First American Railways announces completion of $11.1 million private placement.

HOLLYWOOD, Fla.--(BUSINESS WIRE)--July 2, 1997--First American Railways, Inc. (Nasdaq: FTRN), an entertainment and scenic rail company, today announced the completion of a private placement of convertible subordinated notes and common stock which raised gross proceeds of approximately $11.15 million (net proceeds of approximately $9.56 million). The five-year notes pay semi-annual interest and are convertible into common stock at any time prior to maturity at a conversion price of $3.50 per share. The terms of the private placement provide that should the closing bid price of the Company's common stock be $4.50 per share for twenty consecutive trading days, the Company has the right to convert $7 million of the subordinated notes into common stock. International Capital Growth, Ltd. served as placement agent in this transaction.

Proceeds from the offering will be used to replenish funds previously used in connection with the acquisition of the Durango & Silverton Narrow Gauge Railroad (D&SNG) as well as for capital improvements and working capital for the Florida Fun-Train and the D&SNG.

Commenting on the announcement, Ray Monteleone, President and Chief Operating Officer of First American Railways said, "This very successful private placement, the size of which was increased to meet investor demand, represents a significant validation by the investment community of our Fun-Train strategy and the company's commitment to the scenic rail industry."

First American Railways, Inc. provides innovative, quality entertainment passenger rail service through the development of "Fun-Trains" and the acquisition of "Scenic Destination Railroads". The Company is currently preparing the launch of the Florida Fun-Train which is anticipated to commence operations between Central and South Florida in October 1997. The Company also operates the Colorado-based Durango & Silverton Narrow Gauge Railroad, a registered National Historic Landmark, which accommodates approximately 200,000 passengers annually.

First American Railways' mission is:

To be the recognized leader in providing 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 certain written and oral commitments, as well as expectations with respect to future revenues and business expansion, including those resulting from joint promotional and marketing opportunities, and recently acquired businesses 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 pending or proposed third party agreement or commitments. 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., Hollywood, Fla.

Michael Acierno [phone]

Tara Monteleone McGinn [phone]

or

MWW/Strategic Communications, Inc.

Investor Relations - [phone]

Carolyn Bancone ([e-mail])

Rich Tauberman ([e-mail])