Firesteel Resources Inc. is pleased to announce that it has signed an agreement to option the Reyna de Oro property from Compaņia Minera La Metalica de Chihuahua (a private Mexican company) and Consolidated Magna Ventures Ltd. (a Canadian exploration company listed on the VSE). Firesteel can initially earn a 70% interest in the property by incurring total staged exploration expenditures of US$ 3 million and cash or share-equivalent payments of US$ $203,500 over four years. This option agreement is contingent upon Firesteel's satisfactory completion of a three month due diligence review.

Upon fulfilling the required commitments, a joint venture will be formed with Firesteel holding a 70% interest and Magna holding a 30% interest. Metalica retains a 2% NSR which can be purchased for US$2.5 million. Any J.V. partner that does not contribute to ongoing work programs will have its interest diluted on a straight-line basis. If this interest falls to 10%, an automatic conversion to a 1% Net Smelter Return will be triggered. The contributing company has the right to purchase this 1% NSR for US$ 1.25 million. Thus, the total NSR purchase amount is US$3.75 million.

The 1467 hectare, road accessible property is located in the southwest portion of Chihuahua State in the heart of the Sierra Madre gold-silver-copper belt. This district has experienced continuous mining activity since its discovery in 1632. Numerous mines and significant undeveloped epithermal gold/silver/copper deposits occur in this area.

The Reyna de Oro property adjoins Francisco Gold's El Sauzal holdings. El Sauzal hosts one of the largest gold resources in Mexico and has reported a "mineable resource" of 23.5 million tonnes at a grade of 2.98 grams per tonne of gold. An independent review states that numerous geological similarities exist between the Reyna de Oro prospect and El Sauzal.

The Reyna de Oro property hosts a significant epithermal gold-copper prospect that was formerly part of the Mexican Mineral Reserve. Previous work has delineated the main mineralized zone over a strike length of four hundred meters. Recent prospecting has identified gold mineralization up to one kilometre west and 400 meters east of the main zone. Five previous surface and underground sampling programs confirm the potential of the mineralized system. These are highlighted by:

  • A surface sample from the Vicente Zone which gave 57 meters of 4.52 g/t gold and 0.28% copper, as well as a road-cut channel sample which returned 60 meters of 3.41 g/t gold and 0.18% copper.
  • Underground channel samples of 3.16 g/t gold over 63 meters, 3.44 g/t gold over 54 meters and 2.51 g/t gold over 45 meters
  • In 1997 a drilling program tested the mineralized zone over a strike length of 150 meters. Almost all of the holes encountered lengthy sections of significant gold and copper mineralization. Drill hole RDO 97-01 returned 61.2 meters of 1.44g/t gold and 0.42% copper. (NOTE: This intersection had a core recovery of only 60%.) The upper 29.8 meters of this hole gave 2.89 g/t gold and 0.42% copper despite only a 36% core recovery. Channel sampling of an adit 15 meters above this drill hole returned 6.64 g/t gold and 0.21% copper over 25.8 meters. (NOTE: the gold values intersected in drill holes through the mineralized zone under-represent the true grade because of the poor core recovery. In this case, much of the free gold is hosted by soft, altered volcanics which are easily washed away during drilling.)

    Firesteel's planned exploration program will be directed toward expanding the known mineralized zone at depth and along strike. This program will involve geological mapping, IP, trenching and soil geochemistry followed by a drill program.

    Firesteel's immediate objective is to define a world class gold - copper deposit. Previous exploration on Reyna de Oro and our adjoining neighbor, El Sauzal, has shown that this region is capable of hosting this type of very large deposit.


    David G. Dupré, President

The Alberta Stock Exchange has neither approved nor disapproved the information contain herein.

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