Proposed Asset Acquisition

Mercator Gold PLC
03 November 2005



FOR IMMEDIATE RELEASE 3 November 2005

      Proposed Meekatharra Asset Acquisition from St Barbara Mines Limited
                         ('Mercator' or 'the Company')

LONDON - Mercator Gold plc (AIM: MCR/MCRW) is pleased to confirm, further to the
announcement on 28 October 2005, the terms of the agreement to acquire St
Barbara Mines Limited's ('SBM') entire gold exploration and mining assets in the
highly prospective Meekatharra Belt of Western Australia, subject to shareholder
approval.  The total purchase consideration will comprise of AU$18 million (£7.56
million) in cash and new ordinary shares plus the adoption of environmental
bonding requirements of approximately AU$3 million (£1.26 million).

The acquisition will consolidate Mercator's position as the dominant player in
the Murchison Gold Province and has the potential to transform the Company from
explorer to producer by providing 100% ownership of the mining tenements and
infrastructure required to commence any significant gold production.

The acquisition will comprise:

   •The current 55% balance of SBM's interest in the Annean Joint Venture
    with Mercator;


   •The 3 million tonne per annum Bluebird (Yaloginda) mill and gold
    processing facility, together with associated plant, equipment, 250-person
    camp and tailings dams located 10km south of the Meekatharra township within
    the Annean Joint Venture area. The mill is currently on care and maintenance
    and Mercator considers that it has a replacement value in excess of £20
    million;


   •Approximately 123 granted exploration tenements and 92 tenement
    applications in the Meekatharra region ('the Meekatharra Tenements'),
    bringing Mercator's total holding to 439 granted and pending tenements
    totaling 1,970 sq km;


   •The SBM joint venture interest and benefits (currently 100% but reducing
    to potentially 35%) in the Pollelle joint venture with Elara Mining Pty Ltd
    (subject to Elara Mining's first right of refusal);


   •Land and property assets in and around Meekatharra and an option on
    pastoral leases covering a portion of the tenement area.

Managing Director, Patrick Harford, said: 'This acquisition provides 100%
ownership of the emerging and highly prospective Annean Joint Venture ground,
significant additional gold resources, and a large mill and gold processing
plant. Outright purchase of these assets means Mercator will have acquired
without debt all the assets required to commence significant gold production at
Meekatharra. This acquisition marks an important milestone in Mercator's short
life.'



Meekatharra assets strategically located near the Bluebird gold processing
facility

The acquisition will consolidate and enlarge Mercator's holding over the highly
prospective Meekatharra Belt in the Murchison Gold Province, more than double
the Company's gold resource base and add significant additional exploration
ground to the Yaloginda project area currently yielding significant exploration
success for the Company.

Ownership of the Bluebird mill and gold processing plant along with the enlarged
resource base are integral to giving the Company the capacity to commence
significant gold production during 2007 should it reach its resource base
criteria.

Exploration of the Meekatharra Tenements by St Barbara has outlined significant
gold resources (greater than 1.5 million ounces in indicated and inferred
categories) which require significant geological input and drilling to convert
to mineable ounces. This represents an excellent exploration opportunity for the
Company's geology team to apply the same process of validation and drilling
which has seen resources of 120,000 ounces at Bluebird and Surprise rise to
470,000 ounces of indicated and inferred resources over comparable areas.

The enlarged tenement package gives Mercator the largest land holding in the
Murchison Gold Province. In addition to the above tenements, the company is
acquiring the rights to a number of Miscellaneous and General Purposes Licenses
providing access, water, waste dump and tailings dam rights.

The Bluebird gold processing plant has a capacity of 3 million tonnes per annum
of oxide ore, dependent on ore hardness and leach residence time required. The
Bluebird plant has a standard layout with single stage crushing, open stockpile,
SAG and ball milling, emergency feed, pebble/scats reject conveyors, leach and
adsorption, elution, gold recovery, reagents, tailings and services areas. The
plant is in excellent condition and has the potential to produce in excess of
170,000 ounces of gold per annum at a 2g/t Au feed rate and 90% recovery.

The Bluebird mill and associated infrastructure located 12 Km from Meekatharra
could be re commissioned at a relatively low cost as and when Mercator commences
mining operations.
The plant has a flexible configuration which allows for the treatment of
different ore types and throughput rates.

A large production facility with no attached debt significantly lowers the total
operating costs associated with the treatment of gold bearing ores and as
consequence enhances any exploration success achieved by the Company.

Mercator considers that the replacement cost of the plant and associated
infrastructure, including a 250 person camp, would be in excess of AU$48 million
(£20 million).
In addition to the tenements, resources and plant, the company is acquiring:

   • data and intellectual property related to exploration, mining and ore
     processing on the tenements;
   • a residential camp capable of housing up to 250 people;
   • offices, warehouse, workshops, vehicles, spare parts and consumables;

   • a six month option to purchase the Annean (1686 sq km), Norie (213 sq
     km) and Cullculli (584 sq km) pastoral leases.


Purchase consideration

The purchase consideration is as follows:

1.                  Cash consideration of AU$5 million (£2.1 million), including
a non-refundable cash deposit of AU$250,000 (£105,000);

2.                  The issue to SBM of AU$13 million (£5.46 million) of fully
paid ordinary Mercator shares at completion at an issue price equal to the price
at which the Company raises new capital to fund the acquisition;

3.                  Mercator to assume approximately AU$3 million (£1.26
million) in Environmental Bonds presently held by SBM and to assume the
obligations under existing production royalties over the acquired tenements
(principally the 1.5% production royalty owned by Resource Capital Fund III LP
over all of the SBM tenements that are the subject of this sale).

Conditions Precedent

The Sale Agreement is subject to the following conditions precedent:

   •Mercator completing to its sole satisfaction due diligence on the
    Meekatharra assets on or before 28 November 2005.
   •Mercator obtaining all necessary regulatory and shareholder approvals,
    and completing the acquisition by 31 January 2006. (Mercator has an option
    to extend completion to 28 February 2006 by paying a further non-refundable
    deposit of AU$500,000 (£210,000), such deposit to be subtracted from the
    purchase price on successful completion.)
   •Mercator raising a minimum of £8 million cash through a placing of new
    shares prior to 31 January 2006. (The company has received expression of
    interest from suitable qualified broking institutions in support of this
    proposed capital raising and has appointed Loeb Aron & Company Ltd as
    investment adviser in respect of the acquisition and capital raising.)

Capital Structure

Management intends to raise between £8 and £12 million in the placing, which is
considered sufficient to fund the payment of the cash portion of the acquisition
(£2.1 million) and increase exploration activity targeting additional quality
resources, the conversion of resources into reserves as well as working capital
leading to commencement of gold production at Meekatharra.

The proposed transaction will result in SBM becoming a 20% shareholder in
Mercator. This structure recognises SBM's desire to maintain an interest in the
prospective tenement holdings,

In consideration of the proposed new capital raising and the proposed transition
from explorer to producer, shareholders will also be asked to approve a
consolidation of the share capital of the Company on the basis of one share for
every ten held. Warrants and options will be consolidated on the same basis.

Board Change

Paul R. Loudon, a director of Loeb Aron & Co. has tendered his resignation as a
non-executive director of Mercator so that he can act impartially as an adviser
to the Company in relation to the acquisition and capital raising.

Share Suspension.

The acquisition represents a 'reverse' transaction under the AIM Rules and
accordingly the existing Mercator ordinary shares and the warrants of the
Company have been suspended from trading until either:

a)     The Company posts to its shareholders an admission document and
circularfor shareholder approval of the acquisition (expected to be a date no
later than 31 December 2005), or

b)     The Company decides not to proceed with the acquisition in accordance
with the terms of the agreement with SBM.

Warrants - expiring 7th November 2005
Although the shares and warrants will be suspended from trading, warrant holders
are still able to exercise the warrants up until the expiry date 7th November
2005 if they so desire. The Company has written to warrantholders informing them
of this ability and copies of that letter, together with this announcement, are
available, free of charge, for a period of one month from the offices of the
Company at Peek House, 3rd Floor, 20 Eastcheap, London EC3M 1EB.

Anticipated timetable
The anticipated timetable for completion of the acquisition and the balance of
the matters referred to above is set out below:

Event                                                Date
---------------------------                          ---------------------------
Announcement of transaction                          28 October 2005
Completion of Due Diligence                          28 November 2005
Posting of admission document and circular to        30 December 2005
shareholders
Extraordinary General Meeting and completion of      By end of January 2006
capital raising and of acquisition of Meekatharra    ---------------------------
assets
---------------------------

For further information please contact:
Mercator Gold plc
Patrick Harford, Managing Director              Tel: [phone]
Terry Strapp, Chairman                          Tel : [phone]
Michael de Villiers, Finance Director           Tel: [phone]
Dr Julian Vearncombe                            Tel: [phone]
Email: [e-mail]
www.mercatorgold.com
Beaumont Cornish Limited
Roland Cornish                                  Tel: [phone]

King & Shaxson Capital Ltd
Nick Bealer                                     Tel: [phone]

Ocean Equities Ltd
Will Slack                                      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. Information on the acquisition resources was supplied by SBM.




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