/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS./
TORONTO, Nov. 2 /CNW/ - Sprott Resource Corp. (TSX: SCP) - Sprott Resource Corp. ("SRC") is pleased to announce that its subsidiary Orion Oil & Gas Ltd. (formerly 1491542 Alberta Ltd.) ("Orion"), Wintraysan Capital Corp. ("Wintraysan") and 1498513 Alberta Ltd. (the recently incorporated wholly-owned subsidiary of Wintraysan) ("AquireCo") have entered into a arrangement agreement dated October 30, 2009 (the "Arrangement Agreement"), relating to the acquisition by Wintraysan of all of the issued and outstanding securities of Orion by way of the amalgamation of Orion and AcquireCo pursuant to a plan of arrangement (the "Arrangement") to be conducted in accordance with the provisions of the Business Corporations Act (Alberta).
The Arrangement Agreement is the definitive agreement contemplated in the letter agreement into which Wintraysan and Orion entered on October 13, 2009 (the "Letter Agreement"). The Arrangement Agreement reflects the terms and conditions of the Letter Agreement, including the share exchange ratio for the business combination contemplated therein (see SRC's press release issued on October 13, 2009).
Proposed Qualifying Transaction
Wintraysan is a "capital pool company" as defined under the policies of the TSX Venture Exchange (the "Exchange") and intends for the Arrangement and associated transactions (collectively, the "Proposed Qualifying Transaction") to constitute the "Qualifying Transaction" of Wintraysan (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 with Auriga Energy Inc. (a private Alberta oil and gas company with assets in the Kaybob, Redwater and Bigstone areas of Alberta) ("Auriga"), SRC and the principal shareholders of Auriga. Orion completed its acquisition of Auriga on October 20, 2009 (see SRC's press release issued on October 20, 2009). Upon completion of the Proposed Qualifying Transaction and assuming completion of the Brokered Financing (as defined below), Wintraysan will continue to carry out the business of Orion as currently contemplated to be constituted.
Proposed Brokered Financing
As disclosed in SRC's press release of October 15, 2009, Orion has entered into an equity financing agreement with a syndicate of agents co-led by Cormark Securities Inc., FirstEnergy Capital Corp. and TD Securities Inc (collectively, the "Agents"), pursuant to which Orion has agreed to raise, on a best efforts agency basis, $100,000,000 (the "Brokered Financing") from the sale of subscription receipts.
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, completion of the Brokered Financing, and other matters. 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 statements in this news release are made as of the date of this release 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.
