Etruscan starts construction at Youga (July 21, 2005)

Vancouver — Diversified African miner Etruscan Resources (EET-T) has started initial construction of its 90%-owned Youga gold project in Burkina Faso.

Among the other highlights of the company’s latest quarter ended May 31 were an increase in minable reserves at Youga and the discovery of a new mineralized zone 2 km south of the proposed millsite at the Youga mine project.

Recent drilling at Youga boosted minable reserves to 6.6 million tonnes grading 2.7 grams gold per tonne from 5.5 million tonnes at 2.9 grams, allowing for a mine life of 6.5 years. Total reserves for the project increased to 580,000 oz. from 515,000 oz. as reported in a feasibility released early this year.

On the exploration front, Etruscan discovered a new zone known as the Nanga deposit while carrying out a geological mapping program at the Youga property. Sampling of 17 trenches confirmed that the zone has a strike length of more than 400 metres and an average width of 25 metres, and is open in both directions along strike. A 5,000-metre drill program is under way to further test the discovery.

Meanwhile, mine construction at Youga is under way, starting with general earthworks, site preparation, and on-site road construction. The company plans to buy a ball mill from a Canadian mine and ship it to the site later this year. A refurbished jaw-crusher purchased in South Africa will be delivered to the site this fall.

Etruscan notes that full-scale construction at Youga will begin once project financing is completed. The mine would be the company’s second gold mine in Africa, and the first in Burkina Faso.

Etruscan holds a 40% interest in the Samira Hill gold mine in Niger, which produced 25,380 oz. in the latest quarter. This brings total production to 56,147 oz. since the mine began commercial production in October of 2004.

Samira Hill is expected to produce 120,000 oz. gold this year from the processing of 1.8 million tonnes averaging 2.2 grams gold. At the end of 2004, open-pittable reserves (including the adjacent Libiri deposit) stood at 9.6 million tonnes averaging 2.21 grams.

Etruscan also owns 51% of a South African diamond mine that sold a 1,245-carat parcel of diamonds in the latest quarter for an average of US$606 per carat. The parcel generated proceeds of US$745,470 and included stones ranging in weight from 0.25 to 24.36 carats.

On the financial front, Etruscan posted a net loss of $372,648 in the latest quarter, compared with a loss of $817,098 for the second quarter of 2004. The company’s net loss for the six months ended May 31 was $1.5 million, which compares with a loss of $1.2 million a year earlier.