Sprott
Resource Corp. Announces Letter Agreement for Business Combination Between its
Subsidiary Orion Oil & Gas Ltd. (formerly 1491542 Alberta Ltd.) and
Wintraysan Capital Corp.
Toronto: October 13, 2009 � Sprott Resource Corp.
(TSX: SCP) � Sprott Resource Corp. (�SRC�) is pleased to announce that its
wholly-owned subsidiary Orion Oil & Gas Ltd. (formerly 1491542 Alberta
Ltd.) (�Orion�) and Wintraysan Capital Corp. (�Wintraysan� or the
�Corporation�) have entered into a letter agreement dated October 13, 2009 (the
�Letter Agreement�), whereby the Corporation has agreed to acquire all of the
currently issued and outstanding securities, including common shares of Orion
(the �Orion Shares�) via the issuance of approximately 870,000,000 common
shares or other securities convertible into common shares in the capital
of the Corporation (the �Wintraysan Shares�), which will be issued on the
basis of (3) Wintraysan Shares for every one (1) Orion Share (the �Exchange Ratio�).
Wintraysan
is a �capital pool company� as defined under the policies of the TSX Venture
Exchange (the �Exchange�) and intends for the proposed acquisition (the
�Proposed Qualifying Transaction�) to constitute the �Qualifying Transaction�
of the Corporation as such term is defined in the policies of the
Exchange.� The Proposed Qualifying
Transaction will be an arm�s length transaction as the directors and officers
of Wintraysan currently have no interest in Orion.
Orion
was recently incorporated for the purposes of entering into an acquisition
agreement to purchase all of the issued and outstanding common shares of Auriga
Energy Inc. (�Auriga�) (see press release issued on September 28, 2009).� Auriga is a private Alberta
oil and gas company with assets in the Kaybob, Redwater and Bigstone areas of Alberta.�� It is expected that Orion will complete its
acquisition of all of the issued and outstanding securities of Auriga on
October 20, 2009 and in any event no later than November 15, 2009.
Upon
completion of the Proposed Qualifying Transaction, the board and management
team of the Corporation will be reconstituted such that the board of directors
will be comprised of Kent Jespersen (Chairman), Gary Guidry, Paul Dimitriadis
(COO and General Counsel of SRC), Robert B. Hodgins and another independent
director yet to be appointed and the officers of the Corporation will be Gary
Guidry (President and Chief Executive Officer) and Douglas Allen (Chief
Financial Officer).
Upon
completion of the Proposed Qualifying Transaction, the Corporation will be led
by Gary Guidry, who has over 30 years of experience operating international oil
and gas assets and who most recently served as Chief Executive Officer of
Tanganyika Oil Company Ltd., which under Gary�s leadership between May 2005 and
December 2008, grew production to approximately 25,000 bbl/d with share price
increasing from $6.50 to $31.50 per share at the time of its sale to Sinopec
International Petroleum Exploration and Production Corporation in December 2008
for over $2.0 billion. Prior to this, Gary
held positions including President and Chief Executive Officer of Calpine
Natural Gas Trust, President and Senior Vice-President of AEC International and
various senior management positions with Canadian Occidental Petroleum.�
Douglas
Allen was most recently the Senior Vice-President, Finance and Chief Financial
Officer of North American Oil Sands Corporation, which was sold to Statoil ASA
for $2.2 billion in 2007. Previously, he was the Managing Director and Energy
Sector Head for Citibank Canada
and Senior Manager, Energy Project Finance for the Royal Bank of Canada.
He has over thirty years of experience in corporate finance and oil and gas
industry executive roles.
Kent
Jespersen is currently the Chief Executive Officer of La Jolla Resources
International Ltd. and has held that position since 1998. Previously he held
senior executive positions with NOVA Corp., Foothills Pipe Lines Ltd. and Husky
Oil Limited. He is currently the Chairman and a director of Orvana Minerals
Ltd. and CCR Technologies Ltd. and a director of TransAlta Corp., Seven
Generations Energy Corp., Matrikon Inc., Axia NetMedia Corporation and CanElson
Drilling Ltd.
Robert
B. Hodgins is an independent businessman with over 27 years of oil and gas
industry experience. Most recently he was the Chief Financial Officer of
Pengrowth Energy Trust. Previously, he held positions as Vice-President and
Treasurer of Canadian Pacific Limited and Chief Financial Officer of
TransCanada Pipelines Limited. He is currently a director of several public
companies, including Fairborne Energy Ltd., AltaGas Income Trust, EnerPlus
Resources Fund, Enerflex Systems Income Fund and MGM Energy Corp.
The Proposed
Qualifying Transaction
Subject
to any regulatory, shareholder, director or other approvals that may be
required, the completion of satisfactory due diligence by Wintraysan and other
conditions contained in the Letter Agreement, it is intended that Wintraysan
will acquire Orion in a reverse take-over transaction which will be effected by
way of an amalgamation, arrangement, share exchange or other similar form of
transaction.
There are currently 7,545,454 Orion Shares issued and
outstanding and, upon completion of the acquisition of Auriga and the private placements
of Orion Shares to be completed in connection therewith, it is anticipated that
there will be approximately 290 million Orion Shares issued and outstanding.
Wintraysan currently has 2,300,000 issued and outstanding shares and options
and agent�s warrants to acquire up to 300,000 Wintraysan Shares issued and
outstanding. Upon completion of the Proposed Qualifying Transaction but prior
to the Brokered Financing (as defined below), it is anticipated that the
current holders of Orion Shares will own over 99% of the issued and outstanding
Wintraysan Shares and the current Wintraysan shareholders will own less than 1%
of the issued and outstanding Wintraysan Shares. The Wintraysan Shares to be
issued pursuant to the Proposed Qualifying Transaction may be subject to the
escrow requirements of the Exchange, if applicable.�
Upon completion of the Proposed Qualifying Transaction
and assuming completion of the Brokered Financing (as defined below), the
Corporation will continue to carry out the business of Orion as currently
contemplated to be constituted.
Proposed Brokered Financing
As a condition precedent to the closing of the
Proposed Qualifying Transaction, a brokered financing in a minimum amount of
$100,000,000 (the �Brokered Financing�) is to be completed.
Capitalization of the Resulting
Issuer
It is anticipated that in conjunction with the
Proposed Qualifying Transaction and Brokered Financing, Wintraysan will effect
a consolidation (the �Consolidation�) of the Wintraysan Shares on the basis of
one (1) new Common Share for each fifteen (15) existing Wintraysan Shares.� In addition, it is intended that Wintraysan
will change its name to �Orion Oil & Gas Corporation�
or such other name as may be approved by the board of directors of the
Corporation (the �Name Change�). In accordance with applicable laws, the
Consolidation and the Name Change are subject to the approval of the
shareholders of the Corporation.
Description of
Significant Conditions to Closing
Completion
of the Proposed Qualifying Transaction is subject to the satisfaction of a
number of conditions, including, but not limited to, Exchange acceptance. Other
necessary conditions to the closing of the Proposed Qualifying Transaction,
include obtaining all other necessary regulatory and third-party approvals and
authorizations, the completion of a definitive agreement setting forth the
terms and conditions set out in the Letter Agreement, completion of the
Brokered Financing, and the completion of due diligence.� As the Proposed Qualifying Transaction is an
arm's-length transaction, it is anticipated that Wintraysan shareholder
approval will not be required. There can be no assurance that the Proposed
Qualifying Transaction will be completed as proposed or at all.
About Sprott Resource
Corp.
SRC
is a Canadian based company, the primary purpose of which is to invest,
directly and indirectly, in natural resources. Through acquisitions, joint
ventures and other investments, SRC seeks to provide its shareholders with
exposure to the natural resource sector for the purposes of capital appreciation
and real wealth preservation. SRC is well positioned to draw upon the
considerable experience and expertise of both its Board of Directors and Sprott
Consulting Limited Partnership (�SCLP�), of which Sprott Inc. is the sole
limited partner. Pursuant to a management services agreement between SCLP and
SRC, SCLP provides day-to-day business management for SRC as well as other
management and administrative services.
Forward-looking
Statements
This news release
contains forward-looking statements and information (�forward looking
statements�) within the meaning of applicable securities laws relating to the
proposal to complete the Proposed Qualifying Transaction and associated
transactions (including the Brokered Financing), including statements regarding
the terms and conditions of the Proposed Qualifying Transaction and associated
transactions (including the Brokered Financing). Readers are cautioned to not
place undue reliance on forward-looking statements. Actual results and
developments may differ materially from those contemplated by these statements
depending on, among other things, the risks that the parties will not proceed
with the Proposed Qualifying Transaction and associated transactions (including
the Brokered Financing), that the ultimate terms of the Proposed Qualifying
Transaction and associated transactions (including the Brokered Financing) will
differ from those that currently are contemplated, and that the Proposed
Qualifying Transaction and associated transactions (including the Brokered Financing)
will not be successfully completed for any reason (including the failure to
obtain the required approvals or clearances from regulatory authorities). The
forward-looking statements contained in this document are made as of the date
hereof and SRC does not undertake any obligation to update publicly or revise
any forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable
securities laws.
For further information, please contact:
Kevin Bambrough
President and CEO
Tel: (416) 977-7333
Fax: (416) 977-9555