Hanover Gold Co. Inc. and Kennecott Exploration Co. agree to end their mining venture agreement

Business Wire, March 20, 1995

ROSLYN, N.Y.--(BUSINESS WIRE)--March 20, 1995--Hanover Gold Co. Inc. (NASDAQ:HVGO) and Kennecott Exploration Co., mining venture partners, have agreed to terminate their mining venture partnership in the Alder Gulch/Virginia City Mining District, Montana in the next 30 days.

Kennecott has advised Hanover that it decided to withdraw from the mining venture because Kennecott was unable to negotiate a mineral lease on certain adjacent properties and thereby expand the area of interest. Hanover understands that an increase in the reserves was needed to meet Kennecott's requirements for an open-pit mining project.

Hanover Gold is currently mining gold from its properties. Both it and Kennecott have, since May 1992, undertaken extensive exploration, property acquisitions and development programs within the district at a cost estimated to be more than $7.5 million. Fred Schmid, Hanover's president, stated that a positive by-product of Kennecott's decision was that under the terms of the mining venture agreement, Hanover Gold will become the sole owner of all claims, reserves, exploration data (including reserves and data resulting from Kennecott's exploratory work), and gold production in connection with ongoing mining activities in the Alder Gulch.

Kennecott had previously advised Hanover that it had defined 1.6 million ounces of drill-indicated gold resource within the district. Hanover Gold is presently mining on a portion of the area, containing approximately 500,000 ounces of drill-indicated gold resource, including both proven and probable reserves.

News that Hanover Gold and Kennecott will cease to be mining venture partners in the Alder Gulch/Virginia City Mining District, has already prompted contacts from several major and smaller American and Canadian gold producers who management believes could be interested in participating with Hanover in developing and mining the property area.

Hanover Gold plans to increase its production of gold from its underground mine in the Alder Gulch to an annual level of 15,000 ounces of gold by the end of 1995.

CONTACT: Hanover Gold Co. Inc.

Fred R. Schmid, 516/742-1202 or Fax: 516/294-1066