EL MISTI GOLD LIMITED - ANNOUNCEMENT.

VANCOUVER, BRITISH COLUMBIA--(BUSINESS WIRE)--Aug. 27, 1998--

The Board of Directors are pleased to announce the following:

^Directors Report to Shareholders

^The year has seen a period of significant consolidation and advancement of your Company. It is our pleasure to provide you with a report summarizing the significant events for the year ended March 31, 1998 and subsequent events up to August 15, 1998.

-- The Company underwent a dramatic expansion during the financial year with improved financial condition, new capital raised was $13.4 million, including $6.5 million in convertible debentures and $6.9 million in new equity, $4.1 million was subsequently raised by June 30, 1998. The ability to fund the Company during difficult market conditions was a significant achievement.

-- These capital raisings allowed the Company to increase its investment in mineral properties in Peru during the year by $8.1 million, a 68% increase. In an independent review of exploration activity in Peru the Company was ranked number five explorer in 1997 behind such illustrious companies as Newmont, Barrick, Buenaventura and Southern Peru Copper (Minas Y Pozos June 1998). This reinforces the Company's strategy of sole focus on Peru in terms of its ability to compete for mineral resources. Properties were selected in mineralized areas with evidence of previous production and disseminated mineralization in a specific structural setting. There can be no doubt that your Company is a most active junior explorer in Peru. Your company continues to be an aggressive explorer and is committed to the philosophy that drilling is a key ingredient to advancing exploration projects to resource definition stage and thereby adding shareholder value.

-- The Company completed four significant drill programs to date; San Nicolas, 10,000 meters; Sinchao 1997, 1,700 meters; Sinchao 1998, 6,700 meters; and Santa Rosa, 14,000 meters. These drill programs have, as announced on July 20, provided the basis for commencement of pre-feasibility studies at San Nicolas and Santa Rosa properties, to be carried out by Rosco Postle and Associates and the second phase drilling program at Sinchao. The Company completed a second phase drilling program at Sinchao in August this year under difficult drilling conditions with extremely fractured and water logged ground being encountered. A total of 5,175 meters of diamond drilling (10 holes) and 1,508 meters of reverse circulation drilling (7 holes) were completed. Assay results have been received for the reverse circulation drilling and three holes of diamond drilling, with encouraging results. All holes contained copper, gold, silver and zinc mineralization over significant drill widths. Assay results from the remaining drill holes are pending. Metallurgical testwork completed to date on drill samples has been encouraging as well with 90% of copper, gold, silver and zinc contents of the feed samples reporting to a bulk flotation concentrate. Further metallurgical testing is required to determine the metal recovery from the concentrates. The drill program at Sinchao indicates the presence of a major polymetallic mineralized system that warrants systematic evaluation.

-- The Company completed a 100% acquisition of the key tenements at its flagship property, Sinchao, including purchase agreements on the royalty provisions. The royalty

buyouts announced on March 30 are subject to regulatory approval. At Sinchao alone, as at July 31, your Company has an estimated investment of $16.6 million. This investment reflects the commitment and belief your directors have in the Sinchao property. Sinchao is located immediately west of the Cerro Tanthuatay Property where Southern Peru Copper Corporation and Buenaventura have announced a drill defined resource of 6.6 billion pounds of copper and 4 million ounces of gold.

-- Property payments of US$550,000 on tenements of lesser importance remains to be paid in 1998.

-- Early in March 1997 the Company secured an option, in a bold but eventually unsuccessful bid, to acquire the Cerro Corona property some 8 kilometers southeast of Sinchao. This property was identified as having close synergy with the Company's Sinchao and San Nicolas properties. The falling share price and lack of market support prevented the transaction from completing. Cerro Corona is reported to have resources of 1.3 billion pounds of copper and 3 million ounces of gold.

-- The Company's commitment to the Yanacocha region in Peru took a leap forward when, on April 3, it announced an option to purchase a 100% undivided interest in the Colpayoj and Chamis concessions immediately south west of the successful Yanacocha gold mine, which produces in excess of one million ounces of gold annually. The Company regards this region as one of the most prospective for bulk tonnage open pittable gold deposits in Peru. Gold asays in a drill hole of 0.6g/t over 165 metres have been encountered by previous explorers.

-- The Company reported on April 6, 1998 that it has secured an eighteen month option to purchase the San Nicolas heap leach operation including a pilot treatment plant which is located some three kilometers south of Sinchao. In addition, the San Nicolas Mine and Consulado options have been renegotiated with more favourable terms. The Company has until October 1999 to complete a feasibility on these projects. The Company plans to use the pilot plant to carry out in-field metallurgical testwork on bulk samples from Sinchao, San Nicolas, Consulado and Colpayoj/Chamis properties.

-- In addition to the Sinchao, San Nicolas, Colpayoj/Chamis, Santa Rosa and Don Jeronimo properties post year end, the Company rationalized its exploration holdings in Peru to 21,000 hectares (51,870 acres) encompassing six projects.

-- Base metal sulphide deposits containing copper, zinc and lead sulphides typically require significant energy input to extract the base metals from the sulphide minerals in finished form. The extraction of base metals relies heavily on pyrometallurgy and smelter technology. The Company has been particularly encouraged by recent extraction developments where hydrometallurgical methods are being piloted to extract finished metal. These methods incorporate solvent extraction and electrowinning, which is commonly used in the extraction of copper from oxide deposits. In Australia, such technologies are being developed by Atomaer, Intec, Activox and Bactec. In North America, Geobiotics is developing a low cost approach. Your Company is in close contact with these groups and continues to monitor their progress. The hydrometallurgical processes being developed all have one key element, which is critical to their viability. They require a secure and low cost source of energy. It was for this reason that your Company announced that it is taking steps to secure such an energy source near its San Nicolas and Sinchao properties in Peru.

-- On December 31, 1997, the Company reported a $4.3 million working capital deficit. This was reduced to $760,000 at year end. At the time of writing this report the Company's working capital deficit had increased to an estimated $1.8 million (unaudited). This reflects the growing pains of an aggressive junior explorer where the Company, over the past 15 months, has worked positively and diligently in Peru in a time of weak market conditions. The Company needs to raise additional capital to complete the probable needs of a new drill program, make the required property payments and pay off the remaining costs of the Phase I drill program. Pleasingly, the Company had repaid the intercompany debt at the time of writing this report. The Company has a plan to fund its deficit such that obligations can be dealt with in a timely manner and to fund future activities in a weak market. This will be a test of your Directors' strength of resolve to preserve and to consolidate the value of your Company's investments in Peru. Strong and decisive management is required. We are facing critical decisions in Peru; the key one is whether to complete the feasibility studies on its advanced projects, San Nicolas and Santa Rosa, and advance them to production with the resultant cash flow funding future drilling of Sinchao or, do we continue to drill the Sinchao property or, do we seek partners for our projects in Peru. This will depend on the drill results received from the second phase Sinchao drill program, the conclusions of the feasibility studies and, to some degree, on market conditions which will enable the necessary funds to be raised to complete the programs.

-- During the year the Company received resignations from four Directors - Senior Mining Executives, Dr. Andrew Robertson and Messrs. Ray Soper and Peter Slaughter, and Senior Financial Executive, Mr. George Milton. The Directors, on behalf of the Company, would like to express their thanks for the contribution made to the Company's development by these gentlemen during a critical period of growth and consolidation. The Directors would also express its appreciation for the efforts of the Company's employees, contractors, consultants and advisors in North America, Peru and Australia.

The Directors continue to hold out strong support for the Company's Peruvian projects. Exploration successes are built on human persistence and determination coupled with geological judgement of looking in the right zone. We believe the Sinchao fits these parameters. With your continued support we will get there.

Private Placement- The Directors wish to announce a private placement of up to 3,000,000 units at a purchase price of $0.15 Cdn per unit. Each unit will consist of a common share and one non transferable share purchase warrant. Each non transferable share purchase warrant will entitle the holder to purchase an additional common share in the capital of the Company for a period of one year from the date of the issue at an exercise price of $0.15 Cdn per share. A commission of 7% will be payable, in cash, on part of the private placement. The proceeds of the private placement will be used for working capital purposes. The above private placement is subject to acceptance for filing rby the Vancouver Stock Exchange.

On behalf of the Board,

"Robin A. Slaughter" "John Huguet" Robin A. Slaughter, President John Huguet, Executive Chairman

The Vancouver Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release

   CONTACT: El Misti Gold Limited
             Robin A. Slaughter, 604/681-6186
             toll free: 1-888-LMISTI
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             URL: www.info-mine.com/l_misti/