Annean Drilling

Mercator Gold PLC
18 January 2005



              Georgian House, 63 Coleman Street, London, EC2R 5BB
Tel [phone] Fax [phone]

                              ANNEAN JOINT VENTURE
                              DRILLING INTERCEPTS
                          HIGH-GRADE GOLD AT SURPRISE

LONDON - 18 January 2005 - Mercator Gold plc (AIM: MCR) as operator of the
Annean Joint Venture announces that drilling has intersected high-grade gold
mineralisation at Surprise, the second of three targets being drilled in the
Yaloginda region near Meekatharra, Western Australia.

Highlights

•           Hole 04SURCDD012 drilled from surface adjacent to the Surprise open
pit intersected 15m grading 45.1 g/t Au from 127m down-hole, approximately 100m
vertical depth and 50m below the base of the existing open pit;

•            Other intercepts of note include Hole 04SURC014 which intersected
6m @ 36 g/t Au from 155m down-hole and Hole 04SURCDD013 which intersected 5m @
6.3 g/t from 132m down-hole. In addition to the high-grade gold, wide zones of
low-grade mineralisation have been recognised in the host porphyry intrusive at
Surprise.

•            Mineralisation at Surprise is open at depth and will be tested in
future drilling. Gold at Surprise is associated with a conjugate set of veins,
one flat and the other steep north-dipping. While the host rocks differ in
detail, the structural geology is similar to that of Mt Charlotte at Kalgoorlie.

•            Mercator management has an exploration target of 2,000,000 ounces
of gold contained within four resources each of at least 500,000 ounces within
the Annean Joint Venture area. The high-grade Bluebird drilling results
announced in December and today's Surprise results means the company is on the
way to identifying the first two of these resources.

•            Management is highly encouraged by the results and, having expended
the first AUD$1 million (£406,500) on exploration, has decided to proceed to
Stage 2 of the Joint Venture by spending the next AUD$2 million (£813,000) on
exploration before March 2006 to secure a 45% interest in the Meekatharra
properties.

Surprise Drilling

Surprise is the second of three resource extension targets in the Yaloginda mine
area, immediately south of Meekatharra, Western Australia, being drilled by
Mercator. The company considers that each has the potential to contain in excess
of 500,000 ounces of high-grade gold. The targets are within 4km of the St
Barbara Mines Ltd ('SBM') Bluebird mill that is currently on care and
maintenance.



The drill results are presented in the Table 1 below. The drilling, all from
surface, shows almost complete gold anomalism within the porphyry host at
Surprise, illustrated by the 35m of intercepts in Hole 04SURCDD015.

Intercepts of high-grade gold include Hole 04SURCDD012 adjacent to the Surprise
open pit which returned 15m grading 45.1 g/t Au from 127m down-hole, Hole
04SURC014 which intersected 6m @ 36 g/t Au from 155m down-hole and Hole
04SURCDD013 which intersected 5m @ 6.3 g/t from 132m down-hole.

In addition to the wide high-grade zones, low-grade gold is recognised with the
host porphyry intrusive at Surprise. Hole 04SURCDD013 results are incomplete as
drilling ceased over the Christmas break with the hole still in mineralisation.

The Company's current 20,000m drilling programme under the Annean Joint Venture
is on-going, including the completion of hole 04SURCDD013 at Surprise.

Table 1: Mercator Gold results for Surprise drilling (all results >1m @ 0.5 g/t
Au)
----------    ------ ------ ------  -------    -------      --------      ------
Hole          From   To     Width   Grade      Easting      Northing      RL
                                               AMG          AMG
              (m)    (m)    (m)     (g/t Au)
   ---------- ------ ------ ------- -------         -------      -------- ------
04SURC011      108    112       4        0.6       642732       7045356    385
04SURC011      152    156       4        0.8       642761       7045346    353

04SURCDD012    127    142      15       45.1       642743       7045310    372
04SURCDD012    157    158       1        3.6       642761       7045304    357

04SURCDD013    116    117       1        0.6       642719       7045276    386
04SURCDD013    121    127       6        1.6       642724       7045274    381
04SURCDD013    132    137       5        6.3       642731       7045272    374

04SURC014      130    131       1        0.7       642718       7045255    369
04SURC014      135    140       5        2.0       642722       7045254    364
04SURC014      141    145       4        0.8       642726       7045252    360
04SURC014      149    154       5        0.9       642732       7045250    354
04SURC014      155    161       6       36.0       642736       7045249    349
04SURC014      163    165       2        2.3       642740       7045248    345
04SURC014      169    175       6        0.9       642745       7045246    339

04SURCDD015    164    166       2        2.1       642698       7045220    325
04SURCDD015    170    175       5        0.9       642702       7045218    319
04SURCDD015    180    184       4        0.6       642706       7045217    310
04SURCDD015    187    189       2        0.9       642709       7045216    305
04SURCDD015    192    193       1        0.8       642711       7045215    301
04SURCDD015    196    201       5        0.9       642713       7045214    296
04SURCDD015    203    206       3        0.5       642716       7045214    290
04SURCDD015    207    212       5        0.5       642718       7045213    286
04SURCDD015    216    223       7        1.1       642723       7045211    277
04SURCDD015    225    226       1        1.5       642725       7045210    272
------------  ------ ------ -------    -------      -------      -------- ------

The above table is based on compositing trigger value = 0.5 g/t Au, minimum
composite length 0.2m, and maximum width of internal waste 2m (except hole
04SURCDD012 where there are 3 separate 1m intervals of internal waste).
Intercept coordinates represent the x-y-z centroid position of the composited
drill-hole intercept. Assay method is Genalysis 50g fire assay (FA50/AAS).
Surface RL is about 470m, hence intercepts are between 86 and 200m below
surface.


Surprise Geology

The geology at Surprise comprises competent host porphyry, within schistose high
magnesium basalts. The porphyry is up to 40m wide, mostly about 20m wide, and
thins to the north where it terminates in a boat-like fore keel that plunges 60
degrees south. At depth beneath the proven high-grade mineralisation the shape
of the porphyry is not known. Mineralisation is open at depth and will be tested
in future drilling. Gold at Surprise is associated with a conjugate set of
veins, one flat and the other steep north-dipping. Whilst the host rocks differ
in detail, the structural geology is similar to that of Mt Charlotte at
Kalgoorlie.

SpaDiSTM Technology

The Surprise target was selected using the SpaDiSTM technology of Vearncombe &
Associates Pty Ltd. SpaDiSTM for the first time has identified that high-grade
zones within the Yaloginda mine tenements are in zones 010 degrees to 020
degrees oblique to the general north-south trend of the geology. Consequently,
the northern part of the Surprise porphyry, Bluebird and Jess were selected for
their obliquity to the regional trend as priority exploration targets.

Three-dimensional SpaDiSTM analyses on the historic Surprise data recognised
detail within the host porphyry not previously known with a subhorizontal to
gently south dipping zone of high-grade gold associated with flat quartz veins,
and predicted a second deeper zone which was tested and confirmed in this drill
program.

For the Surprise data in-put to SpaDiSTM the company conducted internal
consistency validation of the previous SBM digital data for Surprise. The
company has an on-going program where the digital data are checked against
original hard copy. Table 2 below is a record of the Surprise drilling results
of all historic and new intercepts grading greater than 20 gram metres (length
of intercept multiplied by assay grade). The data shown in Table 2 comprise
intercepts that are below the base of the deepest part of the Surprise pit at
420mRL. The intercepts are at depths from 50m to 125m below surface. A full
table of the previous drilling, including grid location is available on request
from the Company. Various diagrams and cross-sections will be available at the
company's website www.mercatorgold.com.

Mercator to Proceed to Stage 2 of Annean Joint Venture

In its AIM Admission Document prior to listing on 8th October 2004, Mercator
management set the Company the exploration target of locating four gold
resources within the Annean Joint Venture area, each containing greater than
half a million ounces. With the Bluebird and Surprise results to hand,
management considers the Company is on the way to identifying two of these
resources. The company is actively exploring at Jess (the third target within
the Yaloginda mine tenements) and other priority targets within its 1,020 sq km
of tenements, including Maid Marion, Lukes Junction and Tuckanarra.

To date, Mercator has expended the minimum AUD$1 million (£406,500) under the
terms of the Annean Joint Venture with SBM.

Management is highly encouraged by the results to date and as a result has
notified SBM that it intends to proceed to Stage 2 of the Joint Venture by
spending a further AUD$2 million (£813,000) on exploration before March 2006.
This will secure the Company a 45% interest in the joint venture. Mercator then
has the right to increase its interest to 70% by spending a further AUD$5
million (£2.03 million) on exploration. The decision to proceed to Stage 2 will
result in the final tranche of 20 million Mercator vendor shares being issued
for the acquisition of the operating subsidiary Aurogenic Resources Pty Limited.



Table 2
Previous drilling at Surprise by St Barbara Mines (SBM) and current drilling by
Mercator (MCR) with down-hole gold intervals returning >20 gram metres (grade *
thickness) beneath the 420mRL that is the base of the existing open pit.

Hole          Year      Company Easting  Northing  RL     From   To (m) Au g/  Interval
              Drilled   that    (AMG)    (AMG)    (above   (m)           t      (m)
                        drilled                    sea
                        hole                       level
                                                     m)
                                                                                                     
04SURCDD012      2004   MCR     642743   7045309    372    127    142   45.1       15
SU124            1997   SBM     642754   7045327    345    145    159   19.2       14
SU83             1997   SBM     642756   7045326    378    108    119   23.7       11
04SURC014        2004   MCR     642736   7045248    349    155    161   36.0        6
SU82             1997   SBM     642735   7045291    377    110    119   17.7        9
SU62             1997   SBM     642708   7045217    414     64     70   16.3        6
SU0240           2002   SBM     642768   7045333    395     46     50   16.4        4
SU115            1997   SBM     642761   7045282    389    100    103   17.9        3
SU72             1997   SBM     642711   7045173    418     48     78    1.3       30
SU0195           2002   SBM     642720   7045150    408     71     79    4.0        8
SU124            1997   SBM     642770   7045322    375    109    126    1.8       17
SU0234           2002   SBM     642777   7045351    408     27     39    2.3       12
SU30             1997   SBM     642761   7045369    344    152    154   12.9        2
SU82             1997   SBM     642744   7045288    393     94    100    4.3        6
04SURCDD013      2004   MCR     642731   7045271    373    132    137    6.3        5
SU0239           2002   SBM     642784   7045359    414     24     31    3.6        7
SU0240           2002   SBM     642758   7045331    377     64     74    2.5       10
SU83             1997   SBM     642750   7045328    367    121    132    2.1       11
SU83             1997   SBM     642770   7045322    403     82     88    3.6        6
SU0240           2002   SBM     642764   7045332    387     55     61    3.6        6
SU0242           2002   SBM     642790   7045378    413     26     36    2.1       10
-----------     ------- -------  -------  -------- ------ ------ ------ ------  -------

The above table is based on composting trigger value = 0.5 g/t Au, minimum
composite length 0.2m, and maximum width of internal waste 2m (except hole
04SURCDD012 where there are 3 separate 1m intervals of internal waste).
Intercept coordinates represent the x-y-z centroid position of the composited
drill-hole intercept. Surface RL is 470m.


For more information

Mercator Gold plc                             www.mercatorgold.com
                                              ----------------------

Patrick Harford, Managing Director            Tel: [phone]
Terry Strapp, Chairman                        Tel : [phone]

Beaumont Cornish Limited
Rod Venables / Roland Cornish                 Tel: [phone]

Phillip Securities UK Limited
Nick Bealer                                   Tel: [phone]

Parkgreen Communications
Justine Howarth / Ana Ribeiro                 Tel: [phone]

Mercator operates a continuous disclosure policy with respect to exploration
results. Company news releases are based on technical information approved by
the Company's Exploration Director, Julian Vearncombe BSc (Hons), PhD, FGS,
RPGeo, FAIG.



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