U.S. REPORT (March 23, 1992)

A definitive agreement was recently concluded between Athena Gold (VSE) and Pegasus Gold (TSE) for continued exploration of the Talapoosa property in Nevada.

Pegasus signed a deal giving it the right to earn a 70% interest in the property by making a series of cash payments totalling US$3.25 million as well as spending US$2.8 million on exploration and development. An additional payment of US$1.5 million to Athena on the 4-year anniversary of the agreement is conditional on an average gold price of US$400 during the fourth year.

Previous work on the property by a number of parties, including most recently Placer Dome, outlined an estimated preliminary reserve of 19.6 million tons grading 0.045 oz. gold and 0.61 oz. silver per ton at a cutoff grade of 0.02 oz. gold.

Placer had a rather onerous deal on the property. Faced with payments and property expenditures totalling US$39 million to earn a 51% interest, Placer dropped the property in mid-1991.

Thomas Adamson, president of Athena, says Pegasus will begin a drilling program immediately to confirm grade and continuity of the deposit. Pegasus must spend a minimum of US$300,000 on the initial program which will include sampling for further metallurgical testing.

Adamson notes that the deposit is primarily sulphide mineralization but does contain an estimated 3-4 million tons of oxide material of about the same grade. He estimates the strip ratio on the oxide reserve at less than 1-to-1 while the overall reserve has a strip ratio of about 3-to-1.