Sprott Resource Corp. Announces Closing of
Acquisition of Auriga Energy Inc. by its Subsidiary Orion Oil & Gas Ltd.
Toronto:
October 20, 2009 � Sprott Resource Corp. (TSX: SCP) �
Sprott Resource Corp. (�SRC�) is pleased to announce that Orion Oil and Gas
Ltd. (�Orion�), a subsidiary of SRC,� has
closed its acquisition (the �Acquisition�) of all of the issued and outstanding
common shares of Auriga Energy Inc. (�Auriga�).�
In order to complete the Acquisition, SRC issued approximately 13.85
million common shares of SRC and approximately 42.45 million common shares of
Orion to Auriga shareholders.�
Immediately following the Acquisition, Orion completed
a $61.5 million private placement (the �Private Placement�) of which $53.8
million was funded by SRC.� The balance
of the Private Placement was funded by new management, associates of new
management and former Auriga shareholders.�
The proceeds from the Private Placement have been used to repay all of
Auriga�s outstanding debt.�
As a result of the closing of the Acquisition and the
Private Placement, SRC owns approximately 79.3% of the issued and outstanding
common shares of Orion.�
SRC has provided Auriga with a short-term working
capital loan of $10 million (�SRC Facility�) to facilitate the timely execution
of the winter drilling program.� Orion
management is at an advanced stage of discussion with a major Canadian bank
with respect to a new committed credit facility (the �New Facility�) to provide
for longer term working capital financing.�
Once the New Facility is in place, the SRC Facility will be repaid and
terminated.
SRC previously announced an agreement between Orion
and Wintraysan Capital Corp. (TSXV:WTS.P) (�Wintraysan�) whereby Wintraysan,
pursuant to a plan of arrangement or similar form of transaction (the
�Arrangement�), will acquire all of the issued and outstanding shares of Orion
(see press release dated October 13, 2009).�
As well, SRC previously announced that Orion has also entered into an
equity financing agreement with a syndicate of lenders co-led by Cormark
Securities Inc., FirstEnergy Capital Corporation and TD Securities Inc. to
raise $100 million through the sale of subscription receipts (the �Brokered
Financing�) (see press release dated October 15, 2009).��
�
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
Arrangement, the Brokered Financing and the establishment of the New Facility. 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 Arrangement, the Brokered Financing or the establishment
of the New Facility, that the ultimate terms of the Arrangement, the Brokered
Financing or the New Facility will differ from those that currently are
contemplated, and that the Arrangement, the Brokered Financing or the New
Facility 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
The subscription
receipts offered pursuant to the Brokered Financing have not been and will not
be registered under the United States Securities Act of 1933, as amended and
may not be offered or sold in the United States absent registration or an
applicable exemption from the registration requirement.� This press release shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any
sale of the securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful.