HALIFAX, June 10 /CNW/ - Etruscan Resources Inc. (EET.TSX) reported today
that its Youga Gold Mine located in Burkina Faso, West Africa poured 13,024
ounces of gold during the second quarter ending May 31, 2009. Mill throughput
for the period was 206,283 tonnes at an average grade of 2.35 grams per tonne.
Gold production for the first six months of fiscal 2009 aggregated 28,205
ounces from the processing of 415,050 tonnes at an average grade of 2.48 grams
per tonne. During the first six months of fiscal 2009 Etruscan sold 30,680
ounces of gold realizing gross revenues of US$21.9 million.
Mill throughput and gold production for the second quarter were lower
than projected as a result of a combination of reduced availability of the
on-site power generators and lower than forecast drill rig availability for
blasting. The near term focus for Etruscan is to address these issues and
bring the Youga project to steady state production. Etruscan's newly appointed
Chief Operating Officer, Stephen Stine, is presently based at the Youga Gold
Mine and is now directly overseeing operations to ensure that Youga reaches
projected production targets of 7,000 ounces per month, mill throughput of
83,000 tonnes per month and material movement of 340,000 bench cubic meters
per month. Mr. Stine's 37 years of operational experience as a professional
engineer together with the additional talent he is presently assembling at
Youga is enhancing the strength of the operational team at Youga.
Delays in completing the grid power connection from Ghana into Burkina
Faso have placed unscheduled availability demands on the six existing diesel
generators (1.3 MW each). These backup generators were never intended to
provide power on a 24 hour continuous basis, and during the first half of 2009
a number of the generators required major maintenance which resulted in
reduced plant availability. This situation has been mitigated by the recent
sourcing of three new 1.0 MW Caterpillar generators to the Youga mine site all
of which are operational. The addition of these three new generators has
reduced the draw required from the existing backup generators and will ensure
security of power supply until the grid power is connected.
Grid power is expected to be available at Youga in July. Work on the grid
power line from Ghana is almost complete with all of the poles on both sides
of the border now erected and the lines strung. The Youga substation is 95%
complete and the Zebila substation is 80% complete with power hook up being
scheduled in June to integrate and connect the line to the VRA grid.
The drill rig availability of the drill and blast contractor improved
during the second quarter but total material blasted was still 32% below
forecast. The contractor continues to make improvements to the rigs to
increase availability so that the backlog of waste mining in the Main Pit can
be addressed. The mined ore grade for the quarter was below forecast for two
main reasons. The reduced blast volumes prevented access to the higher grade
ore blocks scheduled in the mine plan for the quarter and the quality of the
blasting was poor, causing excess ore dilution. Both of these issues are being
addressed and additional drill capacity is being acquired. With these issues
resolved, the actual mined ore grade is expected to be in line with the
projected grades set out in the Youga mine plan.
The Company continues to have the strong support of its lending syndicate
which is comprised of RMB Australia Holdings and Macquarie Bank. The original
Youga bank debt of US$42.5 million has been paid down to US$33 million and the
loans remain in good standing. In order to allow the Youga Mine to be
stabilized and optimized, the banks have recently agreed to waive the June
30th scheduled principal payment of US$2.5 million and have also defer the
re-cashing of the debt service reserve account in the amount of US$2.5 million
to September 30, 2009.
The Youga gold hedge book as at May 31, 2009 has been reduced from an
initial 246,306 ounces to 162,156 ounces under commitment at a price of $US700
per ounce. This now represents approximately 30% of the remaining life-of-mine
reserves leaving approximately 70% unhedged and available to be sold at spot
prices. Furthermore, a number of potential satellite pits have been identified
on the Youga mining permit within a three kilometer radius of the existing
plant and will be evaluated for conversion into reserves. Also, the Ouare gold
deposit located 35 kilometers northeast of Youga has demonstrated the
potential to provide additional mill feed to the Youga mill. A preliminary
resource estimation was completed in late 2008 and using a 1.0 gram per tonne
cutoff grade, the deposit contains 4.45 million tonnes of inferred resource at
2.2 grams per tonne (315,000 ounces). Once the Youga gold output has been
stabilized at the 7,000 ounce per month level, the focus of the mine
management will be to expand both the annual gold production and the mine
Etruscan continues to benefit from the financial, technical and
operational support of its largest shareholder, Maxim Finskiy. Mr. Finskiy is
a partner and the Chief Executive Officer of LLC MC Intergeo, the mining and
exploration arm of the private investment fund Onexim Group. While both
Etruscan and Mr. Finskiy agree with the near term focus on Youga, both parties
recognize the importance of moving forward with the Agbaou Project in Côte
d'Ivoire. Etruscan is continuing with the economic re-evaluation of the
original feasibility study for Agbaou completed in December 2008 to reflect
current market prices and conditions. Upon completion of the economic
re-evaluation, Etruscan and Mr. Finskiy and his team will continue discussions
on the development plans and financing requirements of the Agbaou project.
Etruscan is also actively working with Mr. Finskiy and his team to identify
acquisition opportunities which would enhance Etruscan's production profile.
Etruscan management is pleased with the evolution of the relationship with Mr.
Finskiy and his team and particularly the level of support being provided for
the Youga Mine.
Robert Harris, P.Eng., Vice President of Operations of Etruscan, is the
Qualified Person overseeing production and development in West Africa and
South Africa and has reviewed and approved this press release. The quarterly
figures in this press release are preliminary and are subject to final
About Etruscan Resources Inc.
Etruscan Resources Inc. is a gold focused Canadian junior mining company
with dominant land positions in district scale gold belts covering more than
13,000 square kilometers in West Africa. Its principal mine development
projects include the Youga Gold Project in Burkina Faso, the Agbaou Gold
Project in Côte d'Ivoire and the Finkolo Gold Project in Mali. Advanced and
early stage exploration projects are on-going in Burkina Faso, Mali, Côte
d'Ivoire, Ghana and Namibia. Etruscan also has a 47.4% interest in Etruscan
Diamonds Limited which has a dominant land position in the Ventersdorp Diamond
District located in South Africa. The common shares of Etruscan are traded on
The TSX Exchange under the symbol "EET". More extensive information on
Etruscan can be found on its home page at http://www.etruscan.com.
This press release may contain certain forward-looking statements which
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Forward-looking
statements may include statements regarding exploration results and budgets,
mineral reserve and resource estimates, work programs, capital expenditures,
mine operating costs, production targets and timetables, future commercial
production, strategic plans, market price of precious metals or other
statements that are not statements of fact. Although the Company believes the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Various factors that may affect future results include, but are not limited
to: fluctuations in market prices of precious metals; foreign currency
exchange fluctuations; risks relating to mining exploration and development
including reserve estimation and costs and timing of commercial production;
requirements for additional financing; political and regulatory risks, and
other risks and uncertainties described in the Company's annual information
form filed with the Canadian Securities regulators on SEDAR (www.sedar.com).
Accordingly, readers should not place undue reliance on forward-looking
NO REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE CONTENT OF THIS
For further information:
For further information: from Etruscan: Richard Gordon, Investor
Relations, (877) 465-3674, Fax: (902) 832-6702, firstname.lastname@example.org