Toronto,Ontario - June 26, 2000

 

FOR IMMEDIATE RELEASE

South American Gold and Copper Company Limited Takes Major Step Toward Placing Cal Norte Project into Production

Toronto, Ontario, Canada - South American Gold and Copper Company Limited ("SAGC") (Toronto Stock Exchange Symbol "SAG"), is pleased to announce that it has been informed by a leading Chilean financial institution that its Directors have approved in principle an equity investment participation in SAGC’s Cal Norte lime project.

The Cal Norte lime manufacturing facility will have an initial capacity to produce 150 tons per day (51,000 tons per year) of metallurgical grade lime with provisions to double its capacity in anticipation of further growth in demand in the plant’s market area. The estimated Project capital cost is US $7,370,000. It will be located at the site of Cal Norte’s high grade limestone deposit and mine near Illapel, Region IV of Chile and approximately 130 kilometers northwest of Minera Los Pelambres’ new 85,000 ton per day copper concentrator,.

Stephen W. Houghton, President and CEO, stated, "The investment by the Chilean institution is expected to be in the range of US $2,000,000 to US $3,000,000 and will purchase an ownership interest in the Cal Norte project of approximately 20% to 30%. We expect to finalize a Stockholders Agreement with the financial institution in the next 25 to 35 days, by which time the final amount of the investment and equity participation in the Project will be determined.’

Mr. Houghton also announced, "SAGC has been informed by a major equipment supplier to the Cal Norte Project that it will make available to SAGC a credit facility in the amount of US $700,000 which SAGC will invest directly into the Cal Norte Project.

"Our confidence in placing our Cal Norte lime manufacturing facility into operation in mid to late 2001 has been greatly reinforced as a result of these recent events. The previously announced US $4,000,000 six year bank term credit facility for the Project in combination with the equipment supplier credit facility and the conditional equity financing commitment, which we are confident of finalizing, will enable SAGC to complete its financing plans for the Cal Norte Project.

"Contract discussions for the sale of the lime plant’s total daily production, a part of which is already under contract to Minera Los Pelambres, are also progressing well. We expect to have a substantial part of the plant’s capacity under contract by early September 2000, which fits with our financing arrangements and will enable SAGC to initiate construction activities on the Project.

"We are also pleased to report our first efforts at commercializing metallurgical grade lime imports from Argentine covered under our recently announced joint venture with the Argentinean lime producer are advancing favorably and we expect sales by the joint venture will be initiated during the third quarter of this year."

Metallurgical grade lime is used in minerals processing by the Chilean mining industry in the selective flotation process of copper minerals to modify alkalinity (pH) and also in gold leaching to provide protective alkalinity and to improve metallurgical efficiency.

SAGC’s interest in the Cal Norte project is currently 60% by way of its ownership position in Compañía Minera Cal Norte. Its interest in the sales/marketing joint venture with the Argentinean producer is 50%.

SAGC is a mineral exploration and development company with current focus on industrial mineral projects in Chile. The Company also holds significant interests in several high potential gold projects in Chile. Its common shares are listed on the Toronto Stock Exchange under the symbol SAG.