Morgain Minerals Inc. Strategic Joint Venture Formed for New Property Acquisitions in Chihuahua.

TORONTO--(BUSINESS WIRE)--Oct. 7, 1997--Morgain Minerals Inc (VSE:MGM., OTC Bulletin Board:MGIMF.)

Option Agreement to earn a 50 percent interest in a potentially large, low grade, gold-silver deposit amenable to open pit mining methods located near Chihuahua City, Chihuahua, Mexico.

Morgain Minerals Inc. is pleased to announce that through its wholly owned Mexican subsidiary, Minera MGM S.A. de C.V., ("MGM"), that is has entered into a joint venture with Minera Columbia de Mexico S.A., de C.V., a wholly owned subsidiary of Columbia Metals Corporations Limited ("COML" - CDN).

The joint venture has acquired an option to earn a 100 percent interest in the DOS AMIGOS gold-silver property, situated approximately 20 kilometres from the city of Chihuahua, Chihuahua, Mexico. The property consists of two claims totaling about 1,000 hectares. An additional 10,000 hectares has been staked by the MGM-COML joint venture to secure the surrounding area.

The DOS AMIGOS option agreement calls for cash payments totaling U.S. $1,000,000.00 over a three year period, of which U.S. $70,000.00 are due within the first year. These payments and all exploration expenditures will be divided on a 50/50 basis between MGM and Columbia. MGM will act as operator. The property option was acquired from Miguel Jesus Perez Chavez of Chihuahua, Mexico, who holds a 100 percent interest in the property. Perez Chavez will hold a 15 percent Net Profit Interest (NPI) in the property and will have an option to sell this NPI to the Joint Venture Partners for U.S. $2,000,000.00 at the end of three years.

A composite of eight large random samples taken by Perez Chavez over an area of approximately one (1) square kilometer area, covering a thick sequence of deeply maroon coloured, strongly oxidized, siliceous (45 percent silica) tuffaceous agglomerates assayed 0.4 grams gold/tonne and 14 grams silver/tonne, representing a gold equivalent of 0.63 grams/tonne. A preliminary gravity test using tables for gravity concentration achieved a 73 percent recovery of the gold and silver, all in the 200 mesh fraction. This suggests that most of the gold/silver may be recovered by low cost mechanical means. Assays and the gravity concentration test were carried out by the Consejo de Recurso Minerals, Gerencia de Laboratorios, Centro Experimental Chihuahua.

In addition, Perez Chavez reports a 2 ton sample taken along a 12 metre wall returned assays of 0.4 grams gold/tonne and 13 grams silver/tonne.

The highly altered maroon oxidized volcanic ash is known to cover an area one km by three kms. To a depth of 60 metres, this represents an immense volume of oxidized material in the hundreds of millions of tonnes. Whatever tonnage proves to be gold bearing, it will have the advantage of being mined, without blasting or crushing, by open-pit mining methods with very little waste rock removal. The gold/silver may be recoverable by mechanical gravity means on-site where all of the infrastructure required for a large open pit mine is available. All of these criteria allow for the economic processing of very low grade gold-silver material.

The Company has sent a sampling crew to conduct a geological mapping, sampling and assay program over the main one km square pit area for assay verification.

ON BEHALF OF THE BOARD

RAYMOND J. MONGEAU PRESIDENT

CONTACT: Morgain Minerals Inc.

Mr. Joe De Felice, 416/364-5756