U.S. REPORT (February 24, 1992)

An improved operating performance at the Kendall gold mine enabled Canyon Resources (NASDAQ) to record its first year of operating profitabil- ity in six years as a public company.

The Montana gold mine produced 57,070 oz. gold during 1991, twice the company’s 1990 production, and far better than all expectations. As a result, Canyon reported three consecutive quarters of profitability last year, and net cash flow from operations of US$11.5 million on revenues of US$21.7 million for all of 1991.

The junior gold producer’s improved performance has not gone unnoticed by mining analysts and is also reflected by its current share price of over US$3, an increase of about 250% from early 1991 when Canyon shares traded at about US$1.18.

The cash flow from operations enabled Canyon to pay down its gold loan debt of US$5 million, construct an expansion to the leach pad and a storm-capacity pond and other items at the Kendall mine, and support exploration, property purchases and general administrative activities. The company’s cash position at year-end was about US$2.7 million.

The Kendall mine’s remaining proven and probable reserves total 200,000 oz. gold, which Canyon views as sufficient for three more years of full-scale production.

But the company’s reserve base was doubled last year by the discovery and definition of the sizable McDonald gold deposit in western Montana. This project is now reported to contain preliminary reserves totalling 185 million tons averaging 0.028 oz. gold per ton. Canyon has a 27.6% interest in the McDonald deposit (5.2 million oz. gold), and in the smaller Seven-Up Pete deposit (1.6 million oz. gold) which together are expected to provide for a 15- to 20-year mine life.

Canyon also plans to continue work at its advanced, 100% owned Briggs gold property in southeastern California, a bulk tonnage heap leach project. Canyon no longer has an interest in the Beartrack gold project in Idaho, as the company decided late last year to transfer its 15% interest to majority owner FMC Gold rather than repay US$1.75 million debt to FMC.