Arauco completes George Lake prefeasibility study.

TORONTO--(BUSINESS WIRE)--March 25, 1997--Arauco Resources Corp. (TSE:ARU) is pleased to announce the completion of its prefeasibility study into the George Lake gold project in the Northwest Territories. The study examined the feasibility of shipping ore over winter roads to a nearby milling facility. The study was based on the following parameters: -0-

-Mineable Resource  Tonnes                          5,294,438
                    Grade           10.6 grams gold per tonne

-Production Rate    Per Day                      1,500 tonnes

-Mining Method                       Open Pit and Underground

The study estimates $63 million in preproduction capital will be required, while life-of-mine capital costs are $83 million. Operating costs are estimated at $105 per tonne, while recoveries are estimated at 92 percent. The study produced the following results:

Operating Costs per Ounce                             US$242

IRR @ US$390 Gold (Including Property Purchase) 18.2 percent
IRR @ US$390 Gold (Not including Property
 Purchase)                                      34.3 percent

Net Present Value (5 percent Discount Rate)     $132 million
Net Present Value  (10 percent Discount Rate)    $85 million

Arauco plans to embark on an independent feasibility study immediately, with completion scheduled for late this year. The study will include the option of constructing a milling facility at George Lake, which would add an estimated $50 million to the capital costs but reduce operating costs to below US$200 per ounce. It is currently anticipated that, subject to financing and permitting, mining could begin in July of 1998 with actual gold production six months later.

Arauco is also pleased to announce that George Woollett has been appointed Vice-President Exploration. Woollett has a strong background in mine and exploration geology, having worked in the Canadian north for 40 years. As one of the founders of Trigg, Woollett, Olson Consulting of Edmonton, he was a member of the team that discovered gold on the George Lake site in 1982. More recently, he has been responsible for the annual audit of reserves for Echo Bay Mines.

A drilling contract has recently been let for a 20,000 metre drilling program including both infill and exploration drilling, which is slated to begin next month. The exploration will include the testing of 12 high priority targets designed to increase the resource at George Lake.

CONTACT: Arauco Resources Corporation

Kerry J. Knoll, 416/ 860-1583