SOURCE: Uruguay Mineral Exploration Inc.

June 16, 2005 10:38 ET

UME Wins Tax Breaks

CALGARY, AB -- (MARKET WIRE) -- June 16, 2005 -- Uruguay Minerals Exploration Inc. ("UME") (TSX- V: UME) (AIM: UGY), is pleased to announce that it has been granted national interest status under Uruguayan Investment Law in respect of its capital investment in the Arenal mining project. This recognition should result in future income tax savings and deferrals.

Tax benefits have been granted on capital investments of up to $US19.3 million over the 3 year period commencing 1 June 2004. The investment includes capital expenditure on the new mine fleet, exploration and developing the Arenal mine.

The relief granted takes the following form:

--  relief from Corporate Tax on a total of up to $US 9,656,000 of taxable
    income has been granted for the 2006, 2007 and 2008 financial years. At the
    current tax rate of 30% this equates to a potential reduction of tax
    payable of $US2,896,800.
    
--  in addition, up to a further $US 9,656,000 in taxable income from the
    2005, 2006, 2007 and 2008 financial years may be deferred to 2010. At the
    current tax rate of 30% this is equivalent to deferral of potential tax
    payments of up to a further $US2,896,800.
    
These benefits are indicative maximum benefits. The actual benefit will be depend on the timing of investment and profitability of operations in any specific tax year. To receive the benefit, the taxable income to which the benefit applies needs to be retained in the business for a period of 5 years before it can be distributed as dividends.

This classification of UME's investment in the Arenal mine as having national interest status is a strong indication of the Uruguayan government's commitment to foreign investment and the mining industry in Uruguay.

ENDS

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Editors note: Uruguay Mineral Exploration Inc. is a gold producer and exploration company focused on identifying and developing mineral opportunities in Uruguay. UME is a fully integrated mining company, 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 assembled an exploration portfolio based on gold, base metals (copper, nickel, lead, zinc) and diamond prospects. In the first half of 2003, the Company discovered the Arenal deposit, currently the largest known gold resource in Uruguay. It is quoted in Canada (TSXV) and London (AIM) and Durlacher Limited is the nominated adviser.

Contact Information

  • For further information, please contact

    Uruguay Mineral Exploration Inc.
    Tony Shearer
    Chairman
    + 44 20 7523 5914
    Email Contact

    Chris Clark
    President
    +59 82 601 6354
    Email Contact

    PJ Lewis
    + 44 7950 003 138
    Email Contact

    Panmure Gordon & Co
    Mathew Robinson
    +44 207 459 3600

    Jonathan Retter
    +44 207 459 3600