Consolidated Nevada Goldfields Corporation announces fiscal 1997 first quarter results and details Mexican acquisition.

DENVER--(BUSINESS WIRE)--Nov. 8, 1996--The first quarter of fiscal 1997 culminated in significant advances for the Company.

On October 10, 1996, four operating silver, gold, copper and barite mines in Mexico were acquired from former owner Grupo Real del Monte S.A. de C.V. Simultaneous with the closing of this acquisition, a related US$20 million special warrants financing was completed. With the completion of these transactions, the Company moves confidently into the international mining arena. Now, with six producing mines and over 1,500 employees, the Company counts among its resources proven and probable reserves of approximately 600,000 ounces of gold, 47 million ounces of silver, 28 million pounds of copper and 4 million tons of barite. Total gold equivalent geologic resources are 4.8 million ounces. The combined Company is projected by independent engineers to double its productive capacity as a result of the Mexican acquisition. It represents an impressive beginning to fiscal 1997.

Here is a brief overview of each of the mines acquired:

-- Pachuca - a gold and silver mine which has been in continuous operation for over 465 years producing over 1.2 billion ounces of silver and 6 million ounces of gold. Pachuca is currently operating at less than half capacity and the Company is planning on restoring the mine to its full potential and exploring the 116,000 acre Pachuca district which the Company now owns virtually in its entirety.

-- El Baztan - a 500-ton-per-day operating copper and gold mine which currently has average grades of 1.8% copper and over 43,000 acres of exploration land.

-- Magistral del Oro - currently reprocessing tailings from a gold mine which produced approximately 700,000 ounces of gold.

-- Barita de Sonora - a barite mine which sells high-quality barite to the petroleum industry which currently has in excess of 10 years of reserves.

During the quarter, at its U.S. mines, the Company sold 10,172 ounces of gold compared to 4,860 ounces of gold sold during the comparable quarter of 1996. The Company reported a net loss of $2,543,000 on revenues of $3,565,000 compared to a net loss of $227,000 on revenues of $1,697,000 for the comparable quarter of the prior year. Included in the quarter's net loss are non-cash charges of $1,425,600 in depreciation, depletion and amortization and $242,000 in the continuing write-off of a hedging agreement terminated in a prior period. Also included were $474,000 in finance charges. The increase in the loss was primarily a result of temporary mining sequencing delays and equipment downtime due to major overhaul programs at the Nixon Fork mine in Alaska. General and administrative costs continued to be high due because of activities related to the Grupo Real del Monte acquisition.

PACHUCA

In acquiring the Pachuca mine, the Company inherits half a millennium of extraordinary mining history. The Company now owns 100% of the Pachuca underground mine complex, mill, refinery, considerable real estate holdings in the city of Pachuca and the mining concessions covering the entire Pachuca mining district, including over 116,000 acres of highly prospective exploration ground.

The mine is in operation and employs 1,043 people. Last year Pachuca produced 1.6 million ounces of silver, 7,100 ounces of gold, 223 tons of zinc and 29 tons of lead from its 3,000-ton-per-day flotation/cyanidation mill. Pachuca owns and operates the only precious metals refinery in Mexico, producing 99.99% pure gold and silver with a Comex fair delivery silver grade stamp. All of the silver and gold mined at Pachuca is refined on site through this facility.

Pachuca is currently producing at less than half capacity. In concert with Denver-based engineering company, Pincock, Allen & Holt, a comprehensive investment plan has been designed to restore the mine to its full capacity of six million ounces of silver and 30,000 ounces of gold per year. The majority of this plan is to be implemented over the next two years at a total estimated capital cost of $27.7 million, the bulk of which is to be spent in shaft sinking, development of new haulage entries and development of new stopes. In addition, minor equipment upgrades and replacements will be made in the mill.

Exploration at Pachuca

The Pachuca mine exploits two intersecting quartz vein systems trending west-northwest and north-south. These veins are generally steeply dipping with widths ranging from 0.3 meters up to 15 meters at some localities in the district. Despite its 465 years of operation, very significant potential exists for the discovery of new veins and deposits on extensions of the known veins. In addition, the El Chico/Zumate area to the north of the existing mine is truly a world class exploration target with an areal extent three times that of the historic workings at Pachuca. Fifteen hundred meters of underground exploration and approximately 200 diamond drill holes in this area have just begun to define the extent of its potential. In the process, drill-indicated and inferred resources of 3.6 million tons have been established at an average grade of 8.7 ounces of silver and 0.07 ounces of gold per ton for a total of 31 million ounces of silver and 250,000 ounces of gold. This significant area will have a high priority in future district exploration plans.

MAGISTRAL DEL ORO

At Magistral del Oro, the Company processes tailings from a mine which produced approximately 700,000 ounces of gold during its 100-year life. The gold-bearing tailings are "mined" then agglomerated and stacked for heap leaching. Gold recovery is achieved using conventional cyanide leaching of the heaps and ADR technology (adsorption using activated carbon, desorbtion by higher strength cyanide solutions, and recovery in electrolytic cells).

Reserves remaining are 1.45 million tons at a grade of 0.066 ounces of gold per ton, sufficient to sustain the operation for 3.6 years at the current production rate. The Company is currently evaluating a 30% increase in the production rate which would reduce the operating life to 2.5 years.

Exploration at Magistral del Oro

Recent limited exploration at Magistral del Oro has identified a resource of 745,000 tons at a gold grade of 0.142 ounces of gold per ton (106,000 contained ounces), dominantly in quartz veins similar to that mined in the past.

In addition, this work has identified two areas of disseminated gold mineralization. The best explored of these has surface samples averaging 0.06 ounces of gold per ton in an area measuring 330 feet by 130 feet. The disseminated mineralization in both areas is associated with silica and iron oxides, suggesting pipe-like epithermal bodies with significant tonnage potential.

BARITA DE SONORA

At its Barita de Sonora operation, the Company manufactures two high density barite products: 1) granular barite for use in oil well drilling additives; and, 2) on demand, small lots of fine-milled barite for various custom applications. Most of the granular barite is sold to PEMEX, Mexico's national petroleum company.

The barite is mined from deposits in Paleozoic sedimentary rocks by conventional open-pit mining methods. Processing consists of crushing the ore, followed by jigging (gravity concentration) to ensure the minimum specific gravity required by the customer.

Current reserves of 4.4 million tons are sufficient for a mine life in excess of 12 years at the current production rate. However, as mining moves away from the plant, increased haulage costs will impact the profitability of the operation. As a result, emphasis is being placed on exploration for deposits on trend in alluvium covered areas near the plant to optimize haulage costs.

EL BAZTAN MINE

At the El Baztan underground operation, copper ore is won from two types of mineral deposits. At the Vista Hermosa area, responsible for 85% of current production, skarn ore is mined from an andesite host adjacent to an intermediate porphyry. The El Arroyo area produces from a vein cutting the andesitic rocks. The ore from both deposits is processed by conventional flotation in a 500-ton-per-day plant to produce a copper concentrate with minor gold and silver credits.

Total proven and probable mineable reserves for El Baztan are 734,000 tons averaging 1.92% copper (28.2 million contained pounds of copper). Of this total, 614,000 tons at 1.75% copper (21.5 million pounds of contained copper) are in the Vista Hermosa deposit, and 120,000 tons at 2.81% copper (6.7 million pounds of contained copper) are in the El Arroyo vein. During 1995, the El Baztan operations mined and processed 126,000 tons of ore.

Exploration at El Baztan

Underground diamond drilling has outlined an additional inferred resource of 507,000 tons at 1.50% copper. Indications are that there is a high probability that further drilling of this resource could nearly double the Vista Hermosa reserves. Analysis of historic production data has outlined a potential high grade ore shoot in the El Arroyo area at the intersection of several productive structures. This is the target of ongoing underground exploration.

NIXON FORK MINE

During the quarter, Nixon Fork sold 7,525 ounces of gold and experienced lower (1 oz/ton) grades. This is projected to be a temporary phenomenon caused by delays in underground development accessing higher grade orebodies in the mine. These delays were attributable to adverse ground conditions and equipment availability. These orebodies have now been accessed, are being developed for production, and are projected to increase the average grade, thereby increasing production and reducing operating cash cost. In addition, the operation experienced downtime caused by temporary cessations in production in the mill in order to perform equipment overhauls and to re-line the grinding mills.

Exploration at Nixon Fork

Nixon Fork Mine Site

Exploration drilling at the Nixon Fork mine has very significantly extended the C3000 orebody and discovered two new potential orebodies:

-- An underground drill hole (96U043) drilled down plunge to test the extent of the C3000 orebody at depth intersected two significant down plunge extensions:

-- 82 feet at 1.846 ounces of gold per ton from 236 feet to 318 feet -- 92.5 feet at 1.139 ounces of gold per ton from 358.5 feet to 451 feet

These intersections demonstrate an additional 280 vertical feet of new mineralization below the current level of mining (3000E stope). Because the original vertical extent of the 3000 orebody was only 177 feet and has produced over 43,000 ounces of gold, we expect to add important new reserves in this area.

-- Several drill holes in the C3300 deposit encountered higher grade intersections, including:

-- 5.9 feet at 3.464 ounces of gold per ton -- 25.3 feet at 1.006 ounces of gold per ton -- 34.8 feet at 1.710 ounces of gold per ton

These intercepts demonstrate that the new C3300 mineralized body has the potential to become an important new orebody in the Crystal/Garnet area.

-- Multiple drill holes in the J5-A area have intersected significant ore grades, including:

-- 12.1 feet at 2.174 ounces of gold per ton -- 10.8 feet at 0.500 ounces of gold per ton -- 11.5 feet at 0.755 ounces of gold per ton

These intercepts indicate potential to develop new reserves between the Crystal/Garnet and Mystery areas.

District Exploration

District-wide exploration at Nixon Fork has identified several areas of gold mineralization which the Company believes may extend the geologic resources.

-- Four drill holes in the intrusion demonstrate that previously defined gold-in-soil anomalies are associated with zones of extensive auriferous alteration. The best drill hole (NR96-03) intersected mineralization averaging 0.03 ounces of gold per ton from 37 feet to 145 feet, including 0.19 ounces of gold per ton from 62.5 to 69.0 feet and 0.12 ounces of gold per ton from 138.5 to 145 feet. The drill hole penetrates a coincident magnetic and gold-in-soil geochemical anomaly 3,000 feet long and up to 1,000 feet wide, suggesting significant potential for the delineation of a large, bulk-mineable, intrusion-hosted gold deposit on the Company's property.

-- A soil geochemical survey in the Eagle Creek area, six miles southwest of Nixon Fork, has extended the gold-anomalous (10 to 565 ppb) area there to 6,000 feet along the western contact of the stock. On the eastern margin of the stock, geochemical sampling outlines a 3,000-foot by 2,600-foot zone of low level (5-60 ppb) anomalous gold values which is interpreted to reflect mineralization on the marble/monzonite contact beneath a layer of dacitic alluvium derived from a ridge to the north. These data indicate that an entire new area of skarn-hosted gold mineralization has been discovered.

-- Analysis of airborne geophysical survey data indicates that ore-grade skarn mineralization has a unique combined magnetic-electromagnetic (EM) signature. Detailed evaluation of the data set, which covers all the Company's holdings in the area, for this signature should enhance the success rate of exploration drilling.

AURORA MINE

During the first quarter of fiscal 1997, Aurora sold 2,647 ounces of gold compared to 3,782 ounces of gold during the same period of fiscal 1996 as a result of low grade ore which as part of the mine plan was scheduled to be shipped to the mill. Despite a highwall failure earlier in the year, the mine experienced better than budget performance in tons milled, direct costs and recoveries.

Work continued on the definition of the Martinez deposit discovered during 1995. The Company completed over 38,000 feet of drilling which has established a resource of 1.16 million tons at a grade of 0.092 ounces of gold per ton for a total of 104,000 ounces of gold.

Better results from the ongoing drilling of the deeper portions of the Martinez deposit included true widths of:

-- 30 feet at 0.20 ounces of gold per ton -- 82 feet at 0.26 ounces of gold per ton -- 10 feet at 0.49 ounces of gold per ton -- 45 feet at 0.15 ounces of gold per ton -- 36 feet at 0.33 ounces of gold per ton

The Company plans on completing an internal feasibility study of the Martinez deposit during the second quarter of the fiscal year.

BARITE HILL

The reclamation of Barite Hill continued during the quarter with evaporation of the main pit water, and revegetation of the completed clay caps of the main heap and waste areas. In addition, the Company began initial studies of on-site bioremediation of the solution ponds. Substantial completion of reclamation is planned during 1997.

CONTACT: Consolidated Nevada Goldfields Corp., Denver

Geoffrey Hoyl, 303/296-3200