Channel Resources Ltd.
TSX VENTURE : CHU

Channel Resources Ltd.

October 27, 2006 13:48 ET

Channel Resources Ltd.: Private Placement

KELOWNA, BRITISH COLUMBIA--(CCNMatthews - Oct. 27, 2006) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Channel Resources Ltd. (the "Company") (TSX VENTURE:CHU) has agreed to enter into a letter of engagement with Quest Securities Corporation (the "Agent") pursuant to which the Agent, as the agent of the Company, will agree to offer for sale by way of private placement, on a best efforts basis, up to 7,500,000 units ("Units") at a subscription price of $0.20 per Unit, each Unit comprised of one common share of the Company ("Common Shares") and one warrant (a "Warrant"), with each Warrant being exercisable for one Common Share ("Warrant Share") at an exercise price of $0.30 for a period of 12 months, and $0.40 for an additional period of 12 months. The Common Shares comprising part of the Units and the Warrant Shares will be subject to a four-month and one-day hold or restricted period under applicable securities legislation. The Warrants must be exercised if, at any time after the expiry of such hold period, the closing price of the Common Shares of the Company is $0.40 or more for a consecutive 20 business day period during the first 12 months or $0.50 or more for a consecutive 20 business day period during the second 12 month period.

The Agent will receive a cash commission of 7% of the gross proceeds of the Units. In addition, the Agent will receive a Warrant which will entitle the Agent to purchase Common Shares equal in number to 7% of the Units sold at an exercise price of $0.23 per Common Share at any time during the 24 months after the Closing Date.

The proceeds of the private placement will be used to fund a comprehensive exploration program including the Phase 3 drilling program on the El Mozo Property, Ecuador and for general corporate purposes.

Completion of the private placement, which is expected to take place on or before November 30, 2006 is subject to execution and delivery of standard documentation including an agency agreement and subscription agreements, and receipt of all required regulatory approvals and consents.

The Company has a total of 43,693,740 Common Shares issued and outstanding prior to the completion of the above referenced private placement.


The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this Release.

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