Favorable results from Talapoosa

Results from a continuing exploration program at the Talapoosa gold property in Nevada have Athena Gold (VSE) confident the project is advancing as planned.

Pegasus Gold (TSE), operator of the joint venture, can earn a 70% interest in the project from Athena by making staged payments totalling US$3.25 million and completing US$2.8 million in exploration expenditures. Pegasus is in the process of completing a second phase of work on the property. According to the earn-in agreement, Pegasus must spend a minimum of US$800,000 on the property

by March 9, as well as make a cash payment to Athena of US$250,000. To give Pegasus additional time to compile ongoing metallurgical testing, Athena has extended the second phase deadline an additional 30 days to April 9.

Previous work on the Talapoosa property, done prior to Pegasus optioning it in early 1992, outlined an estimated 19.6 million tons grading 0.045 oz. gold and 0.6 oz. silver per ton at a cutoff grade of 0.02 oz. gold. Most of the reserves are sulphide-hosted, although an estimated 3-4 million tons are oxidized material of about the same grade. Preliminary estimates by Athena put the overall strip ratio at about 3-to-1 while the strip ratio of the oxide reserve is estimated at less than 1-to-1.

Pegasus has not released a reserve estimate for the project although it is in the process of completing a new estimate as well as working out preliminary estimates of capital and operating costs.

Much of Pegasus’ work on the property has involved confirmatory drilling and metallurgical testing of both the oxide and sulphide mineralization. Pegasus’ second phase of drilling included five core holes totalling 2,607 ft. to test projections of known mineralization as well as collect samples for metallurgical testing.

An additional 16 reverse circulation holes were completed totalling 6,600 ft. to increase the sample density in a sparsely drilled zone overlying the Bear Creek zone.

Athena notes that all the core and reverse circulation holes returned ore-grade values over minable widths.

Pegasus plans to conduct additional reverse circulation drilling on the upper Bear Creek zone to increase drill density as well as further test a number of narrow high-grade intersections. The high values included a 10-ft. intersection in hole PE-12 from 410 ft. to 420 ft. grading an average of 0.96 oz. gold and a 10-ft. intersection in hole PE-15 from 350 ft. to 360 ft. grading 0.51 oz. gold.

Pegasus’ metallurgical studies are continuing, including separate evaluations on crush-size, agglomeration, bacterial oxidization as well as crushing tests. Michael Steeves, a spokesman for Pegasus, said the project is one of the company’s top priorities and he noted that the primary factor in determining the project’s viability will be the results of the company’s ongoing metallurgical tests.

Selected intersections from the second-phase drill program are as follows: Hole Interval Width Gold Silver

(ft.) (ft.) (oz./ton) (oz./ton)

Core holes:

PE-2 255-300 45 0.077 1.84

PE-3 130-220 90 0.23 1.55

PE-4 260-580 320 0.04 0.49

PE-5 380-555 175 0.057 1.02

PE-6 345-520 175 0.028 0.61

RC holes:

PE-7 135-210 75 0.058 0.63

PE-8 230-335 105 0.045 2.23

PE-9 75-135 60 0.031 0.32

PE-10 420-460 40 0.064 2.05

PE-11 325-400 75 0.046 0.94

PE-12 365-435 70 0.18 6.88

PE-13 195-215 20 0.12 4.79

PE-14 250-360 110 0.029 0.18

PE-15 340-380 40 0.15 0.69

PE-16 145-290 145 0.039 0.21

PE-17 235-360 125 0.032 1.30

PE-18 320-450 130 0.046 0.23