ARC Completes Financing For San Gregorio Project, Uruguay

Business Wire, May 28, 1996

GREENBRAE, Calif.--(BUSINESS WIRE)--May 28, 1996--American Resource Corp. Inc. ("ARC") (NASDAQ:AREE) announced today that it has completed financing on its wholly-owned San Gregorio gold mine in northern Uruguay.

The project, consisting of a conventional 2,750 tons (2,500t) per day open pit mine and mill, has an estimated capital cost of $42 million. ARC will fund the project using a $25 million gold loan facility through N. M. Rothschild & Sons Limited of the United Kingdom and Bayerische Vereinsbank AG of Germany, with the balance of the capital being funded directly by ARC. Drawdown is scheduled to occur on or before June 7, 1996.

The team of Minproc Engineers Limited of Perth, Western Australia, and MinCorp Engineers & Constructors, of Denver, Colorado, has been awarded the contract to design, procure, and construct the process plant facilities. The contracts provide ARC with full guarantees on cost, schedule, throughput, and plant performance.

Construction commenced on March 27, 1996 following receipt of the project environmental permit from the Uruguayan Ministry of Housing, Town Planning and Environment. The project is expected to be in operation by the first half of 1997 at its annualized capacity of 70,000 ounces (2.2t) of gold.

Capital expenditures to date amount to approximately $11.8 million. Plant site earthworks are nearly completed and CIL tank fabrication has begun in Montevideo. The pouring of the mill and tank foundations will commence in June. All heavy mining equipment and the SAG and ball mills have been purchased.

Mine development and tailings dam construction is scheduled to begin in June. At full production the project will employ up to 180 people of which in excess of 96 percent will be Uruguayan and predominantly from the local area. Specialist expatriate staff to direct startup and training have been drawn from Argentina, Brazil, Chile, United Kingdom and the United States.

Mineable reserves, which are open along strike and at depth, are estimating at 421,000 ounces (13.1t). In March, ARC announced an exploration budget for Uruguay of $1.8 million, with a focus on reserve expansion at San Gregorio and regional exploration followed by target definition drilling over its 1,200m squared (3,000km squared) land position in northern and southern Uruguay.

CONTACT: American Resource Corporation, Inc.

Ian B. Smith, 415/461-6868