Etruscan reports third quarter results

    HALIFAX, Oct. 15 /CNW/ - Etruscan Resources Inc. (EET.TSX) has reported
its financial and operating results for the interim period ended August 31,
2007. The Q3 2007 Financial Report is available on the SEDAR website at or at the Company's website at All figures are
reported in Canadian dollars unless otherwise noted.

    Highlights from third quarter 2007 operations include:

    - The Youga Gold Project in Burkina Faso entered the final phase of
      construction with commissioning of the main plant circuits scheduled to
      be completed in November and the initial gold pour scheduled for

    - The feasibility drill program at the Agbaou Gold Project in Côte
      d'Ivoire was completed and a feasibility team comprised of a number of
      internationally recognized consulting firms was engaged to complete the
      feasibility study

    - A 6,700 meter drill program was completed at the Finkolo Gold Project
      in Mali South

    - Etruscan Diamonds continued mining, bulk sampling and drilling
      activities on its Blue Gum alluvial diamond project in South Africa
      with the goal to upgrade the NI 43-101 inferred resource into the
      indicated category

    Youga Gold Project, Burkina Faso

    Construction at the Company's Youga Gold Project located in Burkina Faso,
West Africa is nearing completion with commissioning of the main plant
circuits scheduled to be completed in November and the initial gold pour
scheduled December. In spite of enduring exceptionally heavy rains over the
past months, the Youga Gold Project is now in the final stage of completion as
highlighted by the following:

    - The contract mining fleet operated by PW Mining has been fully
      mobilized and has completed overburden and waste stripping of the main
      pit. The drill and blast contractor, Nitro Chimie, is also fully
      mobilized and has blasted in excess of 500,000 cubic meters as at end
      of September. The on-site infrastructure for both contractors is
      nearing completion.

    - The initial phase of the ROM (run-of-mine) pad has been completed which
      represented the placement of approximately 300,000 cubic meters of
      waste rock. The pad will be expanded over the life of the project to
      allow for extra ore stockpiling capacity.

    - A clay liner and the starter wall and the return water pond for the
      tailings storage facility have been completed and the remaining piping
      and liners are currently being installed.

    - A primary grade control drill rig is now on site and in operation. The
      initial ore will be mined from the main pit (A2 Main) and stockpiled on
      the ROM pad for commissioning and early production. The grade control
      staff has been hired and is now on site.

    - The 10 MVA diesel-fired back up power plant has been completely
      installed and is ready to operate.

    - Construction of the main electrical power line from Ghana is continuing
      and the first phase power delivery is scheduled to be completed by

    - Installation of the 11 kilometer water pipeline to the Volta River and
      the overhead power line to power the pumping station has been
      completed. Installation of the pumping units will be completed when the
      water in the Volta River recedes. Temporary pumping capacity is being
      put in place.

    - Important plant circuits (including the crushing and screening, the
      mill and cyclone tower, the carbon in leach and process building) are
      nearing completion with the majority of the steelwork erected and the
      mechanical equipment placed.

    - The mine camp is complete and fully operational. Construction of
      various infrastructure buildings such as the main workshop, chemical
      stores, crusher workshop, security/change building and the office
      blocks are complete.

    The Youga Gold Project is being commissioned in three phases before
ramping up to full production. Each circuit will go through an initial dry,
then wet and finally an ore based commissioning process. The commissioning of
the main plant units is scheduled to be completed in November with testing of
the carbon in leach (CIL) circuit, the crushing and screening circuit,
grinding and cyclone circuit and finally the elution and gold room areas. With
a successful commissioning achieved, the first gold pour is scheduled for

    Agbaou Gold Project, Cote d'Ivoire

    In Côte d'Ivoire the Company is proceeding with taking the Agbaou Gold
Project through full feasibility. Etruscan has completed the feasibility drill
program and has engaged a feasibility team that comprises a number of
internationally recognized consulting firms. The main consultants include MDM
Engineering of South Africa, who will address the plant and infrastructure
design and costing as well as the supervision of the metallurgical program
which is being carried out at the Mintec laboratories, and Coffey Mining
(formerly RSG Global) of Perth Australia who will complete the 43-101
compliant resource estimation and reserve calculation as well as the mine
costing and design. Other consultants include Knight Piesold of South Africa
(tailings dam design and hydrology), African Mining Consultants ("AMC") of
Botswana (environmental study) and Golder and Associates of the United States
(mine geo-tech).
    MDM will serve as the overall coordinator of the feasibility study which
is scheduled for completion the end of April 2008. The resource calculation is
scheduled to be completed by Coffey Mining by the end of November 2007. Five
HQ diamond drill holes (827 meters) were completed to provide representative
samples for grinding and comminution testing following site visits by MDM in
May. A suite of NQ core samples were collected from several diamond drill
holes providing representative samples of mineralized laterite, mottled zone,
saprolite, saprock and bedrock to a maximum vertical depth of 300 meters. All
metallurgical, grinding and comminution samples have been received at the
Mintec laboratory in South Africa and test work is underway. Initial results
indicate that high (+90%) recoveries can be achieved using a combination of
gravity and cyanide leaching. Complete results are expected by the end of
October. Three diamond drill holes (478 meters) were logged and sampled for
geotechnical purposes following a site visit by Golder and Associates in

    Finkolo Gold Project, Mali

    During the third quarter the Company's joint venture partner at the
Finkolo Gold Project, Resolute Mining Limited, completed the planned drill
program in the main Tabakoroni Zone which has provided a systematic drill
density on an approximate 50 x 25 meter grid to a vertical depth of
130 meters. Of the planned 8,200 meters of drilling, a total of 6,702 meters
were accomplished. As of the end of this quarter assay results were incomplete
due to a backlog of samples at the laboratories. However, results received
continued to confirm continuity and grades over the 1.7 kilometer long strike
length of the Tabakoroni Zone. It is anticipated that a new resource
estimation will be provided by Resolute before the end of the fourth quarter
2007. It has been demonstrated that the Tabakoroni Zone has depth potential
below the current 130 meter level, and that the high grade shoots in
particular hold potential for future underground mine development. The timing
of a deeper drill program will be assessed following the evaluation of these
last drill results and completion of the updated resource estimation.

    Alluvial Diamond Properties, South Africa

    Contract drilling and bulk sampling activities at the Hartbeestlaagte
diamond property continued during the quarter with the objective to upgrade
the inferred resource to indicated resources.
    In September, 2007, Mvelaphanda Exploration agreed to transfer its 50%
interest in the Tirisano Diamond Mine Joint Venture to Etruscan Diamonds in
consideration for the payment of 25 million Rand and the delivery to
Mvelaphanda Exploration of 1,184,848 shares of Etruscan Resources Inc. Total
consideration approximated CDN$7.2 million. The shares of Etruscan Resources
Inc. were issued in consideration for the issuance to Etruscan of
1,810,750 shares of Etruscan Diamonds Limited. The acquisition closed on
October 5, 2007. As a result of these transactions, Etruscan Resources Inc.
now holds a 53.7% ownership interest in Etruscan Diamonds and Mountain Lake
holds a 16.2% ownership interest.
    Having control of the Tirisano Diamond Mine operation and surrounding
Nooitgedacht property allows Etruscan Diamonds to consolidate the development
of the diamond resources on the Nooitgedacht property with those on the
adjacent Hartbeestlaagte and Zwartrand properties.
    During September Etruscan Diamonds also reached an agreement in principle
with Mogopa Minerals (Pty) Ltd. (Mogopa) to transfer a 26% interest in the
Tirisano Diamond Mine to Mogopa in consideration for the payment of 26 million
Rand. Mogopa will replace Mvelaphanda Exploration as the entity providing the
Black Economic Empowerment (BEE) for the project as required by South African
mineral legislation. Mogopa is also Etruscan Diamonds' BEE partner on the
Hartbeestlaagte and Zwartrand properties. Mogopa has accepted an indicative
term sheet from the Industrial Development Corporation of South Africa Limited
(IDC) to finance Mogopa's acquisition of the 26% interest in the Tirisano
Diamond Mine. Etruscan Diamonds has also accepted an indicative term sheet
from the IDC to provide an additional R15 million to fund additional working
capital requirements to reactivate the Tirisano Mine. These financings have
been approved by the IDC's credit committee and closing is expected to occur
by the end of October.

    Operating Results

    The net loss for the three months ended August 31, 2007 was $0.8 million
($0.01 per share) compared to a net loss of $1.8 million ($0.016 per share)
for the three months ended August 31, 2006. The current three month period
loss included non-cash income of $0.5 million (2006 - nil) related to
unrealized gains on financial derivative instruments.
    The net loss for the nine months ended August 31, 2007 was $16.8 million
($0.16 per share) compared to a loss of $8.8 million ($0.10 per share) for the
nine months ended August 31, 2006. The current nine month period loss included
non-cash expenses of $14.0 million (2006 - nil) related to the unrealized loss
on financial derivative instruments and $2.3 million related to stock-based
compensation (2006 - $1.7 million).
    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 August 31, 2007 was negative $14.0 million ($0.13 per share). 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 mark-to-market loss represents the theoretical value on
cancellation of the gold option contracts based on market values as at May 31,
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.
    The Company's consolidated cash position as at August 31, 2007 was
$13.7 million and working capital was $2.7 million. In addition, the Company
had $4.9 million in-the-money warrants outstanding and available-for-sale
securities of $1.7 million as at August 31, 2007.
    Long term debt as at August 31, 2007 was $27.6 million, net of deferred
financing costs of $4.2 million, as a result of drawing down US$30 million of
the US$35 million Youga debt facility during the nine month period ended
August 31, 2007.
    The financial statements have been prepared in accordance with Canadian
generally accepted accounting principles.
    K. Kirk Woodman P.Geo., Etruscan's Chief Project Geologist, is the
Qualified Person overseeing Etruscan's exploration programs in West Africa and
Robert Harris, P.Eng., Vice President of Operations of Etruscan, is the
Qualified Person overseeing production and development in West Africa and
South Africa.

    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
10,000 square kilometers in West Africa. Its principal properties include the
Youga Gold Project in Burkina Faso (Press release dated October 3, 2007), the
Agbaou Gold Project in Côte d'Ivoire where its feasibility drilling program
has been completed (Press release dated October 11, 2007), the Diba Gold
Project in Mali where a major drill program was recently completed (Press
release dated July 26, 2007), the Finkolo Gold Project in Mali where an
6,700 meter reverse circulation and diamond drilling program was recently
completed (Press release dated August 30, 2007) and the Banfora Gold Belt in
Burkina Faso with eight major gold targets identified and where a single
sample auger drilling program began in March 2007 (Press release dated
November 27, 2006). Etruscan recently announced a significant acquisition of
strategic properties in Ghana (Press release dated August 7, 2007). Etruscan
also has a 53.7% interest in Etruscan Diamonds Limited which has a dominant
land position in the Ventersdorp Diamond District located in South Africa.
(Press release dated October 9, 2007). 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: from Etruscan contact: Richard Gordon, Investor
Relations, (877) 465-3674, Fax: (902) 832-6702,; Tony
Hayes, (866) 638-3338, Fax: (905) 468-8407,

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