Zaruma Resources Announces Closing of Financing in Escrow

TORONTO, May 20, 2011 /CNW/ --
TORONTO, May 20, 2011 /CNW/ - Zaruma Resources Inc., (TSXV: ZMR.H), (the 'Company') today announced the closing of a US$25 million private placement of
subscription receipts. Each subscription receipt was priced at C$0.05
and entitles the holder, subject to certain conditions described below,
to acquire for no additional consideration, units of the Company
comprising one share and one common share purchase warrant entitling
the holder to purchase an additional share for two years at C$0.10 per
share. Additionally, the Company issued US$1.1 million in subscription
receipts on the same terms in connection with the proposed cancellation
of existing financial and operational agreements. The subscription
receipts proceeds along with US$25 million of a US$30 million debt
financing are or will be held in escrow, to be released from escrow
upon the filing in certain courts and registries in Mexico of
settlement agreements entered into with various creditors. The court
approved settlements would end the ongoing litigation involving the
Company in Mexico and enable the Company to proceed to remove current
liens on the Company's mining concessions. The new debt financing will
be secured by a new first lien on the concessions, the fixed assets in
Mexico and a pledge of the shares of Minerales Libertad, S.A. de C.V.,
the Company's wholly owned subsidiary in Mexico which proposes to put
the Luz del Cobre Copper Project into production as early as the first
quarter of 2012.

Final Approval of the listing of the Company's shares as a Tier 1 mining
company on the TSX Venture Exchange is subject to the satisfaction of
the escrow conditions and the release of funds from escrow, as well as
other conditions stipulated by TSXV. The release from escrow will take
a number of weeks to achieve, depending on the progress of the court
proceedings. However, if the proceedings are not successfully concluded
by the time specified in the Escrow Agreement, or do not have a
positive outcome, the subscription receipts proceeds and the debt
financing proceeds shall be returned to the providers thereof.

Zaruma Gold Mining Ltd. subscribed for US$20 million of the subscription
receipts, and upon the deemed exercise of the subscription receipts
would control 61% of the outstanding common shares at closing.

Zaruma Resources Inc. is a pre-production stage company listed on the
TSX-V NEX Board (symbol ZMR.H) and the Frankfurt Stock Exchange
(symbol: ZMR). Common shares currently outstanding 123,608,747.

Neither TSXVenture 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.

Forward Looking Information

This News Release contains forward-looking statements which are
typically preceded by, followed by or including the words 'believes',
'expects', 'anticipates', 'estimates', 'intends', 'plans' or similar
expressions. Forward-looking statements and information involve known and unknown
risks, uncertainties and other factors that may cause actual results to
differ materially from those expressed or implied in the
forward-looking statements and information. Risks and uncertainties
that may cause actual results to vary include but are not limited to:
the conditional nature of the subscription receipts financing, the risk
that the Mexican courts will not approve of the creditor and litigation
settlement prior to the escrow release deadline or at all,
uncertainties relating to the availability and costs of financing
needed to put Luz del Cobre into production; the costs of commencing
production varying significantly from estimates; delays in commercial
production from Luz del Cobre; unexpected geological conditions; the
speculative nature of mineral exploration and development, including
the uncertainty of reserve and resource estimates; operational and
technical difficulties, including the failure of major mining and
processing equipment; the ability of the Company to service its debt
facilities; fluctuations in copper and other commodity prices; the
existence of undetected or unregistered interests or claims, whether in
contract or in tort, over the property of the Company; success of
future exploration and development initiatives; competition; operating
performance of facilities; environmental and safety risks, including
increased regulatory burdens, seismic activity, weather and other
natural phenomena; inability to, or delays in, obtaining renewal of
necessary permits and approvals from government authorities; risks
relating to labour; and other exploration, development and operating
risks; changes to and compliance with applicable laws and regulations,
including environmental laws ; political, economic and other risks
arising from the Company's activities in Mexico; fluctuations in
foreign exchange rates; as well as other risks and uncertainties.

Any forward-looking statement speaks only as of the date on which it is
made and, except as may be required by applicable laws, the Company
disclaims any intent or obligation to update any forward-looking
statement, whether as a result of new information, future events or
results or otherwise. Although the Company believes that the
assumptions inherent in the forward-looking statements are reasonable,
forward-looking statements are not guarantees of future performance and
accordingly undue reliance should not be put on such statements due to
the inherent uncertainty therein.

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