Merger part of Etruscan strategy

In an attempt to expand its African holdings, Etruscan Resources (EET-T) has entered into an agreement to merge with Mountain Lake Resources (MOA-V).

Subject to due diligence, the companies plan to merge based on an exchange ratio of one share of Etruscan for every two shares of Mountain Lake. Once the share exchange is completed, Mountain Lake shareholders would hold about 16% of Etruscan.

Mountain Lake’s main asset is an alluvial diamond project in the Ventersdorp district, 150 km west of Johannesburg in South Africa. Historically, about 50,000 carats were produced from the gravel deposits, with individual diamonds weighing up to 19 carats. Previous work by Mountain Lake and Ashton Mining of Australia indicated a resource of 14.5 million tonnes of gravel with a historical average grade of 1.5 carats per 100 tonnes.

Small-scale production is ongoing and, in the latest quarter, 2,121 diamonds weighing 2,612 carats were recovered and sold at an average price of US$397 per carat.

Mountain Lake’s other assets include the CK gold property in Wyoming, the Canagau base metal property in Ontario, the Goodwin base metal property in New Brunswick, and the Valentine Lake gold project in Newfoundland.

Etruscan intends to focus chiefly on the Ventersdorp project, with the intention of bringing it into production at the annual rate of 2 million tonnes.

Meanwhile, the company continues to advance its main asset, the 40%-held Samira gold project in Niger. St. Laurent, Que.-based Semafo (SMF-T) holds a 40% stake, with the remaining 20% held by the government of Niger.

A newly discovered zone at the property is expected to add to existing resources at the Libiri deposit, which, at last report, stood at 11.7 million tonnes grading 2.07 grams gold per tonne based on a 1-gram cutoff grade. Oxide and transitional zones at Samira Hill total 6.6 million tonnes grading 2.4 grams, based on an average stripping ratio of 3.06-to-1.

A revised feasibility study was tabled this past summer for a combined operation exploiting the Samira Hill and Libiri deposits at a milling rate of 6,000 tonnes per day. Once commercial production begins, the mine is expected to produce 130,000 oz. annually for the first three years, and 70,000-80,000 oz. in each of the following three years.