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ECHO BAY ACQUIRES REMAINING 15 PERCENT WORKING INTEREST IN ALASKA-JUNEAU PROPERTY FROM WATTS, GRIFFIS AND McOUAT AFFILIATES

 ECHO BAY ACQUIRES REMAINING 15 PERCENT WORKING INTEREST IN
 ALASKA-JUNEAU PROPERTY FROM WATTS, GRIFFIS AND McOUAT AFFILIATES
 EDMONTON, Alberta, Jan. 27 /PRNewswire/ -- Echo Bay Mines Ltd. (AMEX: ECO) said it has acquired from affiliates of Watts, Griffis and McOuat Limited the remaining 15 percent working interest in the Alaska-Juneau gold development property that Echo Bay did not already own.
 Since 1985, Echo Bay has owned an 85 percent working interest in this property and the nearby Treadwell gold property near Juneau in southeastern Alaska. Under the terms of agreements announced today, the Watts, Griffis and McOuat affiliates exchanged their 15 percent working interest in both properties for a 1.5 percent net smelter return royalty on all future production. Watts, Griffis and McOuat (WGM) is a privately held firm of consulting engineers and geologists based in Toronto.
 Echo Bay paid the WGM affiliates Cdn.$4 million in cash (about US$3.5 million) and agreed to pay an additional Cdn.$500,000 annually for the next eight years. Remaining annual payments are to be prepaid once commercial gold production begins or if Echo Bay exercises a royalty purchase option which is part of the agreements. The option gives Echo Bay the right to purchase the WGM affiliates' 1.5 percent net smelter return royalty for Cdn.$15 million until the earlier of Dec. 31, 2003 or three years after commercial production begins. On commercial production, Echo Bay will also issue 100,000 common shares to the WGM affiliates.
 Under the agreements in effect before this transaction, the WGM affiliates' interest would have been carried by Echo Bay until the date of a construction decision. After that date, each would have contributed its proportionate share of future development expenditures. If the WGM affiliates had not funded their proportionate share, their 15 percent working interest would have been converted into a 1.5 percent royalty at that time. Development expenditures totaled approximately US$39 million at Alaska-Juneau through Dec. 31, 1991.
 The new agreements were effective as of Dec. 31, 1991.
 Based on year-end 1990 data, the agreements add about 495,000 ounces of gold to proven and probable reserves at Echo Bay's development properties, and about 320,000 ounces of gold to the company's other mineralization. Total proven and probable reserves at Alaska-Juneau were 3,304,000 ounces at year-end 1990, and other mineralization totaled 2,148,000 ounces (100 percent basis). No major changes are anticipated when year-end 1991 data are announced next month.
 The Alaska-Juneau gold mine was the largest gold mine in North America in the 1930s and early 1940s. Beginning in 1901, it produced more than 3 million ounces of gold from underground before it was closed in 1944 by the imposition of a gross gold tax and the manpower shortages of World War II. Echo Bay proposes to reopen the A-J, as it is known. A feasibility study prepared by Kilborn Engineering (B.C.) Limited and updated to Dec. 31, 1991 calls for a large-volume underground mine and mill, able to process 22,500 tons/day. This would produce on the order of 375,000 ounces of gold a year.
 To enhance the economics of the A-J project, Echo Bay is currently conducting a major series of metallurgical tests on bulk ore samples at Hazen Research Inc. of Golden, Colo. Preliminary results indicate that it may be feasible to modify the A-J mill flowsheet to maximize recovery of gold in the gravity-recovery portion of the mill at the "front end" of the facility, which would reduce the required size of subsequent flotation, carbon-in-leach, and effluent neutralization operations.
 If preliminary indications are confirmed, the impact on the project vs. the feasibility study would be three-fold: lower capital costs, lower operating costs, and significantly greater operating flexibility. A revised feasibility study incorporating the results of the 1991 and 1992 metallurgical tests is expected in the third quarter of this year.
 The old Treadwell mine, located a mile away directly across the Gastineau Channel, also produced more than 3 million ounces of gold from underground between 1882 and 1917, when the mine workings were flooded by the sea.
 Echo Bay is one of the largest gold producers in North America. The company's shares are traded principally on the Toronto and American stock exchanges and on other major exchanges in North America and Europe.
 -0- 1/27/92
 /CONTACT: Paddy Broughton, 303-592-8048 or Ted Sheldon, 303-592-8049, both of Echo Bay Mines/
 (ECO) CO: Echo Bay Mines Ltd.; Watts, Griffis and McOuat Limited ST: Colorado, Alaska IN: MNG SU: TNM


BB -- DV005 -- 3964 01/27/92 17:56 EST
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Date:Jan 27, 1992
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