PERUVIAN GOLD LIMITED
PRESS RELEASE
MAY 12, 1998
Corporate Update
Mr. David Henstridge, President, Peruvian Gold Limited(VSE:PVO), provides
this year-end report on various corporate matters.
Throughout 1997, the Company continued its exploration of existing and new
properties in Peru.ÿ Drilling was undertaken at four prospects, Lara,
Perenti, Mont Dor and Agua Verde.ÿ At Lara, success came with the discovery
of a secondary enriched copper blanket in a porphyry setting, which will
require further drilling in 1998.ÿ As part of the regional geological
program around Lara, a new copper porphyry prospect, known as Tingo, was
discovered.ÿ Initial surface geological and geophysical results were very
encouraging and the prospect will also be drilled later this month.ÿ After
resolving a title dispute, it also appears that the Ollachea gold prospect
will become another drill target for this year.
Over the past 14 months, the Company aggressively reviewed a significant
number of prospects and companies which held advanced exploration
properties.ÿ With the depressed situation in the resource sector,
management believed that the Company could complete an acquisition which
would provide its shareholders with significant potential value.ÿ During
the course of its review, the Company identified Gabriel Resources Ltd., a
company which we believed had extraordinary potential and in February 1998,
the Company made a share exchange takeover bid for Gabriel.ÿ The Company
undertook considerable independent due diligence and obtained a fairness
opinion which confirmed that the bid was fair, from a financial point of
view, to Peruvian shareholders.
As in many corporate acquisitions, the complexity and nature of the
transaction results in different options for implementation.ÿ In regard to
the Gabriel transaction, the Company was informed by Gabriel that the
transaction had to be completed in a timely manner. For this reason the
transaction was structured as a takeover bid of Gabriel by Peruvian.ÿ One
of the largest shareholders of the Company, Bradstone Equity Partners Inc.
("Bradstone"), was of the view that the transaction should not be
implemented without the approval of the Company's shareholders. While such
approval was not required by the Vancouver Stock Exchange as a condition of
its acceptance, this requirement was supported by the British Columbia
Securities Commission.ÿ As a result, the bid for Gabriel was terminated by
mutual agreement as the Company was unable to meet Gabriel's time constraints.
Dr Peter Guest has resigned as a director and Mr Walter Nash has indicated
that he will not be standing for re-election.ÿ We wish them well in their
future endeavours.ÿ Since the Gabriel agreement was terminated, discussions
have taken place with management of Bradstone regarding matters of
corporate governance and future direction of the Company.ÿ Management will
nominate for election as directors at the Annual General Meeting of
Shareholders to be held on June 23, 1998, Mr David Henstridge, Mr Nick
DeMare, Mr Robert Atkinson and Mr David Black.ÿ Messrs. Atkinson and Black
are representatives of Bradstone.
The experience with the Gabriel transaction, while disappointing, has not
resulted in a change in management's objectives of enhancing shareholder
value.ÿ The Bradstone nominees support management's stated objectives for
the Company. Our long term objective of identifying new prospects, which
have a greater chance of success and utilizing our strong financial
resources to aggressively advance them through the exploration cycle, has
not changed.ÿ We look forward to continuing our exploration efforts with
our current projects in Peru and will seek further opportunities for the
Company.
On behalf of the Board of Directors
David Henstridge
President
FOR MORE INFORMATION CONTACT OUR OFFICE AT 1 (604) 681 0110 / 1 (888) 215 5111
1705 - 750 West Pender Street, Vancouver, B.C., V6C 2T8 / fax: 1 (604) 682
2236 / e-mail:pvo@intergate.bc.ca / web site: www.peruviangold.com
The Vancouver Stock Exchange has not reviewed and does not accept
responsibility for the adequacy of this release and the information
contained herein.
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