Zaruma Resources Announces Closing of Financing in Escrow

TORONTO, May 20, 2011 /CNW/ - Zaruma Resources Inc., (TSXV: ZMR.H), (the "Company") today announced the closing of a US$25 million private placement of subscription receipts. Each subscription receipt was priced at C$0.05 and entitles the holder, subject to certain conditions described below, to acquire for no additional consideration, units of the Company comprising one share and one common share purchase warrant entitling the holder to purchase an additional share for two years at C$0.10 per share. Additionally, the Company issued US$1.1 million in subscription receipts on the same terms in connection with the proposed cancellation of existing financial and operational agreements. The subscription receipts proceeds along with US$25 million of a US$30 million debt financing are or will be held in escrow, to be released from escrow upon the filing in certain courts and registries in Mexico of settlement agreements entered into with various creditors. The court approved settlements would end the ongoing litigation involving the Company in Mexico and enable the Company to proceed to remove current liens on the Company's mining concessions. The new debt financing will be secured by a new first lien on the concessions, the fixed assets in Mexico and a pledge of the shares of Minerales Libertad, S.A. de C.V., the Company's wholly owned subsidiary in Mexico which proposes to put the Luz del Cobre Copper Project into production as early as the first quarter of 2012.

Final Approval of the listing of the Company's shares as a Tier 1 mining company on the TSX Venture Exchange is subject to the satisfaction of the escrow conditions and the release of funds from escrow, as well as other conditions stipulated by TSXV. The release from escrow will take a number of weeks to achieve, depending on the progress of the court proceedings. However, if the proceedings are not successfully concluded by the time specified in the Escrow Agreement, or do not have a positive outcome, the subscription receipts proceeds and the debt financing proceeds shall be returned to the providers thereof.

Zaruma Gold Mining Ltd. subscribed for US$20 million of the subscription receipts, and upon the deemed exercise of the subscription receipts would control 61% of the outstanding common shares at closing.

Zaruma Resources Inc. is a pre-production stage company listed on the TSX-V NEX Board (symbol ZMR.H) and the Frankfurt Stock Exchange (symbol: ZMR). Common shares currently outstanding 123,608,747.

Neither TSXVenture 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.

Forward Looking Information

This News Release contains forward-looking statements which are typically preceded by, followed by or including the words "believes", "expects", "anticipates", "estimates", "intends", "plans" or similar expressions. Forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements and information. Risks and uncertainties that may cause actual results to vary include but are not limited to: the conditional nature of the subscription receipts financing, the risk that the Mexican courts will not approve of the creditor and litigation settlement prior to the escrow release deadline or at all, uncertainties relating to the availability and costs of financing needed to put Luz del Cobre into production; the costs of commencing production varying significantly from estimates; delays in commercial production from Luz del Cobre; unexpected geological conditions; the speculative nature of mineral exploration and development, including the uncertainty of reserve and resource estimates; operational and technical difficulties, including the failure of major mining and processing equipment; the ability of the Company to service its debt facilities; fluctuations in copper and other commodity prices; the existence of undetected or unregistered interests or claims, whether in contract or in tort, over the property of the Company; success of future exploration and development initiatives; competition; operating performance of facilities; environmental and safety risks, including increased regulatory burdens, seismic activity, weather and other natural phenomena; inability to, or delays in, obtaining renewal of necessary permits and approvals from government authorities; risks relating to labour; and other exploration, development and operating risks; changes to and compliance with applicable laws and regulations, including environmental laws ; political, economic and other risks arising from the Company's activities in Mexico; fluctuations in foreign exchange rates; as well as other risks and uncertainties.

Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

SOURCE Zaruma Resources Inc.

For further information:

Zaruma Resources Inc.
20 Toronto Street,12th Floor, Toronto ON, M5C 2B8, Canada
Fax: 416 367 3638, website www.zaruma.com
Dr. Thomas Utter, President and CEO            Frank van de Water, CFO and Secretary
Tel: +1 521 662 222 0063            Tel.: 416 869 0772
thomasutter@gmx.net               fvandewater@on.aibn.com

Profil de l'entreprise

Zaruma Resources Inc.

Renseignements sur cet organisme


FORFAITS PERSONNALISÉS

Jetez un coup d’œil sur nos forfaits personnalisés ou créez le vôtre selon vos besoins de communication particuliers.

Commencez dès aujourd'hui .

ADHÉSION À CNW

Remplissez un formulaire d'adhésion à CNW ou communiquez avec nous au 1-877-269-7890.

RENSEIGNEZ-VOUS SUR LES SERVICES DE CNW

Demandez plus d'informations sur les produits et services de CNW ou communiquez avec nous au 1‑877-269-7890.