Madsen announces production financing.

TORONTO--(BUSINESS WIRE)--June 11, 1996--MADSEN GOLD CORP. (TSE:MGF) Madsen Gold Corp. today announced four private placements totalling 2,075,000 units at the price of $2.50 per unit for an aggregate sum of $5,187,500.

Each unit consists of one (1) common share and one (1) share purchase warrant. Four (4) warrants plus $2.65 in the case of 400,000 units, and $2.75 in respect of the balance being 1,675,000 units, entitle the holder to purchase one (1) common share of Madsen. The term of each warrant is two (2) years from the date of issue. The proceeds together with funds on hand will cover the bulk or all costs of re-erecting the 500 ton per day CIP Dona Lake Mill, now on site at Madsen.

In addition, the Corporation is taking under advisement a flow through share issue in the $1.5 million range to provide non-mill working capital in carrying out exploration work including ongoing mine dewatering, surface and underground drilling, underground level clean-up and obtaining a bulk sample. Madsen expects ongoing share purchase warrant exercises which together with part of the funds currently on hand of $600,000 will also be available for mill erecting purposes.

The effect of the above will be that the only remaining funding required to full mine production will be 4-6 months working capital and capital expenditures which combined should not exceed $1.5 million. The latter funding, if required, will probably be in the form of a stand-by credit facility or a gold loan.

Dewatering of the Madsen Mine is currently progressing at a rate of five feet per day with the sixth level to be reached in two weeks. A preliminary investigation of the recently dewatered fifth level shows it to be in good condition but a detailed inspection will be carried out in the near term.

A fourth underground diamond drill has started and all drills are presently outlining additional ore reserves. Two new vein systems on the third level are being delineated and preliminary calculations show them to be typical mine grade. Of the high grade intercepts, the best values have been 2.22 ounces of gold per ton (uncut) over a 4 foot true width and 1.0 ounce of gold per ton (uncut) over 4.5 feet true width.

A recently confirmed point of interest is that a high percentage of our drill hole intercepts encounter visible gold and higher assay grades when compared with the previous operators' drill results. This can be attributed to our present drilling having much larger size core recovery. Follow-up drilling of low grade intercepts quite consistently shows higher ore grade values. This, it is expected, will open several horizons particularly in the upper three levels.

Rehabilitation of the fourth level has commenced and will provide access to the west reaches of the mine where several ore targets are outlined in the South Austin, West McVeigh and the newly discovered North Tuff horizon.

An exploration geologist and post doctorate structural geologist well-versed in structural controls of the Red Lake camp have been contracted and are to compile information from both the Madsen Mine records and the Aitken Russet property on the Ultramafic Rock Unit which hosts the High Grade No. 8 Zone. This compilation along with structural analysis will provide a clearer insight as to the structural controls of the ore bodies and define highly potential areas for focused exploration.

Our surface exploration drill should be available within the week and drilling will commence immediately to expand previously drilled ore intercepts within the Ultramafic Unit.

Construction of the milling complex is to commence immediately with surface stripping. Pouring of the concrete pads is scheduled to be completed shortly after July 31 with erection of the mill structure, mechanical and electrical shops and warehouse to be completed by October 31, 1996. This will allow all of the interior component installations to take place in a heated and enclosed complex over the winter months. Mill completion is slated for April, 1997 with commercial production at an initial targeted rate of 46,000 - 50,000 ounces of gold per year to commence in June, 1997.

Hiring of the first development miners will commence shortly to develop an ore block for a bulk test and provide an orderly phase-in to ensure an adequate regulated supply of ore for the new milling complex. The vast majority of our underground stores will be mined using narrow vein long hole techniques.

During the period 1938 to 1976, Madsen produced 8.5 million tons of ore at a grade of 0.312 ounces of gold per ton (2.45 million ounces of gold). Ore reserves at March 31, 1996 were 1,022,568 tons at a grade of 0.284 of gold ounces per ton on a 25 percent diluted basis.

The issued share capital after giving effect to the above stock issues will be 12,840,500 shares and on a fully diluted basis 14,249,250 shares.

CONTACT: Madsen Gold Corp.

James H. Morlock, 416/862-0583

or

Hume, Kieran Inc.

Jon W. Kieran, 416/868-1079

Olav Svela, Investor Relations, 416/868-1079