Pure Gold Resources Announces Amalgamation Approved.

VANCOUVER, British Columbia--(BUSINESS WIRE)--Oct. 24, 1997-- Pure Gold Resources (TSE:PUG.) At meetings held today in Vancouver, BC and Calgary, Alberta, respectively, shareholders of both Pure Gold Resources Inc. (PUG.T) and Cayo Resources Inc.(CAYO, traded on CDN), overwhelmingly approved the amalgamation of both companies. The amalgamation will more than double Pure Gold's net beneficial acreage in Alberta from approximately 16 million to over 31 million acres, and has received the approval of Pure Gold's joint venture partners, Ashton Mining of Canada Inc. and AEC North, a division of Alberta Energy Company Ltd.

The amalgamated company, to be named Pure Gold Minerals Inc., will have the following directors and officers which were elected at today's meetings: Donald Sheldon, President and CEO/Director; Wilfred D. Jones, Vice President of Exploration/Director; Eugene Beukman, Vice-President of Administration/Director; Nelson W. Baker, Director; and Robert Stikeman, Director. Management is pleased to welcome Mr. Jones, formerly Diamond Consultant with Ashton Mining of Australia and previously with Selection Trust of London, as Chief Geologist, and Mr. Beukman, formerly in-house counsel at Gencor of South Africa.

As part of the amalgamation, each five issued and outstanding Pure Gold Shares will be exchanged for one share of the amalgamated company, and each five issued and outstanding Cayo Shares will be exchanged for three shares of the amalgamated company. This ratio will result in an effectively-consolidated amalgamated company with approximately 25 million outstanding shares, of which approximately 20 million shares, or 80 percent, will represent former Pure Gold shares, and approximately 5 million shares, or 20 percent, will represent former Cayo shares.

The amalgamated company will represent the combined interests of Pure Gold and Cayo which, in addition to Pure Gold's Northwest Territories holdings, will include the following:

- 15 percent interest in the Buffalo Hills Property, site of the discovery of 16 kimberlite bodies to date, and subject to a joint venture with Ashton Mining and Alberta Energy (42.5 percent interest each), comprising 1.5 million acres;

- 15 percent interest in the Birch Mountain Property, subject to a joint venture with Ashton Mining and Alberta Energy (42.5 percent interest each), comprising 4.4 million acres;

- 49 percent interest in the Caribou Hills Property, surrounding the Birch Mountain and Buffalo Hills properties, subject to a joint venture with Ashton Mining and Alberta Energy (25.5 percent interest each), comprising 22.8 million acres;

- 100 percent interest in the Edmonton Property straddling the North Saskatchewan River from approximately lake Wabamun to the Saskatchewan border, site of the discovery in 1993 of a 0.392 carat diamond in river gravels, but otherwise unexplored for diamonds, comprising 9.3 million acres;

- 75 percent interest in the Lethbridge Property, site of the discoveries of the Legend diamonds of 0.14 and 0.17 carats, and the beige-green Black Butte diamond chip, but otherwise previously unexplored for diamonds, comprising 10.1 million acres; and

- 100 percent interest in 625,000 acres staked in south-western Saskatchewan, also unexplored for diamonds but containing anomalous quantities of minerals displaying kimberlitic affinity.

The amalgamation and consolidation have been conditionally approved by The Toronto Stock Exchange, subject to the filing of final documents and the closing of Pure Gold's Special Warrant financing. A further announcement regarding the effective date of the amalgamation, the trading symbol for Pure Gold Minerals Inc., and the first trading date for shares and warrants of Pure Gold Minerals Inc., will be made on receipt of The Exchange's final approval.

BY ORDER OF THE BOARD Donald R. Sheldon, President

CONTACT: Pure Gold Resources Inc.

Donald R. Sheldon, 604/682-1240

1-800-667-1660

or

Pure Gold Resources Inc.

Carina Bittel, 604/682-1240

1-800-667-1660