Gravity Ltd.

November 22, 2010 15:19 ET

Gravity Ltd.: Press Release

TORONTO, ONTARIO--(Marketwire - Nov. 22, 2010) - Gravity Ltd. ("Gravity"), 260 Old Cherry Mountain Road, Jefferson NH 03583, USA, announces that it has advanced the aggregate principal amount of C$75,000 to Zaruma Resources Inc. ("Zaruma") pursuant to the fourth tranche of a 10% Senior Unsecured Convertible Promissory Note (the "August Note") dated August 30, 2010. Gravity previously advanced the first and second tranches of the August Note in the aggregate amount of C$150,000 on September 15, 2010 and the third tranche of the August Note in the amount of C$75,000 on October 12, 2010. The August Note will mature on May 5, 2011 and is convertible into common shares of Zaruma at C$0.05 per share, being 6,000,000 common shares of Zaruma if the aggregate principal amount advanced under the August Note is converted in full. As consideration for receiving the fourth tranche under the August Note in the aggregate amount of C$75,000, Zaruma has also issued 1,500,000 common share purchase warrants to Gravity, each such warrant being exercisable to acquire one common share of Zaruma at C$0.10 per share, subject to adjustment in certain circumstances (each, a "November Warrant"), until November 17, 2011.

In addition to the aggregate principal amount of C$300,000 advanced under the August Note, Gravity has previously advanced the aggregate principal amount of C$500,000 to Zaruma pursuant to a 10% Senior Unsecured Convertible Promissory Note (the "May Note", and together with the August Note, the "Notes"). As consideration for Gravity advancing funds pursuant to the May Note, Zaruma issued 10,000,000 common share purchase warrants to Gravity, each such warrant being exercisable to acquire one common share of Zaruma at C$0.10 per share (together with the November Warrants, the "Warrants").

Gravity does not currently own and/or control any common shares of Zaruma. If Gravity converts all of the C$800,000 aggregate principal amount of the Notes to common shares of Zaruma pursuant to their conversion provisions, and exercises the 16,000,000 Warrants issued to Gravity in connection with the advance of funds pursuant to the Notes, it will own a total of 32,000,000 common shares of Zaruma, representing in the aggregate approximately 21.4% of the issued and outstanding common shares, calculated on a partially diluted basis (not including the exercise of any other securities convertible into common shares of Zaruma held by any other holder).

Gravity agreed to advance funds under the Notes for investment purposes. Gravity may, in the future, increase or decrease its ownership of securities of Zaruma, directly or indirectly, from time to time depending upon the business and prospects of Zaruma and future market conditions.

On May 5, 2010, Gravity entered into a non-binding Memorandum of Understanding with Zaruma regarding the financing of the Luz del Cobre copper project located on Zaruma's wholly-owned San Antonio property in Sonora, Mexico. For more details regarding the Memorandum of Understanding, see Zaruma's news release dated May 6, 2010 available under Zaruma's profile on SEDAR at www.sedar.com.

Neither 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.

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