Ecuador Gold announces exercise of warrants

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS./

TORONTO, Dec. 18, 2013 /CNW/ - Ecuador Gold & Copper Corp. (TSX-V: EGX) (the "Company") announces the exercise by Aura International Services Ltd. ("Aura") of 8,333,333 previously issued warrants to purchase common shares (each a "Warrant") for total proceeds to the Company of US$625,000.  The Warrants were exercisable at a price of US$0.075 per common share, and were issued to Aura pursuant to an up to US$3.25 million private placement by the Company of which the final tranche closed on December 4, 2013 (the "Private Placement").

Following the exercise of the Warrants, and including securities acquired under the Private Placement and previously, Aura holds a total of 98,063,589 common shares of the Company and 46,841,252 Warrants, representing approximately 47.4% of the issued and outstanding common shares of the Company on a non-diluted basis, and 57.1% of the issued and outstanding common shares of the Company on an extended partially-diluted basis after giving effect to the exercise of all of the Warrants held by Aura following completion of the Private Placement. As previously reported in the Company's news release dated December 4, 2013, in exchange for the purchase by Aura of all of the units under the Private Placement, and the exercise of warrants, providing aggregate gross proceeds of US$6.2 million to the Company, Aura will be entitled to nominate up to three directors of the Company.

Aura is a "related party" to the Company under MI 61-101 as it is a "control person" of the Company by virtue of its shareholdings in excess of 20% of all issued and outstanding Shares of the Company. Accordingly, the exercise of the Warrants is a "related party transaction" under MI 61-101.

The Private Placement, including the issuance of the Warrants and the underlying common shares upon exercise thereof, was unanimously approved by the board of directors of the Company effective August 14, 2013. The Company also received minority shareholder approval for the Private Placement pursuant to Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") at a special meeting of the shareholders of the Company held on October 11, 2013 (the "Shareholders' Meeting").

The subscription by Aura for the Units purchased by it was agreed to by the Company on November 6, 2013 pursuant to a subscription agreement containing the customary provisions for the subscription of units of a reporting issuer with such shares comprising the Units posted and listed for trading on the TSX Venture Exchange.

There has been no formal valuation of the Company or its assets to date, as there has not yet been any necessity to do so.  The Private Placement (and exercise of Warrants issued pursuant thereto) is a transaction that is exempt from the formal valuation requirements under Section 5.4 of MI 61-101 pursuant to Subsections 5.5(b) and 5.5(c) of MI 61-101 because:

	(a)	no securities of the Company are listed or quoted on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock Market, or a stock exchange outside of Canada and the United States other than the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc.; and
	(b)	the issuance of the 8,333,333 common shares pursuant to the exercise of the Warrants by Aura for total proceeds of US$625,000 is a distribution of securities of the Company to Aura for cash consideration, and
		i.	neither the Company nor, to the Company's knowledge after reasonable inquiry, Aura has knowledge of any material information concerning the Company or its securities that has not been generally disclosed; and
		ii.	the Company's management information circular dated September 10, 2013 in respect of the Shareholders' Meeting fully describes the Private Placement (including the exercise of Warrants issued pursuant thereto) and includes a description of the effect of the Private Placement and Warrant exercise on the direct and indirect voting interest of Aura.

The proceeds of the Warrant exercise will be used for exploration and development expenses, and as additional working capital. The common shares issued to Aura pursuant to the Warrant exercise are subject to a four-month hold period from the date of issuance

Cautionary Note

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. 

SOURCE: Ecuador Gold and Copper Corp.

Carson Phillips
Vice President, Corporate Development
Telephone: [phone]
Email: [email protected]

Glenn Laing
President and Chief Executive Officer
Telephone: [phone]
Email: [email protected]