Monarch Resources Limited 1996 Year End Results (Part I of III).

PRINCETON, New Jersey--(BUSINESS WIRE)--April 21, 1997--Monarch Resources Limited (TSE, LSE MRE.) Monarch Resources Limited ("Monarch") (TSE & LSE - MRE) announced today its results of operations for the twelve months ended December 31, 1996. The Company reported a net loss of $12,340,000 on revenues of $26,974,000 in 1996, compared with a net loss of $38,106,000 on revenues of $25,463,000 in 1995.

In 1996, the Company's focus of attention in Venezuela was on improving the operating performance of the La Camorra mine, as well as increasing the mine's ore reserves, and both objectives were successfully achieved. Other activities in Venezuela, however, were hampered by a combination of a lack of feed for the Revemin mill, the adverse impact of economic and political factors within Venezuela and a relatively flat gold price, which began to decline during the fourth quarter of 1996. In light of these factors, the Company decided to write off the net investment of its Venezuelan operating assets and deferred exploration expenditures, except for its net investment in the La Camorra mine. The non-cash charge related to this write off amounted to $12,000,000.

In addition, the 1996 loss included a non-cash charge of $919,000 representing the write off of deferred exploration expenditures associated with the termination of the Company's exploration program in Argentina. The 1995 loss included non-cash charges of $15,376,000 relating to a write off of deferred exploration expenditures associated with certain of the Company's Venezuelan mineral properties, a $ 15,000,000 write down of the Company's investment in the La Camorra mine and a $1,330,000 inventory devaluation write down.

Excluding year-end write offs and write downs, income after taxes amounted to $579,000 in 1996, compared with a loss after taxes of $6,400,000 in 1995. This significant improvement in the Company's 1996 operating results was principally attributable to record 1996 operating performance at the La Camorra mine, which included 56,549 ounces of gold production, operating profit of $3,903,000, operating cash flow of $8,306,000 and a cash cost of production of $245 per ounce. By comparison, La Camorra's 1995 operating results included 48,850 ounces of gold production, operating loss of $3,129,000, operating cash flow of $2,442,000 and a cash cost of production of $338 per ounce. La Camorra's improved 1996 operating performance was the result of a significant reduction in operating costs and increased gold production due to a higher average grade of ore processed and higher recovery levels.

La Camorra's 1996 performance was further enhanced by the discovery of 93,000 additional ounces of ore reserves during the year, which added over 1.5 years of production to the mine's life at present annual rates of production. The new reserves were principally attributable to the Upper Levels of the mine and, in particular, to the Betzy Vein which was discovered in 1995 and further developed and defined during 1996.

The increase in Lower Level ore reserves was encouraging in that the B Zone mineralized structure was extended at depth to the -378 Level (approximately 510 metres below surface), which represented the deepest drill hole intersection in the Main Vein to date. The assay result for this drill hole was very encouraging at 29.9 g/t over 3.36 metres. This drill hole, as well as others in the 1996 deep in-fill drilling program, was noteworthy in that it demonstrated that the Lower Level reserves extended up to 100 metres further to the east than previously identified and that the B Zone mineralized structure at depth maybe thicker than comparable Lower Level structures in the Main Vein.

La Camorra's ore reserves as of January 1, 1997 were: Measured and Indicated - 390,000 ounces of gold and Inferred resource - 101,000 ounces of gold; the majority of which were attributable to the Betzy Vein. Allowing for ore reserves mined in 1996, this compares favourably with the ore reserves reported as of January 1, 1996: Measured and Indicated - 354,000 ounces, Inferred resource - 66,000 ounces and Other - 20,000 ounces. It is anticipated that the 1997 underground drilling program will result in a significant portion of the current Inferred resource ounces being reclassified to the Measured and Indicated category during 1997 and replaced with additional ounces of resource. Both the Main Vein and the Betzy Vein remain open at depth. However, whereas the Main Vein has been extended to the -378 Level, drilling programs to date have only intersected the -175 Level in the Betzy Vein. The potential of the Betzy Vein's mineralized structure to extend to the deeper levels of the Main Vein will be tested as part of the 1997 underground drilling programs.

As a result of the increase in La Camorra's Upper Level ore reserves in 1996, a decision to proceed with the shaft project to access the Lower Level ore reserves has been postponed until 1998. This will enable management to further assess the various options available for sinking the shaft.

The Revemin mill reported an operating loss of $877,000 and an operating cash flow deficit of $25,000 in 1996, compared with an operating loss of $1,183,000 and an operating cash flow deficit of $343,000 in 1995. Gold production amounted to 13,370 ounces at a cash cost of production of $393 per ounce in 1996, compared with 17,695 ounces and $405 per ounce, respectively, in 1995. Revemin's 1996 operating performance was adversely affected principally by a more severe and prolonged rainy season, which limited the deliveries of small mill tailings, and the failure of El Callao Mining Corp. ("El Callao") to provide the ore delivery tonnage forecast when a one-year feed supply contract was signed in April 1996. Due to operating problems encountered at its open pit mining operations on the nearby Lo Increible concession, El Callao delivered less than 9,000 tonnes to Revemin, at average grades well below its forecast average grade of 8 g/t, during the period May-October 1996. El Callao notified the Company on October 3, 1996 that it was terminating the supply contract.

While Revemin continues to investigate the possibility of entering into long-term supply contracts with other potential suppliers in the region, it is clear that the mill cannot operate profitably based solely upon the monthly levels of feed provided by the traditional small mill tailings suppliers. In fact, this traditional source of feed is beginning to decline in volume, and there is strong competition from other milling operations for available feed. Accordingly, the Company decided to write off its net investment in the Revemin mill as of December 31, 1996, in connection with its decision to write off the net investment of its Venezuelan capital assets, other than its net investment in the La Camorra mine.

Exploration expenditures in 1996 amounted to $4.7 million, compared with $5.7 million in 1995. The focus of the 1996 exploration program was in Mexico, where the majority of the 1996 exploration expenditures ($ 3.6 million) was incurred. Through its highly successful reconnaissance program, the Company's mineral property interests in Mexico increased from approximately 100,000 hectares in 1995 to nearly 120,000 hectares during 1996. Among the key additions were the Temazcal mineral property (2,300 hectares), which is contiguous with and surrounded by the Company's highly prospective Saladillo Group of mineral properties (60,000 hectares), the San Agustin mineral property (4,800 hectares), which hosts an eroded dacite dome with extensive gold and silver anomalies, and the Reino Unido mineral property (2,660 hectares), which is located in the State of Zacatecus.

The highlight of the 1996 Mexican exploration program was the San Sebastian prospect on the Saladillo mineral property (6,500 hectares), which is Monarch's most advanced project in Mexico. Based upon extensive sampling, trenching and a 51 hole, three-phase drilling program, an Indicated and Inferred Resource was calculated in January 1997 for the Francine Vein, one of several known parallel vein structures at San Sebastian. The resource amounted to 1,628,000 tonnes at an average grade of 6.28 g/t AUE ("Gold Equivalent"), containing 329,000 ounces AUE to a depth of 75 metres below surface. The Francine Vein mineralized structure extends for at least 1,500 metres and is open at depth and along strike to the west for several hundred additional metres.

CONTACT: Monarch Resources Limited

Mr. Anthony F. Ciali, 609/951-0770

or

Monarch Resources Limited

Mr. Eric R. Van Heyst, 609/951-0770