Channel Resources Ltd.
TSX VENTURE : CHU

Channel Resources Ltd.

May 06, 2011 11:27 ET

Channel Resources Announces Closing of $7 Million Bought Deal Private Placement

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 6, 2011) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR OVER UNITED STATES NEWSWIRE SERVICES.

Channel Resources Ltd. ("Channel" or the "Company") (TSX VENTURE:CHU) is pleased to announce that it has completed its previously announced "bought deal" private placement (the "Private Placement") of 20,590,000 units (the "Units") for gross proceeds of $7,000,600, including 5,880,000 units issued pursuant to the exercise of the underwriter's over-allotment option. The Units were sold pursuant to an underwriting agreement entered into between Wellington West Capital Markets Inc. (the "Underwriter") and the Company. The Units were issued at a price of $0.34 per Unit, each Unit consisting of one common share in the capital of the Company (a "Common Share") and one-half of one Common Share purchase warrant (each whole warrant, a "Warrant"). Each Warrant will entitle the holder thereof to acquire one Common Share at a price of $0.50 for a period of 24 months from the date hereof.

The Underwriter was paid a cash fee equal to 7% of the gross proceeds from 20,440,000 Units and was issued 1,430,800 broker warrants (the "Broker Warrants"). Each Broker Warrant will be exercisable at any time to acquire one Common Share at a price of $0.40 for a period of 24 months from the date hereof.

Channel plans to use the net proceeds from the Private Placement to advance the Company's Tanlouka Gold Project in Burkina Faso, and for general corporate purposes.

The offering is subject to the receipt of all necessary regulatory approvals, including the final approval of the TSX Venture Exchange.

The securities will be subject to a resale restriction for a period of four months plus one day, expiring on September 7, 2011.

This news release is not an offer of Units for sale in the United States. The Common Shares, Warrants, Broker Warrants and Common Shares issuable upon exercise of the Warrants and Broker Warrants have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration.

About Channel Resources Ltd.

Channel Resources Ltd. is a Canadian TSX.V listed mineral exploration Company which has an option to earn a 90% interest in the Tanlouka Gold Project in Burkina Faso, West Africa, the terms of which the Company has already satisfied, and an option to earn 100% in the Fox Creek Lithium / Potash Brine Project in Alberta. At Tanlouka, Channel has recently discovered multiple mineralized zones that are now being explored and expanded through an aggressive exploration strategy. At Fox Creek, a bulk sample of brine sourced from producing natural gas wells is undergoing process testing to determine the most efficient method of producing various industrial minerals from the brine, including lithium carbonate, potash, bromine and borates. The Company is well financed to advance both projects and is actively searching for additional opportunities to expand its project portfolio.

Some of the statements contained herein are forward-looking statements which involve known and unknown risks and uncertainties. Without limitation, statements regarding potential mineralization and resources, exploration results, and future plans and objectives of the Company are forward looking statements that involve various degrees of risk. The following are important factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward looking statements: changes in the price of minerals, general market conditions, risks inherent in mineral exploration, risks associated with development, construction and mining operations, the uncertainty of future profitability and the uncertainty of access to additional capital. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements or the foregoing list of factors, whether as a result of new information or future events or otherwise. Further disclosure on risk factors is available in the Company's various corporate filings at www.sedar.com.

Neither 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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