Balloch Resources Ltd.
TSX VENTURE : BAH

September 02, 2005 14:37 ET

Balloch Resources Announces $17 Million Private Placement Financing and Agreement to Acquire 23.33% Interest in Kinross Forrest Ltd.

TORONTO, ONTARIO--(CCNMatthews - Sept. 2, 2005) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Balloch Resources Ltd. (TSX VENTURE:BAH) is pleased to announce today that it has entered into an agreement with GMP Securities Ltd., pursuant to which GMP and Quest Capital Corporation will act as agents on a best efforts basis in connection with a private placement of up to 13.6 million subscription receipts of the Company, at a price of $1.25 per subscription receipt for gross proceeds of up to $17 million. Each subscription receipt will entitle the holder to receive one common share of the Company without payment of any additional consideration, subject to adjustment in certain events.

The gross proceeds of the offering less the agents' estimated out-of-pocket expenses will be held in escrow and will be released to Balloch upon satisfaction of certain escrow release conditions. If the escrow release conditions are not satisfied prior to December 31, 2005, the escrowed proceeds will be used by Balloch, together with other funds on hand, to repurchase the subscription receipts.

The subscription receipts will be automatically exercised upon the satisfaction of escrow release conditions including the filing of a National Instrument 43-101 technical report in respect of the properties, lands, and concessions, comprising the Kamoto joint venture assets in the Democratic Republic of Congo, and receipt of all requisite shareholder and regulatory approvals.

The offering is scheduled to close on or about October 6, 2005 and is subject to certain conditions including, but not limited to, the receipt of all necessary shareholder and regulatory approvals including the approval of the TSX Venture Exchange.

Balloch has agreed to pay the agents a commission equal to 6.0% of the gross proceeds of the offering. In addition, Balloch has agreed to issue to the agents compensation warrants to purchase that number of common shares of Balloch as is equal to 4.0% of the number of subscription receipts sold pursuant to the offering. The compensation warrants will be exercisable for 12 months following the closing of the offering at an exercise price of $1.45 per share.

Balloch also announced today that it has entered into an agreement with Kinross Gold Corporation to purchase from Kinross a 23.33% ownership interest in Kinross Forrest Ltd. (KFL), the owner of a 75% interest in the Kamoto joint venture, for $5.45 million. Following completion of the purchase and sale, Kinross will hold a 11.67% ownership interest in KFL. Pursuant to an option agreement effective July 29, 2005 between the Company and the KFL shareholders, Balloch had previously obtained an option to acquire all of the issued and outstanding shares of KFL as described in the Company's August 2, 2005 press release.

The net proceeds of the offering will be used to fund the completion of a feasibility study in respect of the Kamoto joint venture assets and to fund the purchase of the 23.33% ownership interest in KFL from Kinross.

Balloch is a mineral exploration company with a 10% net profits interest in the El Molino mining concession owned by Lumina Copper Corp. The El Molino project lies contiguous to Lumina's El Galeno mining concessions in the Yanacocha district in Peru.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Balloch Resources Ltd.
    Thomas Pladsen
    President and CEO
    (647) 287-3778