled to start in December and can be undertaken at modest cost utilizing detailed geophysics and geochemistry.

Dr. David R. S. Thomson, EVP and Director of Exploration, stated, "The proposed exploration program will pinpoint new targets for exploration and development of veins and may justify further exploration for deep-seated bulk tonnage possibilities. Pimenton is probably the upper part of a buried Porphyry copper system with a late stage widespread over print by a system of rich but narrow gold veins. The knowledge gained from a successful exploration program will assist the Company in developing Pimenton’s existing resources into reserves and enable it to incorporate plans for systematically expanding future operations to an optimum level based on results of the program and continued improvement in the price of gold."

South American Gold and Copper Company Limited is a mineral exploration and development company with properties and activities currently focused in Chile. It is also developing industrial minerals projects and will utilize potential earnings from these projects to further advance its exploration and development activities. Its common shares are listed on The Toronto Stock Exchange under the symbol SAG.

For further information, please contact Stephen W. Houghton, President and CEO at telephone (212) 751-0083, fax (212) 751-0319 and visit our website at http://www.sagc.com.