Consolidated Nevada Goldfields Corporation announces acquisition and appoints lead underwriter for financing.

DENVER--(BUSINESS WIRE)--July 3, 1996--Consolidated Nevada Goldfields Corporation ("CNGC") today announced the signing of a definitive share purchase agreement with Mexican mining company Grupo Real del Monte, S.A. de C.V. ("GRDM") and Grupo Acerero del Norte, S.A. de C.V. ("GAN") to acquire all of the shares in certain of GRDM's subsidiaries.

The GRDM subsidiaries being acquired own and operate four mines located throughout Mexico.

According to Geoffrey Hoyl, CNGC's President and Chief Executive Officer: "Joining together with GRDM will immediately and substantially increase CNGC's reserves, resources and production capacity. This acquisition brings with it one of the premier precious metal mines in the world: the Pachuca Mine. Pachuca has been in continuous operation for over 465 years. During that time it has produced 6% of the world's supply of silver -- over 1.3 billion ounces -- and more than 6 million ounces of gold. Upon completion of the acquisition, we plan to embark on an investment program to modernize and streamline the Pachuca mine, restoring it to its full potential. In addition to Pachuca, CNGC will acquire three other operating Mexican mines. They are: Magistral del Oro, a gold tailings reprocessing operation; El Baztan, an underground copper mine; and, Barita de Sonora, an open pit barite mine. The acquisition of the Mexican properties, together with CNGC's two existing US mines, Nixon Fork, a high grade underground gold mine in Alaska and Aurora, an open pit gold mine in Nevada, will provide CNGC with a large and diversified asset base. CNGC's mineable, proven and probable reserves will increase by a factor of six to 600,000 ounces of gold, 47 million ounces of silver, 28 million pounds of copper and 4 million tonnes of barite. The Mexican operations, particularly Pachuca, bring with them excellent exploration potential and are a sound foundation for further company growth through acquisitions in Latin America. This transaction puts us squarely on the path towards our goal of being a mid-tier mining company."

Under the terms of the agreement, CNGC will issue a maximum of 52,290,091 common shares to GRDM. In addition, GAN will receive a 12% interest in the net profits from the Mexican operations until a total of US$5 million has been paid. GRDM will also be allowed to nominate one half of the Board of Directors of CNGC which will be expanded to a total of twelve members.

CNGC received a comprehensive due diligence review of the Mexican properties on June 25th from Denver based engineering company Pincock Allen & Holt. The due diligence review included a five year business plan for the combined company and concluded, in part, that a carefully managed program of capital investment and operational revisions can substantially increase the production and profitability of the combined company over the next five years. In addition, Scotia Capital Markets, one of Canada's leading investment banking firms has delivered an oral, preliminary opinion to the Board of Directors of CNGC which concludes that the transaction is fair, from a financial point of view, to CNGC's shareholders, subject to the completion of a minimum financing of US$20 million. A definitive opinion is expected to be received prior to, or concurrently with, the mailing of an information circular to the shareholders of CNGC.

CNGC will mail an information circular and proxy statement to its shareholders on or around July 5th. Management has called a special shareholder meeting for August 2nd and will seek shareholder approval for the acquisition, an increase in the size and a change in membership of the board and an increase in the company's authorized capital. The record date for shareholders eligible to receive notice of the meeting is June 26th. The entire transaction is subject to, among other things, shareholder approval, completion of due diligence and the timely completion of the minimum financing recommended in the Scotia Capital Markets fairness opinion.

CNGC also announced today that it has appointed a leading Canadian investment bank to act as its exclusive financial advisor and lead underwriter in a proposed private placement of up to US$25 million. Net proceeds from the private placement are to be used to fund the proposed operational improvements at the Pachuca mine and for general working capital purposes. The financing is expected to be concluded simultaneously with the closing of the acquisition.

CNGC's common shares trade on the Toronto Stock Exchange under the symbol KNV, on NASDAQ under the symbol KNVCF, and on the Stuttgart exchange under the symbol CNV-SG.

CONTACT: Consolidated Nevada Goldfields Corporation, Denver

Geoffrey Hoyl, 303/296-3200