Zaruma Resources and Gravity Ltd. enter into Memorandum of Understanding on
Financing of Luz del Cobre Copper Project

TORONTO, May 6 /CNW/ - Zaruma Resources Inc. (TSXV-ZMR.H) (the "Company" or "Zaruma") is pleased to report that it has entered into a non-binding Memorandum of Understanding ("MOU") with Gravity Ltd. ("Gravity") regarding the financing of the Luz del Cobre copper project located on Zaruma's wholly-owned San Antonio property in Sonora, Mexico.

Gravity represents the business and investment interests of Mr. Fran Scola, and has recently financed Century Mining Corporation to bring the Lamaque Gold Project in Val d'Or back into production. Mr. Scola is also involved in major mining investments in Russia, South America, South East Asia and Mongolia.

The MOU stipulates that on completion of a satisfactory due diligence review, the completion of definitive agreements, the securing of a US$20 million debt financing and reaching satisfactory settlement terms regarding certain existing agreements with Glencore International AG and its subsidiaries, Gravity may subscribe for US$20 million in units of Zaruma at a price of C$0.05 per unit, with each such unit comprising one common share and one warrant. Each such warrant would entitle the holder to acquire one common share of Zaruma at C$0.10 per share for a period of one year. The proceeds from the issuance of the units would be used for working capital purposes, to fund payments to existing contractors and suppliers as well as the remaining capital cost required to bring Luz del Cobre into production.

In connection with the MOU, Gravity has entered into an agreement whereby it may subscribe for up to C$500,000 of a 10% Senior Unsecured Convertible Promissory Note (the "Note") in three separate advances. The Note will mature one year from the date of issue and is convertible into common shares of the Company at C$0.05 per share. As consideration for receiving the first advance under the Note in the amount of C$260,000, the Company has issued 5,200,000 warrants to Gravity, each such warrant being exercisable to acquire one common share of the Company at C$0.10 per share for a period of one year, subject to adjustment in certain circumstances. The Company will use the proceeds from the Note for working capital purposes.

The proposed US$20 million financing of the Luz del Cobre copper project will be submitted to Zaruma's shareholders for approval at its Annual Meeting expected to be held at the end of June. On approval of the proposed financing by the shareholders and the closing of the financing, the Company expects to graduate its existing listing from the NEX board to the main board of the TSX Venture Exchange.

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 are not guarantees of future performance as they involve risks, uncertainties and assumptions, including securing additional funding.

Zaruma Resources Inc. is a pre-production stage company listed on the NEX board of the TSX Venture Exchange (symbol ZMR.H) and the Frankfurt Stock Exchange (symbol: ZMR). Common shares outstanding: 117,608,747.

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.

SOURCE ZARUMA RESOURCES INC.

For further information: For further information: Zaruma Resources Inc., 20 Toronto Street, 12th Floor, Toronto, ON, M5C 2B8, Canada, Fax: (416) 367-3638, info@zaruma.com, www.zaruma.com; Dr. Thomas Utter, President and CEO, Tel.: +1 521 662 210 5650, thomas.utter@gmx.net; Frank van de Water, CFO and Secretary, Tel.: (416) 869-0772, frank.vandewater@zaruma.com

Organization Profile

ZARUMA RESOURCES INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890