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ASC Industries Files Comapi (Pinaya) Purchase Agreement

May 26, 2004
ASC Industries has provided the following information, in addition to that information reported in on April 28, 2004, on its wholly owned Comapi gold project, located in southern Peru. The company wishes to confirm that the purchase agreement has been filed and registered with the public registries in Peru, and the initial payment of $200,000 (U.S.) will be released to the community of Pinaya through its holding company.

The Pinaya gold project, previously referred to as the Comapi gold project, is located in southern Peru, approximately 110 kilometres northeast of the city of Arequipa. It is road accessible, and lies within seven kilometres of the BHP-Billiton Tintaya mine road. The project comprises seven mineral concessions covering more than 3,900 hectares, or 39 square kilometres. An additional 300-hectare concession has recently been applied for.

The Pinaya gold project is located in an emerging gold district in southern Peru, and is within 40 kilometres to the south of AngloGold's recent discovery at Rescatada. Pinaya is within the same geological belt as Rescatada.

Gold mineralization at Pinaya is hosted by early Tertiary-aged Puno group volcanics and sediments. It is considered a structurally controlled epithermal gold deposit. Limited sampling and mapping of the main gold zone by the company has shown that it may have a strike length of more than 2.7 kilometres. Within the main gold zone, artisanal miners have produced an open cut approximately 300 metres long, 30 to 40 metres wide and up to 20 metres high. A total of 27 samples, including grab samples, one-metre chips and three-metre chips, were collected from within the area of the open cut, and returned an average of 1.47 grams per tonne gold. Most of the samples were collected from the wall rock, indicating a bulk-mining potential. Higher-grade structures within the open cut have returned from two to six grams per tonne gold across widths of one and three metres.

Limited mapping and sampling outside of the main gold zone have returned a number of highly anomalous gold values, indicating potential for a number of parallel gold structures. In addition, seven samples averaging one gram per tonne gold were collected from tailings dumps at the property. The tailings dumps are estimated to contain more than 100,000 tonnes of material.

During the late 1990s, the Pinaya gold property was under option to a large Peruvian-based mining company. As part of a settlement resulting from a dispute arising between the Pinaya community and the Peruvian mining company, the Pinaya gold property was returned. The Peruvian mining company completed a number of drill holes, numerous trenches and other workings throughout the property. Unfortunately, none of the results are currently available to the company. As part of the purchase agreement between the company and the community of Pinaya through its holding company, $125,000 (U.S.) of the purchase price will be forwarded to the local community of Pinaya for community development.

The main gold zone at Pinaya has been mined by artisanal miners for at least 10 years. The miners are in the process of discontinuing their operations to allow for the unobstructed exploration of the main gold zone. An environmental review on the workings at the Pinaya gold project has recently been completed by geosurvey of Lima, Peru. The report provides a cost summary and details pertinent to the reclamation of the main open cut and surrounding tailings. In addition, independent consulting geologist James McCrea, PGeo, is preparing a National Instrument 43-101 report on the geology and mineralization of the Pinaya gold project. It is anticipated that the report will be filed by the end of the week.

During the next few weeks, the company will mobilize field crews to begin a comprehensive exploration program of the Pinaya gold project. Work will include mapping and sampling of all known workings, trenches, adits and other rock exposures. Other work will include ground geophysical surveys, all in preparation for a drill program contemplated for August, 2004.
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