/NOT FOR DISSEMINATION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
CALGARY, March 26, 2012 /CNW/ -
Terra Nova Minerals Inc. ("Terra Nova" or the "Corporation") is pleased to announce that it has signed a letter of intent (the "Letter of Intent") dated March 19, 2012 with Holloman Energy Corporation ("Holloman") of Houston, Texas to acquire up to a 55% working interest in two onshore petroleum exploration licenses (the "Acquisition") located on the western flank of the Cooper Basin in the State of South Australia, namely PEL 112 (comprised of 2,196 square kilometers) and PEL 444 (comprised of 2,358 square kilometers) (collectively, the "Licenses" and individually a "License").
Upon execution of the Letter of Intent, Terra Nova is obliged to pay Holloman a non-refundable deposit of USD $100,000 and within 15 days from regulatory approval of the Letter of Intent deposit in favour of Holloman an additional USD $250,000 (refundable in the event that a definitive agreement is not signed). Within ten business days of the effective date of a definitive agreement pursuant to the Letter of Intent, Terra Nova will issue to Holloman 1,000,000 shares of its common stock.
Within 15 days from regulatory approval of the Letter of Intent, Terra Nova is further obliged to deposit AUD $4.0 million, and by May 1, 2012 AUD $700,000, into trust. Upon execution of a definitive agreement, those funds shall be used by Terra Nova to complete a seismic acquisition program. Upon payment of these amounts, Holloman will transfer to Terra Nova and register in its favour a 20% working interest in each License.
Additionally, pursuant to the Letter of Intent, on or before November 1, 2012, Terra Nova is obliged to pay into trust an additional AUD $4.5 million which funds shall be used by Terra Nova to conduct a three well drilling program on the Licenses (the "Initial Drilling Program"), on locations to be chosen by Terra Nova, with a minimum of one well to be drilled on each License. In the event that any well drilled as part of the Initial Drilling Program tests positively for commercially viable production of oil or gas, Terra Nova is responsible to pay 50% of the total aggregate completion costs of such well, with the current working interest holders responsible for the remaining 50% of such costs, in accordance with their respective working interests.
Further, at Terra Nova's option and on or before March 1, 2013, the Corporation may pay into trust an additional AUD $4.5 million, which funds are to be used to conduct an additional three well drilling program on the Licenses (the "Optional Drilling Program"), again on locations to be chosen by Terra Nova, with a minimum of one well to be drilled on each License and with the same responsibilities for completion costs for wells testing positive for commercial production as under the Initial Drilling Program.
Upon drilling and abandonment or completion of each well within (i) the Initial Drilling Program and (ii) the Optional Drilling Program, within certain designated time frames, Terra Nova shall be deemed to have earned an additional 5.8333% working interest in each of the Licenses (total 17.5% working interest in the event the entire Initial Drilling Program is completed, and an additional 17.5% working interest in the event the Optional Drilling Program is completed), for an aggregate 35% working interest earned for drilling all wells (55% including the seismic earning entitlement).
Terra Nova shall act as operator with respect to all drilling work contemplated by the Letter of Intent.
The Acquisition is subject to ordinary course due diligence, participation of third party working interest participants, the signing of a definitive agreement, and regulatory approvals.
In connection with the Acquisition, Terra Nova entered into an engagement letter dated March 23, 2012 (the "Engagement Letter") with Macquarie Private Wealth Inc. (Canada) (the "Agent") acting as agent on a commercially reasonable basis, pursuant to which Terra Nova intends to complete a brokered private placement of units (the "Units") for aggregate gross proceeds of up to CAD $10 million (the "Financing"). The Units will be offered at a price of CAD$0.25 per Unit and be comprised of one common share of Terra Nova (the "Common Shares") and one share purchase warrant ("Warrant"). Each Warrant will entitle the subscriber to purchase an additional Common Share at a price of CAD$0.30 for 24 months from the date of closing. Upon provision of 30 days notice to subscribers, the expiry date of the Warrants will be accelerated if the Common Shares trade in excess of CAD$0.70 for 20 consecutive trading days. The Agent has been granted an option to increase the size of the Financing by up to 10%. In connection with the Financing, the Agent will receive a cash commission equal to 8% of the gross proceeds raised under the Financing. The Agent will also receive agent's options to purchase that number of Common Shares equal to 8% of the total number of Units sold in the Financing (the "Agent's Options"). The Agent's Options will be exercisable at a price of CAD$0.25 for a period of 24 months from the Closing Date. The Agent will also be paid a corporate finance fee and will be reimbursed for its expenses in relation to the Financing.
The Common Shares and Warrants comprising the Units, Agent's Options and Common Shares issued on the conversion or exercise of such securities, as applicable, will be subject to a hold period of four months and one day from the closing date in accordance with the rules and policies of the TSX Venture Exchange and applicable Canadian securities laws.
Completion of the Financing is subject to the satisfaction of customary conditions precedents to closing including TSX Venture acceptance.
The gross proceeds of the Financing will be used to fund the Acquisition.
The common shares of Terra Nova are currently halted and will continue to be halted pending TSX Venture approval of the Acquisition and a subsequent news release by Terra Nova which will include detailed geological information in respect of the Licenses.
Norman J. Mackenzie, recently appointed Chief Executive Officer of Terra Nova, stated in regard to this opportunity to move the Corporation in a new direction. "I am excited and very confident that the acquisition of 3D seismic on the farmout lands subject to this acquisition will lead to a multitude of drilling locations. The fiscal regime in Australia is attractive and operational infrastructure, equipment and personnel are readily at hand".
Forward looking information
This news release contains forward-looking information relating to the proposed Acquisition and proposed Financing and other statements that are not historical facts. Such forward-looking information is subject to important risks, uncertainties and assumptions. The results or events predicated in this forward-looking information may differ materially from actual results or events. As a result, you are cautioned not to place undue reliance on this forward-looking information.
Forward looking-information is subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what is currently expected. These factors include, the expectation that the Acquisition and Financing will proceed as planned, oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, the inability to settle the definitive terms of the farmout arrangements, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, reliance on key personnel, regulatory risks and delays, including risks relating to the acquisition of necessary licenses and permits, environmental risks and insurance risks.
You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Corporation may elect to, the Corporation is under no obligation and does not undertake to update this information at any particular time, except as required by law.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state in the United States in which such offer, solicitation or sale would be unlawful. The securities referred to herein 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 registration requirements.
About Terra Nova Minerals Inc.
Terra Nova Minerals Inc. is a Calgary based mining company, with common shares trading on the TSX Venture Exchange under the symbol "TGC".
Neither the 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.