Canadian Quantum Energy Corporation

TSX VENTURE : CQM


Canadian Quantum Energy Corporation

November 12, 2012 07:00 ET

Canadian Quantum Closes $500,000 Convertible Debenture Financing

CALGARY, ALBERTA--(Marketwire - Nov. 12, 2012) - Canadian Quantum Energy Corporation ("Canadian Quantum" or the "Corporation") (TSX VENTURE:CQM) announced today that the Corporation has closed a $500,000 private placement of a secured convertible debenture ("Debenture"), subject to TSX Venture Exchange final approval. The Debenture will bear interest at the rate of ten percent (10%) per annum, payable monthly and will mature on May 30, 2014. The Debenture will be convertible at the holder's option into common shares of the Corporation at any time prior to the maturity date at a conversion price of $0.20 per common share. The Corporation can force conversion of the Debenture into common shares if the Corporation's common shares trade, on a 20 day volume weighted average basis, at or above $0.50. The security interest granted by Canadian Quantum under the Debenture is an undivided 25% interest in the Alexander Project, subject to the farmout to an arms' length third party on the upcoming new 16A-11 56 27 W4 Test Well ("16A-11 Test Well") and two associated option wells described below. In addition, the Corporation has granted to the holders of the Debenture and of the debenture in the principal amount of $1,000,000 issued on May 30, 2012, a right of first refusal to participate in the next flow-through offering of the Corporation.

No finder's fees were paid on this transaction. All securities issued in connection with the offering, including any common shares issued upon conversion of the debenture, will be subject to a four month hold period expiring on March 9. 2013 The net proceeds of the Debenture will be used for exploration programs and for general working capital.

Canadian Quantum is further pleased to announce that the Corporation has completed a farmout to an arms' length third party on a small portion of the Company's 50% owned, 27 section Alexander Property, located just north-east of Edmonton. The third party will participate in the drilling of the 16A-11 Test Well by paying 50% of the costs to earn a 30% interest. The third party also has the option to drill two additional wells from the same surface lease earning a 25% interest by paying 25% of the related costs. The earned lands for the farmout only relate to the specific spacing unit assigned to each well drilled. Canadian Quantum will maintain a 20% interest in the 16A-11 Test Well and a 25% interest in the two option wells and a 50% interest in the remaining lands. In addition, the third party has paid a $200,000 equalization payment to the Corporation.

Douglas Brett, President and CEO stated, "We are pleased to have secured additional financial support for the Corporation through the debenture financing and are excited to get drilling again at Alexander. The operator, Sundance Energy Corporation (TSXV trading symbol: "SNY") is in the process of licensing the 16A-11 Test Well which is anticipated to commence drilling operations before the end of the year. Based on the success of the 16A-11 Test Well drilling of the option wells is scheduled to occur early in the New Year. Our upcoming Alexander wells are specifically targeting the Detrital Sand that has been so successful in the offsetting producing oil wells just to the east of our land position."

About Canadian Quantum

Canadian Quantum Energy Corporation holds 640 gross acres at Turin, Alberta and 17,280 gross acres / 27 sections on the Alexander First Nations Permit in Central Alberta along with various interests in approximately 174,000 gross acres covered by four permits in the St. Lawrence Lowlands, Quebec Utica Shale Play.

This news release may contain certain forward-looking information. All statements included herein, other than statements of historical fact, is forward-looking information and such information involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. A description of assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in the Company's disclosure documents on the SEDAR website at www.sedar.com. The Company does not undertake to update any forward-looking information except in accordance with applicable securities laws.

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.

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