CAL NORTE LIME PROJECT
EXECUTIVE SUMMARY
INTRODUCTION

South American Gold and Copper Company "SAGC" has been operating in Chile since 1991. Its common stock is traded on the Toronto Stock Exchange under the symbol of "SAG"

Chile suffers from a lack of well-located high grade limestone deposits. In recognition of this shortage and the fact that there exists substantial growth opportunities for the consumption of burnt lime in Chile particularly in the mining industry, SAGC has refocused part of its exploration activities and knowledge of the Chilean mining industry to identify potential burnt lime projects.

While SAGC has to date identified four potential market areas, this Executive Summary will concentrate on its most advanced burnt lime project, Cal Norte, which will have a capacity of 150 tpd of kiln product with the potential of being expanded to 300 tpd by 2004.

Quicklime (lime), often referred to as burnt lime is produced by heating limestone to a temperature where the CaCO3 disassociates to from lime (CaO) and carbon dioxide (CO2 ).

THE CHILEAN BURNT LIME MARKET can be summarized as follows:

• The demand for burnt lime (CaO) in Chile is growing and presently exceeds 1,022,000 tpy. The mining industry in Chile currently consumes approximately 527,000 tpy (1999) basically supplied by private producers, with the balance primarily taken up by the pulp, paper and sugar industries, which own their own captive lime plants. The demand for metallurgical grade burnt lime, based on new mines and mine expansion plans in progress, is expected to increase by an additional 251,000 tpy in just the Central Regions (Regions IV, V, VI and the Metropolitan Region) which are the focus of this Executive Summary. Due to the shortage of well located high grade limestone deposits in the Central Region, approximately 50,000 (1999) of lime is being imported from Argentina at high transport cost and over a road which can be adversely effected during the winter months. These importations from Argentina are expected to increase to 100,000 tpy in 2000.

• Currently there are two independent suppliers of metallurgical grade lime serving Chile, SOPROCAL and INACESA.

• SOPROCAL, which operates one plant in Melipilla, 70 kilometers southwest of Santiago, operates a 100 tpd and a 400 tpd rotary shaft kiln producing both construction and metallurgical grade lime. Soprocal's primary source of high grade limestone for the Melipilla plant is the La Perla mine, located at an elevation of 2100 meters. The mine is subject to winter closure on account of avalanche dangers and requires stockpiling at its crushing plant, 45 kilometers from the mine. The limestone is then trucked 135 kilometers from the crushing plant to the Melipilla plant.

• INACESA operates two plants, one 400 tpd rotary shaft kiln at a plant site near Copiapo in Region III, 800 road kilometers north of Santiago, and one 300 tpd rotary shaft kiln at a plant site near Antofagasta in Region II, 1,400 road kilometers north of Santiago. Neither of these INACESA plants are competitive, due to transport distances, to the market area to be served by the Cal Norte plant.

CAL NORTE PROJECT

SAGC holds a 60% interest in Compania Cal Norte ("Cal Norte") through its wholly owned subsidiary Compania Minera Til Til Ltd. The Other 40% of Cal Norte is held by Cia Minera Quelon.

The CAL NORTE lime plant will be designed for an initial 150 tpd (51,000 tpy production) of metallurgical grade lime (CaO) with provisions to expand to 300 tpd in the future. It will be located in Canela, near Illapel, in the Region IV, a distance of 323 kilometers north of Santiago. The primary customer for the plant’s output will be the new Los Pelambres Copper mine which will initially consume 115 tpd of CaO and is expected to increase to 145 tpd (70% free lime content) by 2003 when the plant operations at Los Pelambres are expanded. The Cal Norte plant is ideally located to supply the projected 150 tpd of CaO which will be required by the adjacent Pachon copper deposit which is expected to be placed into production in 2003-2004.

PENTA ENGINEERING CORP. ("Penta"), St. Louis, Missouri, a industry respected engineering firm specializing in the design, construction management and start-up of lime kilns and related facilities as well as cement plants has completed a bankable feasibility study on the project. The feasibility study estimates a total capital cost of the project to be $7,370,000. Direct operating costs per ton of kiln product are expected to be less than the US $40.00 per ton. The limestone kiln design selected by Penta will utilize a modern efficient dual vertical shaft reversery kiln manufactured by either Cimprogetti or Maerz. The kiln to be purchased will be a standard "of the shelf" design. Dual shaft vertical kilns require less annual maintenance, are more fuel efficient and are environmentally friendly compared to the older rotary shaft kilns currently operated by SOPRACAL and INACSESA.

The Cal Norte plant will be located at the Hornito and Ceci Tres mine area which contain proven and probable recoverable reserves of 1,533,400 tons of CaCO3 grading near 90% CaCO3 with possible reserves of 1,753,000 tons of CaCO3. These reserves can be increased substantially by additional drilling. Both mines have been in operation during the past six years supplying Cemento Melon and Cemento Polpaico with high grade limestone as a fuel supplement to the low grade Navio and Cerro Blanco limestone deposits.

Both CIMPROGETTI and MAERZ have performed extensive tests of the limestone from the Hornito and Ceci Tres deposits. These tests indicate the material will perform satisfactorily in a vertical dual shaft reversary kiln.

Contract discussions for a substantial part of the Cal Norte’s plant output are well in progress. The construction schedule calls for construction to begin in January 2000 and with a plant startup of January 2001.

At the time of plant start-up, Call Norte will have entered into a technical services agreement with Penta. Under this agreement Penta will provide ongoing technical services to Cal Norte to assure maximum operating efficiency of the Cal Norte plant.