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LEASE AGREEMENT TO LET COMMERCE GROUP CORP. ENTER INTO GOLD PRODUCTION

 MILWAUKEE, Wis., Nov. 17 /PRNewswire/ -- On Nov. 12, 1993, Commerce Group Corp. (Commerce) (NASDAQ: CGCO) entered into an agreement with Corporacion Salvadorena de Inversiones (Corsain), an El Salvadoran governmental agency, to lease for a period of 10 years, approximately 166 acres of land and buildings on which its good processing mill, plant and related equipment are located.
 Commerce purchased the mill, plant, and related equipment on Feb. 23, 1993. Presently, these facilities have the capacity to process 400 tons of tailings for each day of production or to process 200 tons per day from its 13.8 million tons of proven gold ore reserves which contain 1,200,000 ounces of gold. In order to commence production, it will be necessary for Commerce to raise sufficient funds to retrofit, rehabilitate and restore the processing mill and plant and for working capital purposes.
 Commerce anticipates an annual after tax profit of $.33 per share based on the present 4,873,273 shares issued and outstanding and with gold selling at $375 an ounce. The gross receipts should amount to $4.8 million based on producing annually, 12,672 ounces of gold. Production can commence within five months after adequate funding is in place.
 This mill and plant operation will constitute a small part of the production of gold as Commerce's next phase will be to start its open pit heap leaching operations at the San Sebastian Gold Mine site from a beginning capacity of 1,000 tons a day to a 6,000 tons per day operation within a five-year period. From these heap leaching operations (and not including the mill and plant operations), Commerce expects to produce gold annually as follows: year one, 15,600 ounces; year two, 36,600 ounces; year three, 86,400 ounces; year four and thereafter, 129,600 ounces.
 Commerce has also obtained the exploration rights from the Government of El Salvador for two other mining projects: The El Potosi Mine which is located approximately 15 miles west of the mill and plant; and The Hormiquero Mine located less than ten miles southeast of the processing facilities. Commerce has begun exploring the mining potentiality of these mines as historical records register them as favorable prospects.
 -0- 11/17/93
 /CONTACT: Edward L. Machulak, President of Commerce Group Corp., 414-462-5310/
 (CGCO)


CO: Commerce Group Corp. ST: Wisconsin IN: MNG SU:

WB -- NY120 -- 5784 11/17/93 19:31 EST
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Publication:PR Newswire
Date:Nov 17, 1993
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