Ecuador Gold announces closing of forth and final tranche of non-brokered private placement for gross proceeds of US$150,000

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TORONTO, Dec. 4, 2013 /CNW/ - Ecuador Gold & Copper Corp. (TSXV: EGX) (the "Company") is pleased to announce that it has closed the fourth and final tranche (the "Final Tranche Closing") of its non-brokered private placement for gross proceeds of up to US$3,250,000 (the "Private Placement").

A total of US$150,000 (C$159,150) was raised pursuant to the Final Tranche Closing, by the issuance to Aura International Services Ltd.  ("Aura") of 2,000,000 units (each a "Unit") of the Company at a price of US$0.075 per Unit. Each Unit is comprised of one common share (a "Share") of the Company and one common share purchase warrant (a "Warrant") of the Company. Each Warrant entitles the holder to acquire a Share at a price US$0.075 per Share until September 15, 2014.

Upon closing of the Final Tranche, Aura owns a total aggregate of 89,730,256 Shares and 53,174,585 common shares purchase warrants (the "Aura Warrants") of the Company, representing approximately 45.18% of the issued and outstanding Shares of the Company on a non-diluted basis, 45.73% on a partially diluted basis after giving effect to exercise of the Aura Warrants, and 56.3% on an extended partially-diluted basis after giving effect to exercise of all of the Warrants held by Aura after completion of the Final Tranche Closing. Prior to the Final Tranche Closing, Aura owned 44.9% of the Company's issued and outstanding Shares on a non-diluted, 48.7% of the Company's issued and outstanding Shares on a partially diluted basis, and 56.7% on an extended partially-diluted basis.  In exchange for the purchase by Aura of all of the Units under the Private Placement and the exercise of the Warrants contained in the Units providing aggregate gross proceeds of US$6.2 million to the Company, Aura will be entitled to nominate up to three directors of the Company.

All Warrants issued to Aura in conjunction with the total private placement of $3.25 million have an expiry date of September 15, 2014.

Aura is a "related party" to the Company under MI 61-101 as it is a "control person" of the Company by virtue of its shareholdings in excess of 20% of all issued and outstanding Shares of the Company. Accordingly, the Final Tranche Closing of the Private Placement is a "related party transaction" under MI 61-101.

Effective August 14, 2013, the Private Placement was unanimously approved by the board of directors of the Company. On October 11, 2013, the Company also received minority shareholder approval for the Private Placement pursuant to Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") at a special meeting of the shareholders of the Company held on October 11, 2013 (the "Shareholders' Meeting").

On November 6, 2013 the Company agreed to the subscription by Aura of the Units pursuant to a subscription agreement containing the customary provisions for the subscription of units of a reporting issuer with such shares comprising the Units posted and listed for trading on the Exchange.

There has been no formal valuation of the Company or its assets to date, as there has not yet been any necessity to do so.  The Private Placement is a transaction that is exempt from the formal valuation requirements under Section 5.4 of MI 61-101 pursuant to Subsections 5.5(b) and 5.5(c) of MI 61-101 because:

(a)  no securities of the Company are listed or quoted on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock Market, or a stock exchange outside of Canada and the United States other than the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc.; and
(b) the Private Placement is a distribution of securities of the Company to Aura for cash consideration, and
  (i) neither the Company nor, to the Company's knowledge after reasonable inquiry, Aura has knowledge of any material information concerning the Company or its securities that has not been generally disclosed; and
  (ii) the Company's management information circular dated September 10, 2013 in respect of the Shareholders' Meeting fully describes the Private Placement and includes a description of the effect of the Private Placement on the direct and indirect voting interest of Aura.
   

Aura purchased all of the Units under the Final Tranche Closing. The proceeds of the Final Tranche Closing will be used for exploration and development expenses, and as additional working capital. The Units issued are subject to a four‐month hold period from the date of issuance.

Cautionary Note

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Ecuador Gold and Copper Corp.

For further information:

Carson Phillips
Vice President, Corporate Development
Telephone: (604) 657-5871
Email: cphillips@ecuadorgoldandcopper.com

Glenn Laing
President and Chief Executive Officer
Telephone: (647) 865-3101
Email: glaing@ecuadorgoldandcopper.com