Etruscan concludes US$5 million debt financing

    HALIFAX, May 28 /CNW/ - Etruscan Resources Inc. (EET.TSX) announced today
that it has completed in escrow a US$5 million debt financing with two major
shareholders, 2190776 Ontario Inc. and Conus Partners Inc. (the "Lenders")
consisting of senior unsecured convertible promissory notes ("Notes"). The
closing will be completed upon receipt of proceeds by wire transfers which are
presently underway.
    The proceeds from the Notes will be primarily used to fund production
improvements at Etruscan's Youga Gold Mine in Burkina Faso including
completion of the grid power installation and maintenance process enhancements
together with providing additional working capital. The Youga improvement
expenditures will be managed by Etruscan's recently appointed Chief Operating
Officer, Stephen Stine (see Etruscan news release dated April 23, 2009), who
is presently based at the Youga Gold Mine.
    The Notes are repayable on May 28, 2010 ("Maturity Date") and bear
interest at the rate of 10% per annum, calculated and compounded quarterly,
with interest payable in cash by capitalizing it and adding it to the
principal of the outstanding Notes at the Maturity Date. The Notes may be
prepaid at any time without penalty or premium. If the Notes have not been
previously repaid, the Notes will be convertible, at the option of the holder,
at any time after the Maturity Date, into common shares of Etruscan at a
conversion price of $0.3602 being the volume weighted average trading price
("vwap") of the common shares of Etruscan on the Toronto Stock Exchange
("TSX") over the five trading day period immediately prior to the issuance of
the Notes.
    As part of the financing, Etruscan issued two tranches of warrants to the
Lenders. A total of 7,717,933 warrants (representing 50% of the principal of
the Notes divided by $0.3602) ("X Warrants") were issued to the Lenders on
closing with each X Warrant entitling the holder to purchase one common share
of Etruscan on or before May 28, 2011 at an exercise price of $0.3602. The
second tranche of warrants ("Y Warrants") also issued at closing, will be
exercisable commencing November 24, 2009 (being 180 days after the issuance of
the Notes) and ending May 28, 2011 for that number of Y Warrants determined by
dividing the Canadian equivalent of US$2.5 million by the five day vwap of the
common shares of Etruscan on the TSX immediately prior to November 24, 2009
which will also be the exercise price of the Y Warrants.
    The issuance of the Notes and the X and Y Warrants was approved by the
Board of Directors of Etruscan. In addition, in accordance with the
requirements of the TSX, Etruscan has agreed that the X and Y Warrants may not
be exercised and the Notes may not be converted without obtaining shareholder
approval for the issuance of the shares on exercise of the Warrants or
conversion of the Notes, which approval Etruscan intends to seek in the near
future. In the event such shareholder approval is not forthcoming, then the
Lenders and Etruscan have agreed that an amount based on a calculation of the
value of the X and Y Warrants that are not permitted to be issued will either
be paid to the Lenders in cash or, at the Lenders' option, added to the
principal of the Notes. In addition, the interest rate on the Notes will
increase from 10% to 20%. The Corporation's funding requirements necessitated
the closing of the financing less than 21 days prior to its announcement.
    2190776 Ontario Inc. is a major shareholder of Etruscan holding 16.5% of
the outstanding common shares. Conus Partners Inc. and its affiliates are also
major shareholders of Etruscan holding in excess of 10% of the outstanding
common shares. Additional information concerning this financing and the
potential increase in the Lenders' holdings as a result of this financing will
be contained in the material change report filed in conjunction with this
press release.
    Etruscan also announced today the repricing of 1,500,000 unlisted common
share purchase warrants of the Company ("Financier Warrants") held equally by
RMB Australia Holdings Ltd. ("RMB") and Macquarie Bank Limited ("Macquarie").
RMB and Macquarie provided Etruscan with a US$35 million senior debt facility
and a US$7.5 million subordinated debt facility to help fund the development
costs of Etruscan's Youga gold project in Burkina Faso, West Africa. The
Financier Warrants, dated February 27, 2009, have an exercise price of $0.51,
and expire February 27, 2012. The Financier Warrants were issued as
consideration for the agreement by RMB and Macquarie to amend and waive
certain provisions of the Youga debt financing. Etruscan has agreed to amend
the terms of the Financier Warrants to adjust the exercise price thereof to
$0.3602 per common share as consideration for RMB and Macquarie agreeing to
further amend certain terms of the Youga debt facility including a waiver of
the requirement to make a payment on principal of US$2.5 million on June 30,
2009. RMB and Macquarie deal at arms length to Etruscan. The repricing of the
Financier Warrants has been approved by the TSX and will be effective the 10th
business day following the date of this 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 (latest press release
dated March 9, 2009), the Agbaou Gold Project in Côte d'Ivoire (latest press
release dated December 18, 2008), and the Finkolo Gold Project in Mali (latest
press release dated July 2, 2008). Advanced and early stage exploration
projects are on-going in Burkina Faso, Mali, Côte d'Ivoire, Ghana (see press
release dated June 10, 2008) and Namibia (see press release dated January 15,
2009). Etruscan also has a 52.1% interest in Etruscan Diamonds Limited which
has a dominant land position in the Ventersdorp Diamond District located in
South Africa (latest press release dated December 12, 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

    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 (
Accordingly, readers should not place undue reliance on forward-looking


For further information:

For further information: Richard Gordon, Investor Relations, (877)
465-3674, Fax: (902) 832-6702,

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