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ECHO BAY TO INCREASE ITS OWNERSHIP OF SANTA ELINA TO 50%

DENVER, April 9 /PRNewswire/ -- Echo Bay Mines Ltd. (AMEX: ECO; Toronto), Santa Elina Gold Corporation (Toronto: SAU), and Sercor Ltd. (a private company that owns 66% of Santa Elina) announced today that they have signed an agreement enabling Echo Bay to increase its ownership of Santa Elina to 50% from 7% in a US$122.5 million stock- for-stock transaction. The agreement is subject to regulatory approvals and approval by two-thirds of the minority shareholders of Santa Elina. On completion, Echo Bay and Sercor would each own 50% of Santa Elina, a gold company whose assets are located principally in Brazil.

Echo Bay would acquire 58.6 million common shares of Santa Elina, sufficient to achieve 50% ownership of the company when added to the 9.0 million shares it already owns. Santa Elina shareholders will be entitled to receive one share of Echo Bay common stock for every 6.67 shares of Santa Elina, equivalent to US$2.08 per Santa Elina share based on Echo Bay's closing price of US$13.875 today (April 9, 1996), valuing the deal at US$122.5 million. This is a premium of 29% over Santa Elina's market price of C$2.19 (US$1.61) at the close of business today. Echo Bay will issue approximately 8.8 million new common shares to accomplish the transaction.

Echo Bay would acquire all of the 35.1 million Santa Elina shares held publicly and 23.5 million of the 91.0 million shares held privately by Sercor. Sercor is owned by the family of Paulo de Brito, Chairman of Santa Elina. Sercor has agreed to the transaction, which will leave Sercor with 67.6 million shares and Echo Bay with 67.6 million shares. All share numbers are stated on a fully diluted basis.

The transaction has been approved by the boards of directors of the three companies, including an independent committee of Santa Elina's board. The independent committee has relied upon financial advice provided by RBC Dominion Securities Inc. The transaction is subject to approval by two-thirds of the minority shareholders of Santa Elina at a special meeting to be held on or about May 16 in Toronto.

The transaction will be accomplished by a merger of Santa Elina into a newly formed private company equally owned by Echo Bay and Sercor.

Richard C. Kraus, Echo Bay President and Chief Executive Officer, said, "We like what we see for both the medium- and long-term at Santa Elina. By the end of this year, we expect to complete a detailed feasibility study on Chapada, a large copper-gold development property, and initial feasibility studies on the Sao Francisco and Fazenda Nova gold exploration properties, all in Brazil. We anticipate a sufficiently large increase in gold mineralization from those three properties by year-end to offset any dilution in gold mineralization per share caused by the issuance of 8.8 million new Echo Bay shares."

Mr. Kraus added, "In the medium term, we believe Chapada will be a very important project for Echo Bay. By increasing our position in
 - more -
 - 2 - Santa Elina, we'll increase our net interest in Chapada to 66.5%. Our recent work there has indicated that significant additional amounts of gold and co-product copper are likely to be added to the mineralization.


"In the long term," he said, "we think Brazil is an excellent place for us to be, and we'll be there with Sercor and the de Brito family, strong strategic-alliance partners. Brazil is South America's largest gold producer, with a rich mining heritage that dates back to the 1700s. Santa Elina has claimed about 12 million hectares (30 million acres or 46,000 square miles) -- about the size of New York State. That's one of the largest land positions in Brazil, with a good portion of it on the major gold belt running through the western part of the country.

"At Echo Bay, our strategic plans call for us to double gold production and gold reserves by the year 2000," President Kraus said. "Increasing our position in Brazil in partnership with Sercor and the de Brito family is a good opportunity to help get us there."

Paulo C. de Brito, Chairman of Santa Elina and Sercor, said, "This transaction not only enables Santa Elina shareholders to realize a current premium on their shares, but also lets all of us participate in the future growth of Santa Elina's properties through our ownership in Echo Bay. The combined resources of both companies will enable a number of Santa Elina's exciting gold properties to realize their full potential much sooner than would have been possible other-wise."

Santa Elina owns an 83% interest in Sao Francisco, an advanced- staged exploration property with extensive but incompletely outlined mineralization, and in an intermediate-stage gold exploration property, Fazenda Nova, in west-central Brazil. Fazenda Nova has extensive gold mineralization in six separate areas, only one of which has been extensively drill-tested to date. The de Brito family owns the remaining 17% interest in both properties. Both deposits are open in several directions. Echo Bay plans to complete an initial feasibility study on both properties by year-end 1996.

Santa Elina also owns an 83% interest in Chapada, a large copper- gold development property in central Brazil, with the de Brito family owning the remaining 17%. In 1995, Echo Bay acquired an option entitling it to acquire a 50% interest in Chapada by paying Santa Elina US$25 per ounce of gold and US$0.02 per pound of copper for Echo Bay's share of proven and probable reserves as determined in a bankable feasibility study. The transaction announced today will increase Echo Bay's net interest in Chapada to 66.5% and reduce the de Brito group's net interest to 33.5%.

The mineralization outlined at Chapada is expected to grow significantly with additional exploration drilling in 1996 and beyond, as the deposit is open on the perimeter and at depth. Echo Bay plans to complete a detailed feasibility study, currently under way, by the end of this year. This will enable the company to report ore reserves and other mineralization at year-end 1996, and will provide the information necessary to make a decision to develop Chapada into a mine.

At the end of last year, Echo Bay reported Chapada's total mineralization as 1.3 million ounces of gold and 972 million pounds of co-product copper based on estimates prepared by Watts, Griffis and McOuat Limited for Santa Elina and included in Santa Elina's December 1994 initial public offering statement.

Santa Elina also owns an 83% interest in the Sao Vicente gold mine, which produced about 25,000 ounces of gold in 1995. A recent review suggests that process improvements could enhance throughput and reduce unit costs.

Echo Bay is a major gold producer with mines in Canada and the United States. It has greatly expanded its search for gold reserves and
 - more -
 - 3 - production in recent years. Its shares are traded principally on the American and Toronto stock exchanges, with other listings on exchanges in Switzerland, France, Germany and Belgium.


Santa Elina is headquartered in Sao Paulo, Brazil. The company was founded 17 years ago by Paulo de Brito, the company's Chairman, President and Chief Executive Officer. Santa Elina's shares were first offered to the public in December 1994. They are listed on The Toronto Stock Exchange.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Except for the statements of historical fact contained herein, the information presented includes forward-looking statements involving risks and uncertainties, including but not limited to actual results of current exploration activities, conclusions of feasibility studies now under way, changes in project parameters as plans continue to be refined, future prices of gold and copper, and other factors detailed in the companies' filings with the Securities and Exchange Commission and other regulatory bodies.
 -0- 4/9/96


/CONTACT: Media: Jill Paukert, 303-714-8825, or Investor: Ted Sheldon, 303-714-8813, both of Echo Bay; or Media/Investor: Christian F. Baiz, III, of Santa Elina Gold Corp., 212-715-0111/

/Echo Bay releases are available through Company News On-Call by fax, 800-758-5804, extension 269609, or http://www.prnewswire.com/

(ECO)

CO: Echo Bay Mines Ltd. ST: Colorado IN: MNG SU: TNM

MO-JL -- LATU072 -- 6178 04/09/96 18:14 EDT
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Date:Apr 9, 1996
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