Etruscan Reports 2009 First Quarter Results

    HALIFAX, April 14 /CNW/ - Etruscan Resources Inc. (EET.TSX) has reported
its financial and operating results for the first quarter ended February 28,
2009. The first quarter 2009 unaudited 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. The financial statements have been
prepared in accordance with Canadian GAAP.

    Highlights for the first quarter ended February 28, 2009

    - Youga Gold Mine located in Burkina Faso produced 15,181 ounces for the
      three months ended February 28, 2009;
    - Auger drill results confirm two major gold targets on the Keniebandi
      Permit in western Mali;
    - Exploration carried out on the Lofdal permit in northern Namibia
      significantly expands the area of rare earth element (REE) enriched
      carbonatite dykes;
    - US$5 million debt financing completed in December 2008; and
    - Cdn$10.5 million equity financing negotiated in February 2009.

    Youga Gold Mine, Burkina Faso

    Gold production for the first quarter of 2009 aggregated 15,181 ounces of
gold. A total of 209,000 tonnes of ore were milled at an average grade of 2.61
grams per tonne. Throughput for the quarter was 84% of forecast primarily due
to reduced availability of the on site power generators. The on site power
generation has since been stabilized. Power at the mine site is presently
provided by six diesel generators providing eight mega watts of power, however
the primary source of power for the life-of-mine is to be delivered via the
nearby Ghanaian national power grid. The grid power line from Ghana is
scheduled to provide power to the site in mid 2009. This will greatly mitigate
risk with respect to power supply to the project and the diesel generators
will act as a backup power supply as was originally intended. Mill throughput
and head grades during the quarter were also negatively impacted as a result
of lower than forecast contractor drill rig availability for blasting.
    During the first quarter of 2009, gold sales aggregated 16,160 ounces
which generated cash revenues of $14.5 million. A total of 15,026 ounces were
delivered into the US$700 per ounce hedge commitment and 1,134 ounces were
sold at spot prices for an average realized gold price for the first quarter
of US$724 per ounce. Cash operating costs for the quarter were US$768 per
ounce compared to US$598 per ounce for the five months ended November 30,
2008. Gold production for 2009 is forecast at between 70,000 and 80,000

    Operating Results

    Etruscan's consolidated net loss for the first quarter of 2009 was $38.9
million or $0.26 per share compared to a net loss of $36.5 million or $0.30
for the first quarter 2008. The first quarter 2009 loss included a non-cash
loss on the financial derivative instrument (Youga gold hedge) of $31.4
million or $0.21 per share. The first quarter 2008 loss included a non-cash
loss on the financial derivative instrument of $36.2 million or $0.31 per
    The Youga Gold Mine generated negative cash flow from operations of $0.4
million for the first quarter of 2009 as compared to a positive cash flow of
$4.1 million for the fourth quarter of 2008.
    Gold revenues for the first quarter of 2009 were $17.4 million or US$872
per ounce of gold sold. The non-cash revenue adjustment related to the
financial derivative for this period aggregated $3 million (US$148 per ounce)
for net cash revenue received of $14.5 million (US$724 per ounce).
    In the first quarter of 2009, mine operations expenses aggregated $12.3
million and mine administration expenses aggregated $2.1 million. Cash
operating costs for this period after giving effect to an inventory adjustment
for $0.8 million were US$768 per ounce of gold produced. Amortization expense
for the first quarter of 2009 was $3 million.
    There are no comparable figures for the Youga operation for the first
quarter of 2008 as commercial production for accounting purposes was declared
effective July 1, 2008. General and administrative expenses for the first
quarter of 2009 aggregated $1.2 million compared to $1.4 million in first
quarter of 2008.
    Financing costs for the first quarter of 2009 aggregated $3.9 million
compared to $0.2 million in the first quarter of 2008. Financing costs
associated with the Youga Gold Mine aggregated $1.5 million in the first
quarter of 2009. The balance of $2.4 million represented non-cash financing
expense related to the issuance of 10.4 million common share purchase warrants
in conjunction with the December 2008 US$5 million unsecured notes financing
and 1.5 million common share purchase warrants issued to the Youga Project
bankers in conjunction with the restructuring of the long-term debt payments.
    The Company incurred a net foreign currency loss of $0.5 million in the
first quarter of 2009 compared to a net gain of $0.7 million in the first
quarter of 2008. Non-cash stock based compensation expense aggregated $0.8
million in the first quarter of 2009 compared to $0.1 million in the first
quarter of 2008. In the first quarter of 2009 the Company expensed an amount
of $0.4 million related to the write-off of deferred mineral property
expenditures and $0.3 million related to the loss from the operations of its
52% owned subsidiary, Etruscan Diamonds Limited, which was placed on care and
maintenance in December 2008.
    As noted above the Company recorded an unrealized loss on the Youga
financial derivative instrument (gold hedge) of $31.4 million ($0.21 per
share) in the first quarter of 2009. In the first quarter of 2008 the Company
recorded an unrealized loss on the derivative of $36.2 million ($0.31 per
share). 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 February 28, 2009 was negative $56.3 million. The unrealized
marked to market amount represents the theoretical value on cancellation of
the gold option contracts based on market values as at February 28, 2009. 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.

    Liquidity and Capital Resources

    The Company had a consolidated working capital deficiency (net of the
current portion of the financial derivative) of $15.7 million at the end of
February 2009 as compared to a deficiency of $21.3 million at the end of 2008.
Available cash at February 28, 2009 was $6.4 million. Given the current
financial situation, the Company has significantly reduced its exploration
budget for 2009 as compared to 2008 and has completed a detailed review of
corporate general and administrative expenditures. The timing of
recommencement and extent of drilling and other exploration activities for
2009 is dependent upon accessing sufficient funding.
    In December 2008 the Company raised $6.1 million (US$5 million) by
issuing senior unsecured convertible notes. In February 2009 the Company
negotiated a $10.5 million private placement financing, $5.8 of which closed
on February 24, 2009 and the balance of $4.7 million closed on March 31, 2009.
The Company has advanced a significant portion of these proceeds to fund the
operations at the Youga Gold Mine. During the first quarter of 2009, $3.9
million was advanced to the Youga Gold Mine. Since the end of the first
quarter an additional $8.4 million has been advanced.
    The combination of the aforementioned funds together with forecast
positive cash flow from the Youga Gold Mine, and potential amendments to the
Youga debt facility is expected to address the near term funding requirements
for Burkina Mining Company. The Company's current exploration and general and
administrative expenditures are approximately $900,000 per month. An
additional funding requirement in the order of $10 to $15 million is estimated
to be needed to address the balance of Etruscan's forecast expenditures net of
gold revenues for 2009. The expected sources of cash include debt and equity
financing, as well as strategic joint venture and business combinations and
the disposition of assets. Additionally, the Company is undertaking a further
review of its exploration and general and administrative expenditures with a
view to reducing costs.

    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.

    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
14,000 square kilometers in West Africa. Its principal mine development
projects include the Youga Gold Project in Burkina Faso (latest press release
dated December 4, 2008), 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, Etruscan,
(877) 465-3674, Fax (902) 832-6702,

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