First American Railways agrees to acquire Durango & Silverton Narrow Gauge Railroad.

HOLLYWOOD, Fla.--(BUSINESS WIRE)--Dec. 16, 1996--First American Railways, Inc. (NASDAQ,Small Cap:FTRN) an entertainment-based passenger rail company, announced today that it has reached a definitive agreement to acquire from Charles E. Bradshaw, Jr. all of the common stock of The Durango & Silverton Narrow Gauge Railroad Company, a privately-held scenic railroad based in Durango, Colorado.

Terms of the agreement call for a cash payment of $15.8 million, a purchase money financing in the amount of $4.2 million, 200,000 shares of First American Railways common stock, and stock purchase warrants to purchase 600,000 shares of common stock which are exercisable at $5 per share. The company is exploring various means to finance the proposed transaction. The closing is expected during February 1997.

The company has made a $2 million deposit in connection with the proposed transaction which is refundable only upon the occurrence of certain limited circumstances.

The Durango & Silverton operates a three-hour scenic rail trip between the Old West Rocky Mountain town of Durango and the old mining town of Silverton. Durango, built in the 1880s, combines a Victorian ambiance with modern day shopping and dining. First American Railways will continue to maintain the strict standards of authenticity and safety of this National Historic Landmark while endeavoring to promote the unique and natural environment of these scenic mountains.

Raymond Monteleone, president and chief operating officer of First American Railways, Inc., remarked, "This acquisition, when completed, will be a significant step in our strategy to become a national railroad company offering scenic tourist destination trains as well as entertainment-based Fun-Trains. We plan to take what is already one of the most successful scenic railways in the country and enhance its growth opportunities."

Charles E. Bradshaw, Jr., president of the D&SNG, added he is looking forward to a continuing relationship with First American Railways, Inc. "I feel confident that the future of the D&SNG will be in good hands," he said.

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

To be the recognized leader in providing an innovative, quality entertainment-based passenger rail service, offering our customers, employees, and shareholders an experience which exceeds their expectations. -0-

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 rontained 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: First American Railways Inc.

Raymond Monteleone, 954/920-0606

or

Porter, Le Vay & Rose, Inc.

L.B. Stauffer, 212/564-4700

Thomas D. Gibson, 212/564-4700