Island-Arc Resources - New Properties Acquired.

VANCOUVER, British Columbia--(BUSINESS WIRE)--May 16, 1997-- Island-Arc Resources (VSE:IAR.) Island-Arc announces the acquisition, subject to regulatory acceptance, of two additional properties, the Red Lake Gold Project and the United States Copper Project.

RED LAKE GOLD PROJECT RED LAKE MINING DISTRICT, ONTARIO, CANADA

Island-Arc has reached an agreement with Wolfden Resources Ltd. ("Wolfden") whereby Island-Arc can acquire a 70 percent interest in a gold property located in the Red Lake greenstone belt in northwestern Ontario. This gold belt is located 150 kilometers north of Kenora and 250 kilometers northeast of Winnipeg and is one of Canada's prolific gold producers with about 17 million ounces mined to date from high grade gold deposits. Two mines are currently in operation about twenty kilometers east of the Island-Arc option. Placer Dome's Campbell Mine which last year produced about 300,000 ounces of gold and has a 2.5 million ounce reserve, and the Dickensen Mine operated by Goldcorp with a 1.8 million ounce reserve. The Madsen mine is scheduled to re-open this summer and has a 300,000 ounce resource.

Specifically the property ( the "Red Lake Gold Project") consists of 14 claim blocks totaling 173 units over a 8.5 kilometers strike length of the Pipestone Bay deformation zone. Goldcorp and Placer Dome hold contiguous claims along the strike of the deformation zone. It is underlain by deformed ultramafic rocks within a felsic volcanic and sedimentary sequence all of which are key ingredients in the Red Lake gold belt. The vendors report previous exploration work has defined over ten gold showings through limited trenching and drilling work with grab samples values up to 0.83 ounces per ton gold.

To acquire its interest, Island-Arc is required to make payments totalling $165,000 and complete exploration expenditures totalling $700,000 over the next 4 years. In addition, Island-Arc has also agreed to issue 20,000 common shares to Wolfden. The Property is subject to a 2 percent NSR in favour of the underlying vendors, 50 percent of which may be purchased for $1,000,000. Upon exercising the option, Island-Arc has agreed to pay to the Vendors $8,000 per year commencing on May 1, 2003 to be considered as advance royalty payments which shall be credited to Island-Arc's account and be credited against Island-Arcs share of the $1,000,000 NSR buy-out.

A program of data compilation is underway, with a first phase field program consisting of geological sampling, mapping and geophysics set to begin in early summer. It is expected that this program will yield a number of targets for a late fall/early winter drill program.

UNITED STATES COPPER PROJECT (USC PROJECT), YAVAPAI COUNTY, ARIZONA, USA

Island-Arc can acquire a 100 percent interest in the USC Project by making payments totalling US$28,000 over the next 4 years. The vendor will retain a 1.5 percent NSR capped at US$1,500,000. The USC Project consists of six claims totalling 20 acres located some 30 miles north east of Prescott, Arizona.

The United States Copper Mine reportedly operated on the property from 1969 to 1971 producing "6 car loads of copper concentrate as malachite nodules that graded in excess of 25 percent copper." A Bureau of Land Management affidavit of work states that geophysical work was completed and that in excess of 150,000 cubic yards of material were mined. In addition a shaft was sunk and a number drill holes were completed reportedly intersecting grades of between 1.5 percent to 4 percent copper over 40 feet.

Several samples were taken, by the Company's consultant, the details of which are as follows:

Sample No.  Location                   Cu     Acid Soluble Cu
                                   (percent)     (percent)
USM-003     Tailings pile             0.48         0.478
USM-004     High grade stockpile      3.03         2.99
USM-005     Shallow sample from the
             ore stockpile            0.481        0.477

Samples 003, 004 and 005 were assayed for total copper and acid dissolvable copper at Mountain States R&D and samples 004 and 005 were subjected to an acid consumption test. The results of the acid consumption test indicate that acid consumption rates are low.

Island-Arc is planning an initial program consisting of further sampling, geological mapping and possible trenching.

In addition to the foregoing property acquisitions, the Company and its partner, Warner Ventures Ltd. (VSE-WVL) have formally terminated their respective options to earn an interest in Kernow Resources and Developments Ltd.'s (VSE-KRD) Sachem Bay Property in Labrador. Results from exploration and drilling carried out in 1996 do not, in the opinion of management, warrant additional follow-up.

Results from Island-Arc's first phase program in Vanuatu are expected to be received in their entirety within the next 10 days. A comprehensive news release detailing these results will be released at that time.

The Red Lake Gold Project is Island-Arc's third gold property acquisition in the past six months. These acquisitions represent Island-Arc's rapid expansion into gold exploration, which is to be the Company's major focus in the years ahead.

ON BEHALF OF THE BOARD OF DIRECTORS OF ISLAND-ARC RESOURCES CORPORATION

Kim M. Phillips, President

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CONTACT: Island-Arc Resources Corporation

Kim M. Phillips, 604/682-4488

604/682-8728 (FAX)

1-800-868-4788