Canoro Resources Ltd.
TSX VENTURE : CNS

Canoro Resources Ltd.

April 28, 2010 09:00 ET

Canoro Resources Ltd. Announces Conditional Approval of TSX Venture Exchange to Previously Announced Private Placement

CALGARY, ALBERTA--(Marketwire - April 28, 2010) -

THIS PRESS RELEASE IS NOT TO BE DISTRIBUTED TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Canoro Resources Ltd. ("Canoro" or the "Company") (TSX VENTURE:CNS) is pleased to announce that the TSX Venture Exchange ("TSXV") has provided its conditional approval to Canoro's private placement announced on April 19, 2010 (the "Private Placement"). The Private Placement is being conducted pursuant to an Investment Agreement with Mass Financial Corp. (the "Investor" or "Mass"), pursuant to which, among other things, the Investor will subscribe for up to 24,798,000 common shares of the Company ("Common Shares") on a non-brokered basis at a price of $0.13 per share for gross proceeds of approximately $3.22 million (US$3.18 million). As a result of the Private Placement, Mass will not become a new control person of Canoro, nor will there be a material effect on the control of the Company, and accordingly TSXV is not requiring shareholder approval to the Private Placement.

As part of the transactions contemplated by the Investment Agreement, the Company intends to conduct the previously announced rights offering (the "Rights Offering") by way of short form prospectus pursuant to which each holder of Common Shares will receive one right (the "Right") for each Common Share held, each Right entitling the recipient to acquire one Common Share at a price of $0.10. In connection with the Rights Offering, Mass has agreed to take up all shares not subscribed for by holders of Rights (the "Standby Commitment") and will receive warrants to purchase an additional number of Common Shares as is equal to 25% of the total Standby Commitment, at a price equal to the exercise price of the Rights and exercisable for a period of six months. Fully subscribed, the Rights Offering would yield total gross proceeds of approximately $13.9 million (US$13.7 million), prior to the exercise of any warrants.

Furthermore, the Company intends to implement the previously announced debt facility pursuant to which Mass has agreed to provide the Company with a US$35 million Senior Convertible Facility (the "Senior Facility"). The Senior Facility will have a two-year term and may be used to fund approved capital expenditures relating to projects in India. The Senior Facility bears interest at the RBC Base Rate plus 3.5% paid quarterly. Drawings under the Senior Facility are convertible into common shares of the Company based on the stock price at the time of drawing. In addition to the Senior Facility, the Investor has agreed to provide the Company with a US$40 million Structured Credit Facility to fund additional projects on terms to be agreed.

The Standby Commitment under the Rights Offering, including the issue to Mass of warrants, and the Senior Facility will be carried out in accordance with the requirements of TSXV, and will be subject to approval of the TSXV and of the shareholders of Canoro. The Company intends to seek such approval at a meeting of its shareholders to be held on or about June 2, 2010 and intends to complete the Rights Offering and implement the Senior Facility within one week of such shareholder approval. In connection with such shareholder approval, neither Mass nor any insider of Mass will be eligible to vote any Canoro shares which it holds or will acquire under the Private Placement. 

In connection with the investment by Mass, Mass has now agreed to reduce its initial appointment of directors to the Canoro Board from two to one concurrent with closing of the Private Placement. As a result, as previously announced, Messrs. John Boyd and Jeff Clarke will resign from the Canoro Board and Mr. Michael J. Smith, Chairman of Mass, will be appointed to the Canoro Board. Mr. Harley Winger will remain as a director. Upon completion of the Private Placement, Canoro's board will consist of five members until the next meeting of shareholders.

The foregoing transactions are subject to compliance with the conditions of the TSX Venture Exchange, any other applicable regulatory approvals and approval of the shareholders of Canoro to the extent required.

At such time as all shareholder approvals are secured and upon completion of a definitive agreement for the structured credit facility, in excess of $90 million in debt and equity financing will be available to Canoro to fund its current and future projects in India.

As Canoro has previously announced, the Company continues to work with all stakeholders towards the finalization of the Changpang deal, which Canoro believes will result in significant local employment, job training, improvement in infrastructure and revenue to the state of Nagaland as a result of the rehabilitation and development of the field.

In addition, as previously announced, the Government of India has approved the splitting of the production-sharing contract for Block AA-ON/7 into two parts, awarding a separate PSC for Nagaland. The Government of India has provided Canoro, as operator, with a draft PSC and has instructed Canoro to negotiate the final terms and conditions necessary to complete and sign the PSC.

Mass Financial Corp.

Mass Financial Corp. is a merchant bank actively involved in a broad range of activities related to the integration of banking, trading of commodities and natural resources, financing of commercial trade, and proprietary investing. More information concerning Mass can be found at www.massfinancialcorp.com

Visit the Company's website at www.canoro.com.

Reader Advisory

This news release contains certain forward-looking statements, which include assumptions with respect to (i) completion of the Private Placement; (ii) completion of the Rights Offering; (iii) completion of the Senior Facility; (iii) successful negotiation of the Senior Structured Facility and receipt of all required regulatory and other approvals; (iv) future capital expenditures; (v) success of operations; (vi) cash flow; and (vii) debt levels. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward-looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Canoro's control. Such risks and uncertainties include, without limitation, risks associated with oil and natural gas exploration, development, exploitation, production, geopolitical risks, 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, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general global economic conditions, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. Canoro's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what benefits, including the amount of proceeds, Canoro will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to Canoro or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Canoro does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy and accuracy of the contents of this news release.

Contact Information

  • Canoro Resources Ltd.
    Robert S. Wynne
    President and Chief Executive Officer
    +1 (403) 543-5741
    rswynne@canoro.com
    or
    Canoro Resources Ltd.
    Ryan Ellson
    Vice President, Finance and Chief Financial Officer
    +1 (403) 410-6777
    rellson@canoro.com
    or
    Canoro Resources Ltd.
    700 Elveden House
    717 Seventh Avenue SW
    Calgary, Alberta
    Canada T2P 0Z3
    www.canoro.com