An Emerging Diversified Mining Group

Achieves Full Commercial Production at Pimenton

Signs Exploration Agreement with Rio Tinto plc

Initial Exploration Success and Nearby Tordillo Property

South American Gold and Copper Company Ltd. has completed the construction and start-up of its 100%-owned Pimenton gold mine, located approximately 180 kilometers northeast of Santiago in the heart of the central Chilean copper belt.  The Company recently announced that it had signed a letter of understanding with Rio Tinto under which Rio can earn a 60% operating interest in developing a potentially large-scale copper porphyry at Pimenton in exchange for completing a bankable feasibility study.

The Company is also making progress with its substantial limestone deposits.  We believe the Company is now poised to establish itself as a diversified, operating mining company.

Mine start-ups are notoriously difficult, especially for small companies with limited capital or narrow-vein underground operations where ore development is critical.  The ultimate test for any company is whether it can address the problems and overcome them.  South American Gold and Copper commenced operations at Pimenton in the middle of 2004, helped by a mild southern hemisphere winter.  During the past nine months, the mining method has changed, the mill has been modified, and ore development plans have been altered.

Going forward, what matters is that the mine is now operating at the planned rate of approximately 150 tonnes per day, the head grade is approximately on target, and the mine is now generating positive cash flow.  We believe the Company is now poised to expand production and reduce unit costs.

However, while operational developments at Pimenton are important, they are overshadowed by news that Rio Tinto plc has entered into an agreement with the Company to explore the Pimenton property for a copper porphyry that may be the source of the Pimenton mineralization.  Details of the agreement have not been released, other than the fact that Rio Tinto can earn a 60% operating interest by completing a bankable feasibility study.  The detailed terms will give a clearer sense of Rio Tinto’s level of enthusiasm for the project.  What we know is that Pimenton is in the middle of an area of activity exploration by majors such as Codelco, Noranda, Phelps Dodge, and now Rio Tinto.

South American Gold and Copper has also managed to secure another large property – Tordillo – in the area.  Initial exploration results are encouraging.

Finally, the limestone market in Chile appears to be heating up – the Company is one of the few that is positioned to supply demand from the mining and other industries.

We believe South American Gold and Copper is entering into a positive and exciting period in its development, supported by cash flow from Pimenton.