Mill City International Updates Funding of Alberta Aerospace Corporation.

CALGARY, Alberta--(BUSINESS WIRE)--May 12, 1998--Mill City International (VSE:MIY.) (OTC Bulletin Board:MIYNF) MILL CITY INTERNATIONAL INC. (MIY-VSE) (MIYNF-OTC) ("Mill City") announces that its previously announced funding of Alberta Aerospace Corporation ("Alberta Aerospace") has been revised to take into account a proposed private placement offering of up to $10,000,000 currently being negotiated by Alberta Aerospace, Gordon Capital Corporation and First Marathon Securities Ltd. of Toronto. In a recent Press Release issued by Alberta Aerospace, Mr. Raymond Johnson, President, stated the following:

"Alberta Aerospace is pleased to announce that it has entered into a Letter Agreement dated May 6th, 1998 with Gordon Capital Corporation ("GCC") and First Marathon Securities Ltd. ("First Marathon") of Toronto pursuant to which Alberta Aerospace has retained GCC and First Marathon to act as its exclusive agent for the purpose of a private placement offering of up to $10,000,000. Alberta Aerospace, GCC and First Marathon are completing negotiations to finalize the specific terms and conditions of this proposed private placement offering. Additionally, the completion of the private placement offering is subject to the entering into of formal agreements and completion of due diligence of GCC and First Marathon.

In light of this proposed private placement offering in Alberta Aerospace by GCC and First Marathon, Alberta Aerospace and Mill City have agreed to amend the terms and conditions of their convertible debenture to permit Mill City to advance $5,000,000 Canadian to Alberta Aerospace, such funding now required to be completed prior to December 31, 1998. Assuming Mill City's funding and the $10,000,000 funding to be completed by GCC and First Marathon, Mill City would have the right to convert its $5,000,000 into common shares of Alberta Aerospace representing approximately 25 percent of the issued and outstanding common shares. Mill City's right to convert its advances under the convertible debenture into common shares of Alberta Aerospace is at the rate of 1 common share for every $0.66 advanced under the convertible debenture with Mill City's funding obligation to arise subsequent to the proposed private placement offering by GCC and First Marathon.

The combined funding by both GCC, First Marathon and Mill City (now totaling $15,000,000 Canadian) will provide sufficient funding to Alberta Aerospace to not only complete certification of its two-place trainer jet airplane but will also permit certification of the Phoenix Fanjet aircraft in the four-place configuration. Recognizing that Alberta Aerospace had previously announced the sale of three Phoenix Fanjet aircraft in the four-place configuration to Earth Search Sciences Inc. (ESSI) of McCall, Idaho, it is incumbent upon Alberta Aerospace to arrange sufficient financing to proceed with certification of not only its two-place trainer jet but also the Phoenix Fanjet aircraft in the four-place configuration. Alberta Aerospace contemplates that the certification of the Phoenix Fanjet aircraft in the four-place configuration should be completed in approximately the third quarter of 1999."

The transaction between Mill City and Alberta Aerospace is subject to approval by all applicable securities regulatory bodies.

As stated in the previous press release of March 31, 1998, Mill City will continue with the exploration of its recently acquired mining property in Mexico and believes that diversification into the aerospace business will be of benefit to all shareholders.

The Vancouver Stock Exchange has neither approved nor disapproved the information contained herein.

CONTACT: Mill City International Inc.

Larry D. Revitt, 403/ 640-0110

403/ 640-4024 (FAX)

[e-mail]

http://www.millcitygold.com