Joint News - Etruscan and Mountain Lake forming new company to develop South African diamond assets



    HALIFAX, Jan. 30 /CNW/ - Etruscan Resources Inc. (EET.TSX) and Mountain
Lake Resources Inc. (MOA.TSX-V) announced today that they are forming a new
company to be named Etruscan Diamonds Limited ("Etruscan Diamonds") to hold
their respective interests in their diamond assets in South Africa. The
diamond assets are presently held through a South African company, Etruscan
Diamonds (Pty) Limited ("Etruscan South Africa") in which Etruscan has a 51%
effective ownership, Mountain Lake has a 25% ownership and various other third
parties have a 24% ownership. Each of Etruscan and Mountain Lake will transfer
their interests in Etruscan South Africa (both equity and debt) to Etruscan
Diamonds in exchange for shares of Etruscan Diamonds. Upon completion of the
restructuring, Etruscan and Mountain Lake will own 62% and 21% respectively of
Etruscan Diamonds with the balance being held by various third parties.
    In addition, a proposed CDN$10 million private placement financing is
being undertaken by Etruscan Diamonds in conjunction with the restructuring.
The parties are targeting to complete the restructuring and private placement
financing by the middle of March. The proceeds of the private placement will
be primarily used to continue the exploration program and undertake a
feasibility study on the Hartbeestlaagte property described below. A recently
completed 43-101 compliant independent technical report estimates the in situ
inferred diamond resources on the Hartbeestlaagte property to be 16.2 million
cubic meters at an average grade of 3.18 carats per hundred cubic meters
(approximately 500,000 carats). Upon successful completion of the feasibility
study on the Hartbeestlaagte property, Etruscan Diamonds intends to undertake
a public offering and apply for a listing on the Toronto Stock Exchange and
the Johannesburg Stock Exchange to bring the Hartbeestlaagte property into
production. CIBC World Markets Inc. is acting as the private placement agent
in relation to the financing.
    The restructuring and financing are being undertaken to realize the value
of the diamond assets and will allow the new company to more aggressively
pursue the exploration and development of the diamond assets while Etruscan
Resources Inc. focuses on the exploration and development of its gold
properties in West Africa and Mountain Lake focuses on exploration of its gold
and base metals properties in Eastern Canada.
    Over the last year, Etruscan South Africa has assembled a well qualified
management team to oversee the next phase of development of the diamond
assets. Recent senior appointments to this team include Percy Khoza as Manager
of Operations and Simon Netshiozwi as Manager of Exploration. Mr. Khoza was
Mine Manager at the Baken alluvial diamond mine operated by Trans Hex Group
Limited and Mr. Netshiozwi was Divisional Geologist in Mineral Resource
Management with DeBeers at the Namaqualand diamond mining operation. Etruscan
Diamonds will be directed by a Board consisting of representatives of Etruscan
and Mountain Lake as well as independent representatives and the operations
will be supported by the head office management team of Etruscan
Resources Inc.

    Diamond Assets
    --------------

    Over the last five years, Etruscan South Africa has been acquiring
strategic properties in the Ventersdorp Alluvial Diamond District, located
approximately 150 kilometers west of Johannesburg, South Africa. The
Ventersdorp District covers approximately 5,000 km2 and mining of alluvial
diamonds has been carried out in the district since 1904. Total reported
production from the Ventersdorp District during the period 1926 to 1984 is
estimated at 667,000 carats. Etruscan South Africa holds the dominant land
position in the Ventersdorp District with two mining permits and 16
prospecting permits with applications for 5 additional prospecting permits
pending. Etruscan South Africa's efforts to prioritize its land holdings in
the Ventersdorp District have been assisted by the results of an airborne
gravity survey conducted over an area of approximately 4,000 km2. The survey
was conducted by Bell Geospace Ltd. of Aberdeen, Scotland and identified a
number of prospective sinkhole features. Large sinkhole features in the
Ventersdorp District are known to be associated with diamondiferous gravels.
Most recently, Etruscan South Africa has focused its exploration on a large
sinkhole feature on the Hartbeestlaagte property.

    Hartbeestlaagte Property
    ------------------------

    The Hartbeestlaagte property covers approximately 4,000 hectares and is
located approximately 35 kilometers due north of the town of Ventersdorp.
    Etruscan South Africa has completed three bulk samples on the
Hartbeestlaagte property, processing over 78,000 cubic meters of Lower Gravel
Package ("LGP") gravels and recovering approximately 2,500 carats at a global
grade of 3.18 carats per hundred cubic meters with a bottom cut-off size of
1.6 millimeters. A limited amount of Upper Gravel Package ("UGP") was also
processed (approximately 12,000 cubic meters) to recover 187.7 carats at an
average grade of 1.53 carats per hundred cubic meters. The treatment of the
bulk samples was by a process of scrubbing and screening followed by pan
concentration and x-ray sorting. This process has proved feasible for the
treatment of the various gravel packages and will form the basis of the
commercial plant flow sheet.
    The results from the bulk sampling program have indicated that a deep
karst system exists on the Hartbeestlaagte property trending from the
northwest down to the southeast which appears to comprise a number of deep
sink holes connected by incised channels. The gravel stratigraphy comprises an
upper gravel horizon and a lower gravel unit that are both economically
diamondiferous, separated by a sub-economic finer grained pebble clay unit.
Gravity surveys and drilling have indicated that the gravel filled sink holes
extend over 100 meters in depth and may be up to 200 meters in the deeper
parts of the karst system.
    An independent 43-101 resource estimate for the Hartbeestlaagte property
was recently completed by Dr. Tania R. Marshall, Pr.Sci.Nat. of Exploration
Unlimited. Dr. Marshall has worked as a geologist for 16 years and has been
involved in the exploration and exploitation of alluvial diamond deposits
throughout Africa, including the evaluation and valuation of a number of such
deposits for both public and private companies. The in situ inferred diamond
resources are estimated in the 43-101 report to be 16.2 million cubic meters
of LGP gravels at an average grade of 3.18 carats per hundred cubic meters
(approximately 500,000 carats) at an average sales value of USD$400 per carat.
The 43-101 report confirms that, in addition to the inferred resource, a large
area of exploration potential exists in both the lower gravel package and the
upper gravel package including an indefinable volume of material that is
located below the present drilling level in the sink holes. Drilling to date
has been limited to a vertical depth of 117 meters in these areas. Geophysical
modeling is unable to identify the base of the bedrock in these structures
with any accuracy nor has the drill program penetrated the thick gravels. As a
result, it has not been possible to estimate what volume of gravel might
exist, though it is expected to be substantial. The report recommends that the
prospecting phases be completed to upgrade the inferred resource to indicated
resource and converted to probable reserves through a preliminary feasibility
study as a precursor to the commencement of full mining production.
    Etruscan South Africa will undertake additional drilling and sampling to
upgrade the currently identified inferred resources to the indicated category.
Further drilling and bulk sampling will also be undertaken to identify
additional inferred resources and further exploration potential. Concurrently
with the indicated resource study, a preliminary feasibility study will be
completed to convert the indicated resources into probable reserves. As part
of this exploration program, an upgrade of the exploration processing plant
will be completed to allow the processing of approximately 50,000 cubic meters
per month. This activity will be funded by the proceeds of the private
placement referred to above.

    Robert Harris P. Eng and Vice President of Operations of Etruscan
Resources Inc. is the Qualified Person overseeing Etruscan's diamond projects
in South Africa.

    The common shares of Etruscan are traded on The TSX Exchange under the
symbol "EET". The common shares of Mountain Lake are traded on the TSX Venture
Exchange under the symbol "MOA". More extensive information on Etruscan and
Mountain Lake can be found on their respective websites at
http://www.etruscan.com and http://www.mountain-lake.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 Companies 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 Companies believe 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 Companies' annual information
forms filed with the Canadian Securities regulators on SEDAR (www.sedar.com).
Accordingly, readers should not place undue reliance on forward-looking
statements.

    NO REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE CONTENT
    OF THIS RELEASE




For further information:

For further information: from Etruscan contact: Richard Gordon, Investor
Relations, (877) 465-3674, Fax: (902) 832-6702; Tony Hayes, Investor
Relations, (866) 638-3338, Fax: (905) 468-8407; For more information from
Mountain Lake contact: Allen Sheito, President and CEO, (902) 542-9773, Fax:
(902) 542-4442; Frank Metcalf, QC, Director, (902) 420-1990, Fax: (902)
429-1171

Organization Profile

ETRUSCAN RESOURCES INC.

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MOUNTAIN LAKE RESOURCES INC.

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