UPDATE 1-Semafo increases stake in Niger gold mine to 80 pct

* Buys 40 pct stake from Etruscan in Samira Hillmine

* Says buys stake for $3 mln and 1.5 pct smelter royalty

July 22 (Reuters) - Canadian gold miner Semafo Inc (SMF.TO) boosted its stake in a gold mine in Niger to 80 percent after it acquired Etruscan Resources Inc's EET.TO minority interest for $3 million.

Semafo said it acquired 40 percent minority interest of Etruscan in Samira Hillmine, comprising preferred shares, loans and common shares, adding that the government of Niger holds the remaining 20 percent stake in the mine.

The deal also includes a 1.5 percent net smelter royalty, which comes into effect after which time the mine has produced 750,000 ounces, calculated as from July 1, the company said in a statement.

The transaction is expected to reduce Semafo's long-term debt by $6.1 million and add $3.1 million of non-cash gain in the third quarter of 2009, the company said.

Shares of Montreal, Quebec-based Semafo were up 1 Canadian cent at C$2.31 while Etruscan stock was trading flat at 27 Canadian cents Wednesday on the Toronto Stock Exchange. (Reporting by Sakshi A Mattoo in Bangalore; Editing by Deepak Kannan)