Etruscan reports 2007 year end results

    HALIFAX, Feb. 28 /CNW/ - Etruscan Resources Inc. (EET.TSX) has reported
its financial and operating results for the year ended November 30, 2007. The
2007 audited financial statements and management's discussion and analysis are
available on the SEDAR website at or at the Company's website at All figures are reported in Canadian dollars unless
otherwise noted.

    Accomplishments during 2007:

    - Youga Gold Project in Burkina Faso advanced to the commissioning stage;

    - 14,000 meter drilling program completed for a 43-101 compliant resource
      estimation for the Agbaou Gold Project in Côte d'Ivoire and a
      feasibility study initiated;

    - Potential of the Finkolo Gold Project in Mali enhanced with continued
      high grade drill intercepts to support a 43-101 compliant resource

    - Continued acquisition of strategic properties on nine major West
      African gold belts as Etruscan maintains its position as the dominant
      landholder in the region;

    - Completed the restructuring of the ownership of its diamond subsidiary,
      Etruscan Diamonds, in preparation for an IPO in 2008 and reacquired
      100% ownership of the Tirisano Diamond Mine in South Africa; and

    - Etruscan Diamonds completed a $11 million private placement financing
      and initiated a pre-feasibility study for it's Blue Gum Diamond Project
      in South Africa.

    Objectives for 2008:

    - Gold production from the Youga Gold Mine of between 60,000 and
      70,000 ounces in calendar year 2008;

    - Complete the feasibility study for the Agbaou Gold Project during the
      third quarter of 2008;

    - Complete deep drilling program to evaluate the potential of the gold
      resource at the Finkolo Gold Project;

    - Complete an aggressive $15 million exploration program covering five
      countries, targeting new gold discoveries;

    - Achieve a steady state production level of 100,000 cubic meters per
      month of diamondiferous gravels at the Tirisano Diamond Mine equating
      to annual diamond production of 30,000 carats; and

    - Complete a pre-feasibility study for the Blue Gum Diamond Project
      followed by an IPO financing for Etruscan Diamonds coincident with a
      listing of the common shares on the TSX.

    During 2007 Etruscan continued with its strategy of acquiring dominant
land positions within district scale gold and diamond belts in Africa. In West
Africa, the Company presently has an interest in properties covering in excess
of 13,000 km2 on nine established gold belts in five countries. In Southern
Africa, the Company holds an interest in properties covering approximately
10,000 km2 in Namibia and in excess of 2,100 km2 in the Ventersdorp and
Lichtenburg alluvial diamond districts in South Africa. While the Company has
interests in operations that produce gold and diamonds together with advanced
stage projects, these projects cover only a small portion of the Company's
landholdings, the remainder of which is yet to be explored. The Company has
allocated a budget of $15 million for gold exploration and holds high
expectations for new gold discoveries.

    Youga Gold Project, Burkina Faso

    The Youga Gold Project is located 180 kilometers southeast of Ouagadougou,
the capital city of Burkina Faso and is owned 90% by Etruscan and 10% by the
Government of Burkina Faso. Construction activities at the Youga Gold Mine
commenced during the later part of 2006 and continued throughout 2007 with
commissioning of the various components starting in the fourth quarter of
2007. The first ore was fed to the processing plant in early February 2008 and
the first gold pour is expected to occur over the next few days. Etruscan
expects to achieve commercial production at Youga by the end of April with
targeted gold production of between 60,000 and 70,000 ounces in calendar year
    The Youga Gold Project will initially be comprised of open pit mining from
five pits with the ore being processed though a conventional gravity/CIL
circuit having a design capacity of one million tonnes per annum. Mineable
reserves are 6.6 million tonnes with an average grade of 2.7 grams per tonne
containing 580,000 ounces of gold. The project will benefit from a year-round
water supply from a nearby major river system and access to grid power
supplied via the northern grid of the Volta River Authority in Ghana which is
forecast for mid-2008. A full back-up power plant has been installed to ensure
constant power to the site. The plant has been designed for maximum operating
availability and in particular, the mill drive system was supplied new with a
second new drive train (motor and gearbox) being stocked on site as a spare.
    During 2007 the Company invested a total of $70 million in development
activities related to the Youga Gold Project.

    Agbaou Gold Project, Côte d'Ivoire

    The Agbaou Gold Project is located on the Agbaou gold belt in Côte
d'Ivoire, approximately 200 kilometers northwest of the major port city of
Abidjan. Agbaou is the third largest undeveloped gold resource in Côte
d'Ivoire and the permit covers 939 km2 with 40 kilometers of strike length on
the major regional shear zone which hosts the known deposits. The project has
excellent infrastructure including a paved highway crossing the permit and the
national power grid is within 2 kilometers of the deposit. Mining development
and exploration activities in Côte d'Ivoire have increased significantly over
the past 12 months. Randgold Resources recently announced a production
decision for the Tongon Project, in northern Côte d'Ivoire, which is the
largest gold resource discovered in Cote d'Ivoire to date  (4.4 million
ounces). Equigold's Bonikro Project (1.1 million ounces), located
22 kilometers northwest of Agbaou, is being developed as a 2 million tonne per
annum CIL gold processing plant and mine with initial gold production
scheduled for June 2008. Cluff Gold's Angovia Gold Mine, located in central
Côte d'Ivoire, commenced heap leach operations in January 2008 and is expected
to produce 40,000 ounces per annum. Etruscan believes very strongly in the
mineral potential of Côte d'Ivoire and in addition to the Agbaou permit,
Etruscan has made application for nine new permits in Côte d'Ivoire.
    The Company completed the feasibility resource drilling at Agbaou in the
fourth quarter of 2007 with the last drilling targeting infill and depth
extensions on the Agbaou Main, Agbaou South and Agbaou West deposits. Coffey
Mining of Perth, Australia subsequently completed an independent National
Instrument 43-101 compliant resource estimate in February 2008. The report
significantly upgraded the quality of the historic resource with over one
million ounces at a 0.5 gram per tonne cutoff now classified as indicated
resource. At a 1.0 gram per tonne cutoff the indicated resource has increased
32% in contained ounces (from 659,000 oz to 871,000 oz) and 24% in grade (from
2.1 g/t to 2.6 g/t) from the previously reported resource estimate. The new
resource estimates are presented in the table below:

    Cut-off          Indicated Resource              Inferred Resource
     Grade        Mt      Grade       Ounces      Mt      Grade      Ounces
       g/t                  g/t                             g/t
       0.5      16.6        1.9    1,015,000     5.1        1.7     272,000
       1.0      10.5        2.6      871,000     2.8        2.5     218,000
       1.5       6.8        3.3      727,000     1.7        3.3     176,000
       2.0       4.7        4.0      610,000     1.1        4.1     143,000

    The previously reported historic resource was prepared in 2000 by RSG
Global (Pty) Ltd. (now Coffey Mining) and at a 1.0 gram per tonne cutoff
reported 9.7 Mt of indicated resource at a grade of 2.1 g/t (659,000 ounces)
and 2.6 Mt of inferred resource at a grade of 2.3 g/t (188,000 ounces). This
report was historical in nature and was compiled before NI 43-101 came into
effect. The new estimate prepared by Coffey Mining has taken into account
additional drilling carried out by Etruscan during the period 2005-2007 in
order to verify and update the classification of the mineral resource
    This resource provides the basis for the on-going feasibility study at
Agbaou which is being prepared under the supervision of MDM Engineering and
Coffey Mining, with key technical input from Golder and Associates
(geotechnical studies), Knight Piesold (tailings dam design and hydrology),
African Mining Consultants (environmental study) and Mintek (metallurgical
testwork). The study is scheduled to be completed in the third quarter of 2008
and subject to the receipt of a positive study, the Company intends to
aggressively proceed with obtaining the mine permitting and project financing.
    During 2007 the Company invested a total of $4.2 million in exploration
activities relating to the Agbaou Gold Project.

    Finkolo Gold Project, Mali

    The Company's most advanced project in Mali is the Finkolo Gold Project
located on the Syama gold belt, approximately 300 kilometers southeast of
Bamako, the capital of Mali. The exploration project is operated as a joint
venture with Etruscan owning 40% and Resolute Mining Limited owning 60% and
being the operator. The Finkolo Permit is contiguous with the Syama holdings
of Resolute which hosts the Syama Gold Project. Resolute has stated that
construction of the Syama Gold Project will be completed in the second half of
2008. Current open pit mineable reserves at Syama are estimated by Resolute to
be 1.725 million ounces at an average grade of 3.6 grams per tonne with an
additional 2.4 million ounces of measured and indicated resources lying
beneath the current open pit reserves which are currently being evaluated for
potential underground mining. (Resolute, June 29, 2007).
    During 2007 Resolute completed a 61-hole (5,600 meters) drill program that
targeted the Tabakoroni deposit with the drilling results forming the basis
for an updated resource estimation. The Tabakoroni resource estimation was
completed by Resolute in January 2008. At a one gram per tonne cutoff,
Resolute reported 4.62 million tonnes of measured and indicated resource at
2.6 g/t (382,000 ounces) and a further 4.54 million tonnes of inferred
resource at 2.5 g/t (364,000 ounces). This represents a 53% increase of
contained gold over the previous estimation reported in 2006. A detailed
breakdown of the resource classification at varying cutoff grades is presented
in table below:

     Cut-                                       Measured &
     off       Measured        Indicated        Indicated       Inferred
           Ton-  g/t   Oz   Ton-  g/t  Oz    Ton-  g/t   Oz  Ton-   g/t   Oz
           nes              nes              nes             nes
     g/t    (m)        (k)   (m)       (k)    (m)        (k)  (m)         (k)
    0.50  4.58  1.96  289  2.34  1.96  147  6.92  1.96  436  9.11  1.60  468
    0.70  3.97  2.17  277  1.95  2.24  140  5.91  2.19  417  6.66  1.97  421
    0.90  3.40  2.40  262  1.62  2.53  132  5.02  2.44  394  5.12  2.32  381
    1.00  3.14  2.52  254  1.48  2.68  127  4.62  2.57  382  4.54  2.49  364
    1.10  2.90  2.64  246  1.35  2.83  123  4.25  2.70  369  4.06  2.66  347
    1.20  2.68  2.76  238  1.24  2.99  119  3.91  2.83  357  3.64  2.84  332
    1.50  2.10  3.16  213  0.96  3.46  107  3.06  3.25  320  2.70  3.36  291

    In light of the growing potential of the Tabakoroni deposit, the Finkolo
Joint Venture partners have agreed to complete a 6,100 meter drilling program
to test the potential of the Tabakoroni deposit at vertical depths of
approximately 150 to 300 meters below surface. The new drill program also
includes infill and extension drilling on the near surface resource,
especially at the junction of the Tabakoroni Main Shear Zone and the adjacent
Porphyry Zone.
    The proposed drill program includes 10 diamond core holes designed to test
the depth continuation of the high grade shoots identified over more than 1
kilometer of strike length in the centre of the deposit. The potential for
mineralization to continue to depth has been clearly demonstrated in
longitudinal section.

    2008 Gold Exploration Program

    The Company has allocated $15 million of its recent $35 million equity
financing to aggressive exploration and drill programs in five African
countries. Ten projects are drill-ready and several other projects are
expected to generate drill targets over the next 3- 4 months.
    Highlights of the planned $15 million program include:

    - Burkina Faso - 15,500 geochemical samples, 8,000 meters auger drilling,
      27,000 meters RC drilling;

    - Mali - 2,200 geochemical samples, 41,600 meters auger drilling,
      15,750 meters RAB drilling, 15,000 meters RC drilling;

    - Côte d'Ivoire - 20,000 geochemical samples, 5,000 meters RAB drilling,
      20,000 meters RC drilling;

    - Ghana - 14,270 geochemical samples, 6,000 meters RC drilling; and

    - Namibia - 23,100 geochemical samples, 10,800 meters RC drilling

    In addition, certain land packages have been targeted for detailed
airborne geophysics. It is estimated that in excess of 10,000 line kilometers
of airborne magnetic and electromagnetic surveys will also be carried out.

    Etruscan Diamonds Limited

    Etruscan Diamonds Limited, owned 54% by Etruscan Resources Inc., 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 2007 the
Company completed the formation of a new company named Etruscan Diamonds
Limited ("Etruscan Diamonds") to hold their respective interests in their
diamond assets in South Africa. Each of Etruscan and Mountain Lake, together
with other third parties, transferred all of their interests ( both debt and
equity) in Etruscan Diamonds (Pty) Limited, the entity holding their interests
in the South African diamond assets, to Etruscan Diamonds in exchange for
shares of Etruscan Diamonds. Coincident with the restructuring Etruscan
Diamonds completed a $11 million private placement financing priced at $2.00
per share. The proceeds of the private placement were allocated to exploration
activities and the completion of a pre-feasibility study on the Blue Gum
    An independent resource update recently completed by Dr. Tania Marshall
of Explorations Unlimited estimates that the Blue Gum Project contains
20.5 million cubic meters of indicated diamond resource and 17 million cubic
meters of inferred diamond resource at grades ranging from 1.77 to 2.85 carats
per hundred cubic meters. Etruscan Diamonds is presently undertaking a
pre-feasibility study on the project which is scheduled to be completed in the
second quarter of 2008. The pre-feasibility study is being led by MDM
Engineering of South Africa. Upon successful completion of the pre-feasibility
study, a public offering is planned together with an application for a stock
exchange listing in order to expand the Blue Gum Diamond Project production
rate to 260,000 cubic meters of gravel per month.
    While the pre-feasibility study is underway, Etruscan Diamonds has
recommenced mining at the Tirisano Diamond Mine located on the Blue Gum
property. The gravel from the mine is being processed at the Tirisano plant,
which is rated at 50,000 cubic meters of gravel per month. Etruscan Diamonds
has also installed four 16 foot pan plants, which have added an additional
50,000 cubic meters per month capacity to the Tirisano operations. The ramp up
of the pre-existing plant and the new pan plants is continuing. The operation
is expected to achieve the forecast production rate of 100,000 cubic meters
per month within the next 30 to 60 days. The 100,000 cubic meters per month
operation is anticipated to recover 2,500 carats per month.

    Operating Results

    The GAAP (generally accepted accounting principles) net loss for 2007 was
$35.8 million ($0.33 per share) compared to a GAAP net loss of $10.5 million
($0.12 per share) for 2006. The GAAP loss for 2007 included non-cash expenses
of $33.5 million or $0.31 per share (2006 - nil) related to the unrealized
loss on financial derivative instruments and $2.3 million or $0.02 per share
related to stock-based compensation (2006 - $1.9 million). The 2006 results
from operations include a loss from the equity investment in African Geomin
Mining Development Corporation Ltd.(Samira Hill Gold Project) of $4.5 million
($0.05 per share). Given the carrying value of the Company's equity investment
in African GeoMin was effectively eliminated during 2006, the 2007 results
from operations do not include a further loss from the equity investment.
    The GAAP net loss for the three months ended November 30, 2007 was
$19.1 million ($0.17 per share) compared to a GAAP net loss of $1.7 million 
($0.02 per share) for the three months ended November 30, 2006. The current
three month period loss included non-cash expenses of $19.5 million or
$0.17 per share (2006 - nil) related to unrealized losses on financial
derivative instruments.
    Recent accounting pronouncements 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 Project; it does
not, however, meet the requirements for hedge accounting under the new and
current Canadian GAAP. The marked to market revaluation of the Youga gold
hedge as at November 30, 2007 was negative $33.5 million. The Company has
recorded this unrealized loss in the net loss for the nine month period and
correspondingly recorded the related liability on the balance sheet. The
unrealized marked to market loss represents the theoretical value on
cancellation of the gold option contracts based on market values as at
November 30, 2007. 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.
    Cash and marketable securities aggregated $32.3 million and working
capital was $16.2 million as at November 30, 2007. Long term debt as at
November 30, 2007 was $32.3 million

    The financial statements have been prepared in accordance with Canadian
generally accepted accounting principles (GAAP).

    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 this press release.

    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: from Etruscan contact: Richard Gordon, Investor
Relations, (877) 465-3674, Fax (902) 832-6702,

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