Lateral Capital (LCP-V) Feb 17, '14 has entered into a binding agreement to acquire a private company (PrivateCo) that has rights to earn an 80-per-cent interest in approximately 376,000 acres (net approximately 301,000 acres) in Saskatchewan. Lateral will acquire all of the issued and outstanding shares of PrivateCo for an aggregate purchase price of $4,750,000, comprised of cash in the amount of $750,000 and the issuance of an aggregate of 22,222,223 common shares in the capital of the Company at a price of $0.18 per share (the "PrivateCo Acquisition"). The Company and the shareholders of PrivateCo have negotiated a definitive purchase and sale agreement for the PrivateCo Acquisition. The Closing of the PrivateCo Acquisition will be subject to conditions customary for transactions of this nature including acceptance by the TSX Venture Exchange.
The Lands are one of the largest contiguous land positions in Saskatchewan and includes all conventional petroleum and natural gas rights from surface to basement. PrivateCo acquired two 2-D seismic lines totalling 24km in 2013 which identified a number of potential drilling locations. A larger (53km) 2D seismic program is being shot in February 2014 to detail the features identified, with the planned drilling of two exploratory wells. Well costs for a 1000m test are approximately $600,000 to drill, complete and tie-in. Lateral intends to capitalize on the favorable economic terms of the Saskatchewan government royalty regime and believes there is significant potential in this large acreage position.
An independent third party reviewed various land sale prices for exploration licenses from 2010 to 2013 published by Saskatchewan Energy and Mines and advised the Company that the purchase price is below the estimated value based on the lowest of the average sale values. The price for the land in offsetting acreages has been approximately $66.00 per acre. Mr. Murray Swanson, a director of the Company, is also a director and a shareholder of PrivateCo. In connection with the approval by the Company of the PrivateCo Acquisition, Mr. Swanson declared his personal interest in the PrivateCo Acquisition and abstained from voting on the approval of the PrivateCo Acquisition. The PrivateCo Acquisition is exempt from the valuation and minority approval requirements of Multilateral Instrument 61-101.
As announced previously the Company is currently assessing opportunities to acquire assets (in addition to the PrivateCo Acquisition), and if the Company is able to reach an agreement to acquire assets (details of which will be provided if agreement is reached) it intends to offer securities on a private placement basis to complete any such acquisition. Any such private placement will be subject to acceptance of the TSX Venture Exchange. |
