J.A.G. MINES LTD.
TSX VENTURE : JML

J.A.G. MINES LTD.

January 27, 2010 12:49 ET

J.A.G. Mines Ltd. (TSX VENTURE: JML) Oil and Gas Exploration Permits Transfer Update

MONTREAL, QUEBEC--(Marketwire - Jan. 27, 2010) - J.A.G. Mines Ltd. ("JAG") (TSX VENTURE:JML) wishes to present an update on the transfer of its 16 Oil and Gas exploration permits ("Oil and Gas Properties") to Olitra Inc. These permits are located in the Temiscouata, Lac St-Jean and Charlevoix regions of Quebec covering an area of 332,790 hectares or 932,000 acres.

 

On February 13, 2008, JAG had announced the sale of the Oil and Gas Properties to its then fully owned subsidiary Olitra in exchange for the issuance of 12 million Olitra common shares at a price of $0.025 per share for a value of $300,000. This value represented the sum of JAG's acquisition costs as well as the value of the JAG financed exploration completed as of that date. At the same time, Olitra had announced its intention to complete a non-brokered private placement consisting in the issue of 6 million common shares at $0.025 per share for a total of $150,000.

 

These transactions were subject to TSX Venture approvals which were applied for on February 14, 2008.

 

Following certain observations from the Exchange regarding the proposed Olitra capital structure, JAG and Olitra modified the proposed transaction as follows:

 

The transfer of the Oil and Gas Properties was to be done in exchange for the issuance of 12 million common shares of Olitra at a price of $0.05 per share (a value of $600,000) and a non-brokered Private Placement of 6 million common shares at a price of $0.05 per share for a consideration of $300,000. JAG applied to the Exchange for the approval of the transaction under the new conditions.

 

On April 30, 2008, the Exchange conditionally approved the proposed transactions as well as the Olitra Private Placement subject to various conditions including the SEDAR filing of a geological report prepared according to NI 51-101.

 

On July 8, 2008, JAG announced the filing with the Exchange of a NI 51-101-compliant report prepared by Paul Laroche, petroleum geologist and geophysicist, with the participation of Marc Richer-Laflèche and Geneviève Camiré, both P. Geos. This report presented a summary of the geo-scientific data obtained by JAG since 2006, a compilation of historical work performed on the Oil and Gas Properties, a proposed exploration program using the historical data and a timetable of current and future work. JAG stated that it would wait for the acceptance of the report by the Exchange prior to filing it on SEDAR and making it available to the public. Following the Exchange review the report was SEDAR filed on August 25, 2008.

 

In addition, as long as all the conditions outlined in its conditional approval of April, 2008 had been met, the Exchange issued on October 7, 2008 a bulletin accepting the filing of the documents regarding the transfer by JAG of a 30% interest in Olitra as well as the completion of a $300,000 private placement consisting in the issuance of 6 million shares at $0.05 each.

 

Olitra effectively received from eight (8) arms-length subscribers ("Initial Investors") $300,000, of which $150,000 was received in 2008 and $150,000 in 2010. In view of the favorable market conditions then existing in the Oil and Gas sector JAG did not proceed with the transfer of the Oil and Gas Properties to Olitra.

 

As shown in the continuous disclosure information filed on SEDAR by JAG over the intervening period, it had continuously remained the sole owner of the Oil and Gas Properties. It had also kept the investors informed on the positive results and development of the properties following its various oil and gas exploration program phases. As well during 2008 and 2009 JAG had aggressively continued gold exploration on its 77 claims Belleterre property (1,153 hectares) located in the Témiscamingue area of Quebec.

 

Recently in light of the completed exploration work, the general market conditions and the proposed future oil and gas exploration budgets, a transfer of JAG's interest in the Oil and Gas Properties in favor of Olitra was renegotiated by all parties involved including the Initial Investors.

Under the new terms and conditions, the trans

fer of the Oil and Gas Properties will be completed in exchange for the issuance of Olitra common shares at a price of $0.05 each and whose total value will be based on the sum of the following: i) the value of the deferred reported and committed exploration costs paid for by JAG on the Oil and Gas Properties prior to the transfer; ii) the total acquisition costs of the Oil and Gas Properties; iii) the Income tax credits received by JAG; and iv) the total of the fees paid to "Institut National de recherche scientifique" ("INRS") as exploration expenses according to the term of research contracts signed with INRS up to a maximum of $437,937.

 

Specifically, many tranches of Olitra common shares can potentially be issued to JAG:

 

i) a first tranche to reflect the historical financial data filed by JAG for the 9 month period up to September 30, 2009, covering cumulative acquisition and exploration costs, as well as Income Tax credits received. Accordingly, based on such information supplied by JAG, the number of shares to be issued by Olitra within this first tranche is 20,865,040, or 77.7% of Olitra share capital.

 

ii) a second tranche will be issued upon filing of the Audited yearly financial statements to December 31, 2009, taking into consideration the added acquisition and committed exploration costs for the three (3) month period between September 30, and year-end 2009, and

 

iii) a third tranche once the balance of the total value of the research contracts with INRS are known.

 

In addition, in accordance with the Exchange published administrative guidelines regarding the capital structure of certain operations, Founder Shares under such guidelines can be issued up to 15% of the issued share capital of an issuer upon listing, the parties have reserved the possibility to adjust upward the number of such shares issued to JAG by Olitra to the maximum of 15%.

 

As part of this transaction, Olitra intends to complete a $500,000 Private Placement with subscribers dealing at arms length and which will consist in the issuance of 4 million treasury shares at a price of $0.125 per share.

 

The Exchange has conditionally approved the terms of the Oil and Gas Property transfer conditions to Olitra as well as its proposed $500,000 private placement.

 

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accept responsibility for the adequacy or accuracy of this release.

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