Etruscan Goes for Gold, Diamonds in South and West Africa

CAPE TOWN () -- Headquarters at Etruscan Resources [TSX:EET] must be a busy, if somewhat tight-lipped, place at the moment. Mine construction is in its final phase at the Youga gold project in Burkina Faso, a feasibility study for the Agbaou gold project in C^ote D'Ivoire is nearing completion and drilling programs have been completed at the Diba and Finkolo gold projects in Mali.

To keep the momentum going, CIBC World Markets and Cormark Securities are about to close registration on a C$3 per unit ($2.86) share and warrant underwriting that is expected to raise some C$35 million ($33.4 million). Moreover, Etruscan's efforts to become a diamond producer have quickly moved from conception to reality.

Etruscan Diamonds Ltd., a recently formed subsidiary in which Etruscan Resources holds a 53.7% interest, is listing shares on the Toronto and Johannesburg stock exchanges. Etruscan is consolidating its holdings and ramping up bulk sampling, drilling and processing within a 5,000 square-kilometre diamond belt in South Africa's Ventersdorp Alluvial Diamond District, an area that yielded 667,000 carats from 1926 to 1984.

First Gold Pour

Mine construction at Youga is in its final phase, management reported its Q3 2007 financial report released on 15 October. Management is finalizing pre-production preparations at Youga, where, based on an October 2006 feasibility study, mineable reserves total 6.6 million tonnes at an average grade of 2.7g/t are to yield an expected 580,000 ounces of gold.

The plant's main processing circuits are due to be completed in November, and an initial gold pour is scheduled for December. Average estimated life-of-mine operating costs of $345 per ounce are based on an initial six-year period assuming 100% grid power capacity usage.

The mine will be commissioned in November using power supplied by a back-up diesel generator that will add $50 per ounce to operating costs with a first gold pour to follow in December. Ore will be crushed, ground and milled and pass through a carbon-in-leach/gravity plant with a 1 million tonne per annum capacity.

Full grid power is to come on-line in two phases by the end of Q1 2008. Production will be ramped up to full, steady state rates over a three-month period. A water pipeline and pumping stations to the White Volta River 11 kilometres away will provide a year-round supply and are in the final stages of completion. Access to grid power is being supplied by the northern grid of the Volta River Authority in Ghana.

An estimated $67 million is required to bring Youga into production, including capital, pre-production, financing and working capital costs. Management considers the potential to extend Youga's lifespan to be excellent. Drilling and trenching has resulted in the identification of six additional mineralized zones within three kilometres of the central milling facility. These will be systematically upgraded into resource and reserve categories as mining progresses in the first five open pits.

West African Gold

It is believed that Youga and Agbaou will produce more than 2 million ounces of gold. Both are located within West Africa's Gold Belt, a region rich in alluvial gold deposits, where Etruscan holds rights to prospective gold resources in area that covers more than 10,000 square kilometres. In addition to Youga and Agbaou, these include the Diba and Finkolo gold projects in Mali, the Banfora Gold Belt in Burkina Faso and the August announcement of property acquisitions in Ghana.

Etruscan owns mineral rights covering 1,075 contiguous square kilometres in the Youga Gold Band and an additional 773 square kilometres continuation of the belt into Ghana. Additional target areas have been identified 25 kilometres southwest of Youga at Zerbogo and 25 kilometres northeast at Bougr'e. Etruscan exploration teams are also at work on the Ghanaian side of the belt at three historic mining sites: Nangodi, Dusi and Zug.

Etruscan's 85%-owned Agbaou gold project, 200 kilometres northwest of Abidjan in C^ote D'Ivoire, is at an advanced stage of development. A drilling program has been completed, assay results received and a team comprising a number of international consulting firms have been contracted to complete the feasibility study.

"Our team in C^ote d'Ivoire has achieved all of our objectives for the feasibility study drilling program and we are now focused on completing the feasibility study by April 2008 with a target of bringing Agbaou into production by fourth quarter 2009," Etruscan's president and CEO Gerald J. McConnell stated in an 11 October media release.

"With the first gold pour at Youga scheduled for December, focus is now shifting to Agbaou to bring this property into production as soon as possible to increase Etruscan's gold production and internal cash flows...We are confident that our aggressive exploration programs will lead to additional gold discoveries. Both Youga and Agbaou will provide the cash flow to sustain significant growth and increase shareholder value over the coming years."

South African Diamonds

Etruscan's plans to diversity into diamond mining are also coming to fruition as share flotations of its 53.7%-owned Etruscan Diamonds subsidiary on the Toronto and Johannesburg stock exchanges are in the works. The company has completed is expanding its bulk sampling and drilling activities at the Blue Gum alluvial diamond project in South Africa's Ventersdorp region.

Etruscan Diamonds acquired full ownership of the Tirisano Diamond Mine Joint Venture in early October with the settlement of an agreement with Mvelaphanda Exploration to transfer their 50% stake in the Project for approximately C$7.2 million ($6.864 million), which includes a cash payment of R25 million ($3.806 million) and 1,184,848 Etruscan Resources shares, which were issued in return for Etruscan Diamonds' issuing 1,810,750 of its shares to its parent.

Control of Tirisano and holding rights to the surrounding Nooitgedacht property enables Etruscan to consolidate development of diamond resources spanning both areas, as well as those it controls on the adjacent Hartbeestlaagte and Zwartland properties.

Etruscan in September reached an agreement in principle to transfer a 26% interest in Tirisano to Mogopa Minerals Pty Ltd. for R26 million ($3.959 million), thereby finding the Black Economic Empowerment partner required by South African law. South Africa's Industrial Development Corp. is to finance Mogopa's buy-in and has issued an indicative term sheet to the company. The IDC will also an additional R15 million ($2.284 million) to Etruscan Diamonds to fund working capital requirements that are to be used to restart operations at Tirisano. Mountain Lake Resources holds the remaining 16%-plus interest in Tirisano.

An independent NI 43-101 estimate pegs resources at Blue Gum's SAMREC prospect at 16.2 million cubic metres grading 3.18 carats per 100 metres. Some 104 million cubic metres of ore have been processed at Nooitgedacht, yielding 23,000 carats with a value of more than $480 per carat. RSG Global in 2003 estimated Nooitgedacht holds some 12.3 million cubic metres of ore grading 2.8 carats per 100 metres. Though no resource estimates have been undertaken at Zwartrand as yet, results from geophysical modelling are promising, according to management.

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