Re Agreement

28 Oct 2005 12:00

Uruguay Mineral Exploration Inc28 October 2005 URUGUAY MINERAL EXPLORATION INC. MEDIA RELEASE 28th October, 2005 SYMBOLS: UME (TSXV), UGY (AIM) Acquisition of Net Profits Interest Uruguay Mineral Exploration ("UME") is pleased to announce that it has reachedagreement, subject to normal completion procedures, to acquire the 10% NetProfit Interest ("NPI") over key tenements within the Minas de Corrales Project,including the tenement on which the Arenal deposit is located. This agreementterminates UME's obligation to pay the NPI holder 10% of the net profits derivedby the group from gold produced from the NPI area as part of the acquisition ofthe tenements. The consideration for the acquisition of the NPI is • 290,000 fully paid common shares in UME to be issued on execution of the contract which is expected to occur during November 2005; • US$ 3,150,000 payable in 3 equal annual installments of US$ 1,050,000 ("Installments"). Each Installment is payable no later than the first, second and third anniversary of 30 June 2005, or whenever 2,000,000, 3,200,000 and 4,400,000 tonnes of ore have been mined from the NPI tenements, whichever is the sooner. Each Installment is backed by a convertible note that entitles the holder, within 30 days of the anniversary date, to convert the Installment into 250,000 ordinary shares in UME. An additional US$ 1,050,000 is also payable after the third anniversary date, ifthe average monthly price of gold for the previous 36 months exceeds US$ 400 perounce. The transaction has been structured to provide the NPI holder with certainty offuture cash payments, but also providing the opportunity to participate in theupside of the Minas De Corrales Gold project. UME also advises that it has appointed PricewaterhouseCoopers to replace BDODunwoody as its auditor. The Board chose to make this change at this time as theincumbent auditor was due to retire and the Company decided to take theopportunity to review all of its administrative arrangements. In addition toappointing new auditors, the company has also decided to move it's corporateoffice to a more convenient time zone in Toronto. The Company's new corporateaddress is 360 Bay Street, Suite 500, Toronto, Ontario, Canada, M5H 2V6 Tel:(416) 361-0737 Fax: (416) 361-0923. Mr David Fowler has also been appointed to replace Sara-Lane Sirey as CorporateSecretary of the Company. The company expresses it's thanks to BDO Dunwoody andMs Sirey for their service and support over the past 8 years. ENDS Editors note: Uruguay Mineral Exploration Inc., which joined AIM in December2004, is a gold producer and exploration company focussed on identifying anddeveloping mineral opportunities in Uruguay. UME is a fully integrated miningcompany, possessing the skills necessary to explore and develop its discoveries.The Company operates the only producing gold mine in the country (San Gregorio),and is also the leading mineral exploration company in Uruguay having assembledan exploration portfolio based on gold, base metals (copper, nickel, lead, zinc)and diamond prospects. In the first half of 2003, the Company discovered theArenal deposit, currently the largest known gold resource in Uruguay. It isquoted in Canada (TSXV) and London (AIM) and Panmure Gordon & Co is thenominated adviser and broker. For further information, please contact Uruguay Mineral Exploration IncTony Shearer, Chairman + 44 20 7523 5914; tony@tonyshearer.comChris Clark, President +59 82 601 6354; urumin@adinet.com.uyPJ Lewis + 44 7950 003 138; pjlewis@tiscali.co.uk Panmure Gordon & CoMathew Robinson +44 207 459 3600Jonathan Retter +44 207 459 3600 This information is provided by RNS The company news service from the London Stock Exchange