U.S. REPORT — Pegasus’ Talapoosa drilling confirms deposit’s

A recently completed first-phase drilling program on the Talapoosa project in Nevada confirms the widespread gold mineralization intersected in previous drilling on the property.

Pegasus Gold (TSE) conducted the confirmation drilling as part of an earn-in agreement with owner Athena Gold (VSE).

An agreement completed earlier this year gives Pegasus the right to earn a 70% interest in the property by making cash payments totalling US$3.25 million and expending US$2.8 million on exploration and development. If the gold prices average over US$400 per oz. in the third and fourth years of the agreement, an additional payment of US$1.5 million will be made to Athena. Drill holes PM-1 through PM-3 were drilled on the near-surface Main zone while holes PM-4 through PM-8 tested the Bear Creek zone.

Previous estimates put preliminary reserves in the two zones at about 19.6 million tons grading 0.045 oz. gold per ton and 0.6 oz. silver based on a cutoff grade of 0.02 oz. gold.

Thomas Adamson, president of Athena, said Pegasus has not yet announced its plans for the next phase of work on the property.

Athena sees considerable potential in expanding the Bear Creek zone which remains open a number of directions as well as to depth.

Hole PE-1, a previously reported stepout hole on the Bear Creek zone, intersected one high-grade interval of 80 ft. grading 0.11 oz. gold. Hole Interval Width Gold Silver

(ft.) (ft.) (oz./ton) (oz./ton)

PM-1 10-137 127 0.020 0.19

PM-2 3-100 97 0.046 0.50

PM-3 30-130 100 0.048 0.49

PM-4A 265-515 250 0.064 0.91

PM-5 265-290 25 0.014 0.22

310-325 15 0.015 0.25

340-410 70 0.023 0.33

420-545 125 0.040 0.36

PM-6A 50-60 10 0.022 0.085

255-405 150 0.055 0.36

450-710 260 0.047 0.35

PM-7 55-85 30 0.024 0.14

130-170 40 0.018 0.28

215-230 15 0.017 0.23

240-255 15 0.032 0.37

290-345 55 0.031 0.33

360-540 180 0.020 0.29

PM-8 60-75 15 0.016 0.078

115-145 30 0.022 0.11

210-230 20 0.010 0.10

280-320 40 0.019 0.21

345-650 305 0.039 0.97