Detector Exploration Ltd.

March 11, 2009 16:36 ET

Detector Exploration Ltd.: Additional Loan From Insider and Provision of Security for Loans

CALGARY, ALBERTA--(Marketwire - March 11, 2009) - Detector Exploration Ltd. ("Detector") (TSX VENTURE:DEX) announces that Detector:

(a) has approved the borrowing of funds on a demand basis from Ronald E. Alexander ("Alexander") as follows:

(i) the loan amount is up to $400,000 (to be determined by Alexander);

(ii) the loan shall pay interest at 12% per annum;

(iii) repayment of the loan can be demanded at any time by Alexander (on 30 days prior notice);

(iv) Detector can repay all or any portion of the loan at any time;

(v) the loan shall be fully secured by a general security agreement and land charge in favour of Alexander (see below);

(vi) the loan is not convertible into any securities of Detector.

(b) has approved the amendment of the terms of a prior $200,000 demand loan made by Alexander in November, 2008 as follows:

(i) the loan shall be fully secured by a general security agreement and land charge in favour of Alexander (see below);

(c) has approved providing Alexander with general security over all of Detector's assets by executing and delivering a General Security and Land Charge in favour of Alexander.

It is expected that the new loan will be provided sometime in March, 2009. It is not expected that the documents related to the loan will be signed until the actual advance is made. Alexander has not signed any agreement to irrevocably provide the loan funds. Alexander may elect not to proceed with the loan transaction for any reason determined by Alexander. Since the loans are demand loans it is expected that the loans will be evidenced with simple promissory notes (i.e. no formal long form loan agreement). The security will be provided pursuant a long form general security agreement.

If Alexander loans the maximum amount of $400,000 in new funds then the total amount of borrowings by Detector from Alexander will be $600,000 (not including accrued interest). All of the amounts owing to Alexander will be covered by the security.

Detector has no bank loans and has no outstanding security in favour of any financial institution. Thus it is expected that the security granted to Alexander shall qualify for first priority status.

As Ronald E. Alexander is President, C.E.O. and Director of Detector, the borrowing of the loan from Ronald E. Alexander is a "related party transaction" within the meaning of Multilateral Instrument 61-101 (incorporated by reference into TSX-V Policy 5.9). As a related party transaction, the following additional disclosures are provided (following the listing of disclosures in Section 5.2 of MI 61-101).

The purpose of the loan from the perspective of Detector is to provide Detector with capital needed to fund continuing activities. Alternative funding is not available within the time period required. Since the loan amount only involves up to an additional $400,000, little effect on Detector's business and affairs is expected from the loan.

Ronald E. Alexander, through his investment in the loan will be entitled to receive interest and return of the principal in priority to shareholders.

The review and approval process that has been adopted by Detector for this transaction is as follows:

a) the Board of Directors of Detector has already approved the borrowing of the funds and in particular the appropriate interest rate to pay given market conditions, risk factors and lack of immediately available alternative sources of capital;

b) Detector has determined that distribution of an information circular to shareholders, preparation and distribution of a formal valuation and seeking of Detector shareholder approval of the Debenture issue is not necessary under MI 61-101 (including TSX-V policy 5.9 which incorporates such policy by reference) because:

(i) the transaction being a simple loan transaction (with no securities being issued) does not fall within the types of transactions listed in paragraphs of (a) -(g) of the definition of related party transaction for which MI 61-101 would require a Formal Valuation;

(ii) the transaction being a loan on reasonable commercial terms that are not less advantageous to Detector (as compared to a loan that might be obtained from a person dealing at arm's length to Detector) and since the loan is not convertible into equity and is not repayable with equity, the loan transactions fall with an exemption to the minority approval requirements described in section 5.7(1)(f) of MI 61-101;

d) the disinterested directors of Detector (i.e. those other than Alexander) have all approved the transactions;

Detector is an oil and gas corporation whose shares are listed for trading on TSX Venture Exchange Inc. under the symbol DEX.

As of March 10, 2009 Detector has outstanding 11,918,701 Common Shares and 590,000 options to acquire Common Shares (under Detector's stock option plan). A total of 1,237,500 additional Common Shares would be issuable if the entire amount of $495,000 convertible debentures outstanding were converted at the conversion price currently in effect (i.e. $0.40). A total of 618,750 additional Common Shares would be issuable if the maximum number of warrants were issued upon exercise of the convertible debentures and all the warrants were exercised.

The officer responsible for issuance of this press release and who may be contacted for further information is Ronald E. Alexander.

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.

Contact Information

  • Detector Exploration Ltd.
    Ronald E. Alexander
    (403) 264-1880
    (403) 265-9105 (FAX)