HALIFAX, July 11 /CNW/ - Etruscan Resources Inc. (EET.TSX) has reported
its financial and operating results for the six months ended May 31, 2008. The
Q2 2008 unaudited financial statements and management's discussion and
analysis are available on the SEDAR website at www.sedar.com or at the
Company's website at www.etruscan.com. All figures are reported in Canadian
dollars unless otherwise noted.
Highlights from second quarter 2008 operations include:
- First gold produced at the Youga Gold Mine in Burkina Faso;
- Exploration drilling expanded resource potential at the Bitou area
which is located 35 kilometers north of the Youga Gold Mine; and
- Operations continued to ramp up at the Blue Gum Diamond Project in
Youga Gold Mine, Burkina Faso
Etruscan achieved a major milestone in the second quarter of 2008 with
the first gold pour at its Youga Gold Mine, located 180 kilometers southeast
of Ouagadougou, the capital city of Burkina Faso. Approximately 7,800 ounces
of gold were recovered in the second quarter and 6,200 ounces poured. At
design capacity the Youga Gold Mine will be processing 83,000 tonnes per month
and recovering an average of 6,700 ounces of gold per month. Mining operations
ramped up during the second quarter and provided for a run-of-mine ore
stockpile at the end of May of approximately 45,000 tonnes.
A total of 4,756 ounces of gold were sold during the second quarter for
gross sales receipts of $3.35 million. Operating, finance and other costs for
the quarter, net of gold receipts, were capitalized as preproduction costs.
Commercial production was subsequently achieved in early July with the mill
throughput for the 30 day period ended July 7, 2008 totaling 53,764 tonnes
which represents 65% of the design throughput and 4,094 ounces of gold being
produced during this period which represents 61% of the forecast amount.
Production statistics continue to show steady improvements and the gold
recovery plant continues to operate at projected efficiency with an average
gold recovery of over 93%. Gold production is scheduled to increase during
July as plant throughput and mill feed grades reach forecast levels.
Current mineable reserves at Youga are 6.6 million tonnes with an average
grade of 2.7 grams per tonne containing 580,000 ounces of gold, which is
contained in five separate pits. The mill feed to date has come from the A2
Main pit which has mineable reserves of 4.1 million tonnes with an average
grade of 3.1 grams per tonne and a strip ratio of 6.8 to 1. Mining operations
have recently commenced at the A2 West Zone 1 pit which contains mineable
reserves of 0.5 million tonnes at an average grade of 3.0 grams per tonne with
a very low strip ratio of 1.3 to 1. A number of potential satellite gold
deposits have already been identified on the Youga mining permit within a
three kilometer radius of the existing plant and are being evaluated for
conversion into reportable resources and reserves.
During the six months ended May 31, 2008 the Company invested a total of
$17.3 million in development activities related to the Youga Gold Mine.
Bitou Exploration Permits, Burkina Faso
Exploration activities carried out during the second quarter on the Bitou
permits, which cover the northeastern extension of the Youga Gold Belt,
identified significant mineralization with a resource potential extending over
a strike length of two kilometers. The Bitou area is located 35 kilometers
northeast of the Youga Gold Mine. The objective of this drill program is to
determine the resource potential of a previously known zone at Ouaré with
reverse circulation ("RC") drilling, and to test three new gold targets with
auger drilling. Highlights from the results of the first 1,500 meters of a
planned 5,000 meter RC drill program are listed below:
- 22 meters at 2.8 g/t (including 6 meters at 6.5 g/t)
- 14 meters at 2.6 g/t (including 4 meters at 9.2 g/t)
- 12 meters at 2.6 g/t (including 4 meters at 6.2 g/t)
- 2 meters at 41.6 g/t
- 2 meters at 25.6 g/t
A gold resource at Bitou would have the potential to provide substantial
additional mill feed for the Youga gold operation.
Blue Gum Diamond Project, South Africa
Etruscan's subsidiary company, Etruscan Diamonds, holds one mining permit
and three prospecting permits over three adjacent properties in the
Ventersdorp alluvial diamond district (Nooitgedacht, Hartbeestlaagte and
Zwartrand properties) known as the Blue Gum Project.
During the first quarter of 2008, Etruscan Diamonds recommenced mining
and processing operations at the Tirisano Diamond Mine located on the Blue Gum
property. The gravel from the mine is being processed at the pre-existing
Tirisano DMS (dense media separation) plant, which Etruscan Diamonds regained
control of late in 2007, and through four 16 foot pan plants which have
recently been installed near the DMS plant. The objective is to achieve a
monthly throughput of 100,000 cubic meters of gravel per month from the two
facilities with 40,000 cubic meters coming from the DMS plant and 60,000 cubic
meters from the pan plant.
The ramp up at the Tirisano DMS plant and the new pan plants continued
during the second quarter and the facility is targeted to achieve the forecast
production rate of 100,000 cubic meters per month in the third quarter of
2008. Pre-screening capacity during the second quarter was limited to
1,000 cubic meters per day which limited the pan plant throughput. The
installation of a larger pre-screening unit is now nearing completion and will
improve plant throughput by increasing pre-screening capacity from 1,000 cubic
meters per day to 10,000 cubic meters per day.
For the six month period ended May 31, 2008 processing operations
recovered 5,465 carats from 209,231 cubic meters of gravel with an average
rough tender value of US$613 per carat for an aggregate diamond value of
During the six months ended May 31, 2008 the Company invested a total of
$4.3 million in development activities related to the Blue Gum Diamond Project
and $0.2 million in exploration activities related to other diamond
Other Gold Exploration
Etruscan is exploring over 3,300 km2 in Burkina Faso on three major
greenstone belts referred to as the Youga project area, the Boulounga project
area and the Banfora project area.
In Mali the Company is exploring in two major areas. In Mali South, the
Company is exploring over 2,300 km2 with its most strategic land package along
the Syama Gold Belt, which includes an area under joint venture with Resolute
Mining Limited of Australia. In Mali West, the Company holds over 1,200 km2
with the largest land package strategically situated immediately south and
southwest of the Sadiola Mine that is operated by Anglogold Ashanti and
In Ghana, Etruscan has increased its property interests to over
2,200 km2. The Company is exploring the southwestern extension of the Youga
Gold Belt into Ghana on the Nangodi-Bolgatanga project area and has been
building a strategic land package in southern Ghana.
Etruscan's most important project in Côte d'Ivoire is the Agbaou Gold
Project which is currently undergoing a feasibility study to determine the
economics of developing a one million tonne per annum mine, similar in size to
the Company's recently commissioned Youga Gold Mine in Burkina Faso (90,000 oz
per annum). Etruscan considers Côte d'Ivoire to be one of the most prospective
countries for new discoveries in West Africa. Etruscan has three exploration
permits covering 3,000 square kilometers and applications in progress for six
new permits in different gold belts throughout the country.
Etruscan is exploring almost 18,000 km2 in the country of Namibia. The
Company was first attracted to the country primarily because it had not
received extensive, gold-focused exploration, however, Etruscan is also
cognizant of the potential for other mineral commodities and its licences are
not restricted to precious metals. Drilling is underway on the first four
priority areas to test a variety of targets including copper-gold,
copper-gold-silver and rare earth element deposits.
A comprehensive update on the Company's exploration activities in these
five countries was issued during the quarter; refer to the Company's news
release dated May 6, 2008.
During the six month period ended May 31, 2008 the Company invested a
total of $9.2 million in exploring its African exploration property portfolio.
The net income for the three months ended May 31, 2008 was $13.9 million
($0.11 per share) compared to a net income of $0.8 million ($0.01 per share)
for the three months ended May 31, 2007. The current three month period
results included non-cash income of $19.3 million (2007 - $1 million) related
to unrealized gains on financial derivative instruments.
The net loss for the six months ended May 31, 2008 was $22.6 million
($0.18 per share) compared to a loss of $16.0 million ($0.16 per share) for
the six months ended May 31, 2007. The current six month period loss included
non-cash expenses of $14.9 million (2007 - $14.5 million) related to the
unrealized loss on financial derivative instruments and $1.5 million (2007 -
$2.2 million) related to stock-based compensation.
Generally accepted accounting principles (GAAP) require non-hedging
financial derivative instruments, those which do not qualify for hedge
accounting, to be recorded at fair value (marked to market) on the balance
sheet date and the resulting gains or losses are to be included in earnings
for the period. The Company and its independent advisors have determined that
while the Youga gold hedge constitutes an effective economic hedge for the
Youga Gold Mine; it does not, however, meet the requirements for hedge
accounting under GAAP. The marked to market revaluation of the Youga gold
hedge as at May 31, 2008 was negative $48.4 million which is a reduction of
$19.3 million for the three month period. The Company has recorded this amount
in the net income for the period and correspondingly recorded a decrease in
the related liability on the balance sheet. The unrealized marked to market
amount represents the theoretical value on cancellation of the gold option
contracts based on market values as at May 31, 2008. As such it does not
represent an estimate of further gains or losses nor does it represent an
economic obligation for the Company as long as it is expected to meet its
delivery obligations as they fall due. Furthermore, over future operating
periods as the Youga hedge commitment is fully settled with physical delivery
of gold, the financial derivative liability will be reduced to zero and a
corresponding increase in gold revenue will be recorded.
The financial statements have been prepared in accordance with Canadian
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.
K. Kirk Woodman P.Geo., Etruscan's Chief Project Geologist, is the
Qualified Person overseeing Etruscan's exploration programs in West Africa and
has reviewed and approved this press release.
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 (press release dated
July 8, 2008), the Agbaou Gold Project in Côte d'Ivoire (press release dated
February 21, 2008), and the Finkolo Gold Project in Mali (press release dated
July 2, 2008). Advanced and early stage exploration projects are on-going in
Burkina Faso, Mali, Côte d'Ivoire, Ghana (press release dated June 10, 2008),
and Namibia (press release dated June 19, 2008). See press release dated May
6, 2008 for a comprehensive update of explorations projects. Etruscan also has
a 52.07% interest in Etruscan Diamonds Limited which has a dominant land
position in the Ventersdorp Diamond District located in South Africa. (press
release dated June 13, 2008). 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
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