Etruscan announces US$43 million equity financing and major financial
restructuring plan
Gerald J. McConnell, President of Etruscan, stated:
"Etruscan is very pleased that Endeavour has decided to make this strategic investment in Etruscan. Endeavour is well known in the global mining markets for its ability to implement significant and rapid growth plans for its clients, often leading to premium market valuations. Endeavour's track record of success includes its role in the creation and growth of Wheaton River, which ultimately became Goldcorp. We welcome Endeavour's ongoing active role in guiding Etruscan to drive growth and share value."
Neil Woodyer, Chief Executive Officer of Endeavour, stated:
"Endeavour has a gold-focused investment strategy to create significant value through strategic investments in gold producers with a vision of creating an intermediate sized gold growth company. We believe in long-term rising gold prices and see investment opportunity in companies, like Etruscan, facing short-term financial challenges but with quality underlying gold mining assets. We look forward to working with the Etruscan team to drive the growth of the Company."
Use of Proceeds
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The proceeds of the private placement will be allocated as follows:
- US$23 million to repurchase approximately 50% of Etruscan's $700 per
ounce gold call options;
- approximately US$8.5 million to repay outstanding unsecured convertible
debt;
- US$5 million for working capital purposes and improvements at the Youga
Gold Project; and
- approximately US$6.5 million to for general corporate working capital
requirements.
Benefits of Endeavour's Strategic Investment
--------------------------------------------
The private placement with Endeavour allows Etruscan to complete a
financial restructuring which will:
- address Etruscan's near-term financial needs;
- improve Etruscan's operating cash flow;
- increase Etruscan's leverage to rising gold prices; and
- position Etruscan for future growth initiatives.
Endeavour's investment will provide the funding to facilitate a restructuring of the senior debt facility and related hedging provided by RMB
As part of the planned senior debt facility restructuring, the senior lenders have requested equity participation and, on completion of the transaction, will convert US$3 million of the US$33 million outstanding on the senior debt facility to common shares of Etruscan at the same price as the Endeavour private placement (C$0.30 per common share). In addition, Conus Partners Inc. and affiliates have also requested equity participation and have agreed to convert US$2 million of unsecured convertible promissory notes to common shares of Etruscan at C$0.30 per common share.
The Endeavour private placement targets the key challenges currently constricting Etruscan's share price, namely the gold hedge, the inability to service the near term senior debt repayment schedule and the lack of working capital to implement the site improvements needed at the Youga Gold Project to ensure the operational turnaround. The completion of this transaction will allow Etruscan to return its focus to value creation with the near term plan being to focus on highly prospective exploration targets near Youga which have the potential to extend the Youga mine life.
Endeavour's Share Ownership
---------------------------
Endeavour will acquire 153,123,000 common shares pursuant to the private placement. Endeavour has also agreed to purchase from Kirkland Intertrade Corp. and 2190776 Ontario Inc. 26,315,789 Etruscan common shares ("Kirkland/219 Shares") and 6,855,760 Etruscan share purchase warrants entitling Endeavour to acquire 6,855,760 Etruscan common shares ("Kirkland/219 Warrants"). Endeavour does not currently hold any securities of Etruscan. After giving effect to the acquisition of the Kirkland/219 Shares, but prior to the closing of the private placement, Endeavour will hold 16.5% of the issued and outstanding common shares of Etruscan. Assuming full exercise of the Kirkland/219 Warrants, but prior to the closing of the private placement, Endeavour will hold approximately 19.98% of Etruscan's common shares.
Following completion of the private placement and the purchase of the Kirkland/219 Shares and Warrants, Endeavour will hold approximately 54% of the issued and outstanding common shares of Etruscan on a post-closing basis, assuming the exercise of all of the Kirkland/219 Warrants.
Pursuant to the private placement terms, four nominees of Endeavour will join an Etruscan seven member board. Endeavour has indicated that their nominees will be Neil Woodyer, Frank Giustra,
Closing Conditions
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The private placement and consequent debt restructuring is subject to completion of standard technical, legal and financial due diligence and the negotiation and entering into of definitive documentation. The private placement is conditional upon finalizing documentation with the senior lenders to restructure the Youga debt facility on terms acceptable to Endeavour and Etruscan. The private placement is also subject to the Etruscan shareholders approving the private placement and the waiver and termination of Etruscan's shareholder rights plan. A shareholders' meeting has been convened for
About Endeavour
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Endeavour is an integrated merchant banking investment company listed on the
About Etruscan
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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
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 (www.sedar.com). Accordingly, readers should not place undue reliance on forward-looking statements.
NO REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE CONTENT OF THIS
RELEASE
For further information: from Etruscan contact: Richard Gordon, Investor Relations, [email protected], (877) 465-3674, Fax (902) 832-6702
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