First American Railways, Inc. completes acquisition of Colorado scenic railroad.

HOLLYWOOD, Fla.--(BUSINESS WIRE)--March 17, 1997--First American Railways, Inc. (NASDAQ, Small Cap:FTRN) an entertainment-based passenger rail company, announced today that it has acquired from Charles E. Bradshaw, Jr. all of the common stock of The Durango & Silverton Narrow Gauge Railroad Company (D&SNG), a scenic railroad based in Durango, Colorado, that attracts approximately 200,000 passengers annually and has been a popular site for motion picture productions, including Butch Cassidy and the Sundance Kid, among many others.

First American Railways will maintain the strict standards of authenticity and safety of this registered National Historic Landmark while also promoting the magnificent scenery of the Rocky Mountains.

The D&SNG operates a three and one-half-hour, 45-mile scenic railroad passenger service between the old-western town of Durango and the 19th century mining town of Silverton, operating four trains daily during the peak of the summer season. After an approximate two-hour layover in Silverton for lunch, shopping and sightseeing, the train returns to Durango. Durango was built in the 1880's and the historic town combines a Victorian atmosphere with modern day shopping and dining.

The purchase price consisted of seller financing in the amount of approximately $10 million; cash payments totaling approximately $5 million comprised of $2 million which had been paid as a deposit prior to closing and $3 million provided by institutional financing from NationsBank N.A. (South); 200,000 shares of First American Railways common stock; and, common stock purchase warrants to purchase 1,610,000 shares exercisable at $3.50 per share.

NationsBank financing was also utilized to replace existing debt of the D&SNG and provide working capital for the company's operations.

Also under the agreement, Charles E. Bradshaw, the former owner, president and chief executive officer of the D&SNG, has been elected to the First American Railways board of directors, expanding the board to eight.

Raymond Monteleone, president and chief operating officer of First American Railways, Inc., remarked, "The D&SNG's present $45 average revenue per passenger will generate substantial revenue and cash flow from operations to the company well before we launch our Florida Fun-Train. We are planning marketing and revenue enhancements that are intended to significantly increase the number of passengers and passenger revenue.

"This acquisition is an important step towards our goal to include scenic tourist destination trains with entertainment- based Fun Trains in our growth strategy," Monteleone concluded.

Mr. Bradshaw added, "We have great confidence that First American Railways will operate the railroad in the same manner as has been the practice for the past 16 years. They have the commitment and demonstrated expertise that we believe will assure the continued success of the D&SNG."

At a formal ceremony scheduled for later today, Mr. Bradshaw will present Allen C. Harper, chairman and chief executive officer, and Mr. Monteleone to the employees of the D&SNG.

The unaudited results of operation (after proforma acquisition adjustments) for D&SNG's fiscal year ended December 31, 1996 were approximately: -0-

               Revenue                       $9 million

               Pre-Tax Income                $2 million

               (Excluding Acquisition Debt Costs)

               Operating Cash Flow           $3 million

               (Before Acquisition Debt Costs)

               Operating Cash Flow           $1 million

               (After Acquisition Debt Cost but excluding Bank Loan

               Principal Payments and Capital Expenditures)

First American Railways, Inc. is a publicly held, entertainment-based passenger rail company with headquarters in Hollywood, Fl., whose mission statement is:

To be the recognized leader in providing an innovative, quality entertainment-based passenger rail service, offering our customers, communities, employees and shareholders an experience which exceeds their expectations.

Certain statements in this Press Release constitute "forward- looking statements" within the meaning of the private Securities Litigation reform Act of 1995. In particular, statements contained herein regarding the consummation of future acquisitions, as well as expectations with respect to future revenues and business expansion, are subject to known and unknown risks, uncertainties and contingencies, many of which are beyond the control of First American Railways, Inc., which may cause actual results, performance or achievements to differ materially from anticipated results, performance, or achievements. Factors that might affect such forward-looking statements include, among others, overall economic and business conditions, the demand for the company's services competitive factors, regulatory approvals and the uncertainty of consummation of future acquisitions. Additional factors which may affect the company's business and performance are set forth in the company's filings with the Securities and Exchange Commission.

CONTACT: David Mandy John Chuhran, Media Consultant

Porter, Le Vay & Rose, Inc. Porter, Le Vay & Rose, Inc.

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Company Contact:

Raymond Monteleone, President

[phone]