Philex Gold Inc. - Announcement.

Business Editors

TORONTO--(BUSINESS WIRE)--Dec. 18, 2001

Philex Gold Announces The Signing Of An Agreement To Sell An Effective 10% Equity Interest In Silangan Mindanao Mining Company Inc. ("SMMCI")

Which Holds The Boyongan Project To Anglo American Exploration

(Philippines) B.V. ("ANGLO")

PHILEX GOLD INC. (PGI-CDNX) announced the signing of an Agreement on December 18, 2001 with Anglo to sell an effective 10% equity interest in SMMCI which holds the Boyongan Project and surrounding tenements in the province of Surigao del Norte, Philippines. The closing of the transaction is conditional on the completion of certain conditions precedent. The Boyongan copper-gold porphyry deposit, discovered in August 2000 is under a joint venture between the Company and Anglo. Drilling on the tenement is continuing.

The purchase price is US$20 million, with a resulting valuation of over 3 cents per pound copper equivalent on the basis of the Company's current approximation of the metal content of the deposit, as official mineral resources have not been determined at this time. Additional payments of up to US$5 million may be made on the basis of an increase in the metal content of the deposit or from any other discovery within the surrounding tenements, which will be determined on the basis of feasibility studies. The additional payments will be computed by applying 2.51 cents per pound copper equivalent to 10% of the metal content in excess of a threshold of 7.96 billion pounds copper equivalent, multiplied by a factor of 0.5 representing an equal sharing of the upside potential with Anglo.

The proceeds of the sale will be applied to repay the Company's bank debts of US$14 million and current liabilities, as well as to fund closure costs associated with the impending closure of the Bulawan mine as announced in a recent release dated November 23, 2001. "The situation at the Bulawan mine makes it important for us to raise the necessary funds to pay our liabilities and move ahead", said Gerard Brimo, Chairman and CEO. "The terms of the Agreement are reasonable given the early stage of the exploration and project definition, while our current low share price precludes other acceptable alternatives."

It is anticipated that the transaction will close early in 2002, at which point Philex Gold's equity in the Boyongan deposit will be reduced to 50%. Should Anglo bring the project through a bankable feasibility study at its sole expense, Anglo would be entitled to an additional 30% equity either directly or through a joint venture with a qualified entity and will conduct the operations if the project proceeds to development. In such a situation, Philex Gold will be required to raise its pro-rata share of the project funding while Anglo would provide 100% of the completion guarantees that may be required by third party lenders.

The Company continues to be encouraged by the drilling results from the deposit and by the expanded exploration program for next year. About 15,000 metres of resource definition drilling and 3,000 metres of scout drilling are planned in 2002 using four high capacity and one to two medium capacity diamond drill rigs.

The Canadian Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.