Elkwater Resources Ltd.
TSX VENTURE : ELW

October 29, 2014 14:57 ET

Elkwater Resources Ltd. Announces Closing of Subscription Receipt Financing and Announces Flow-Through Financing Resulting in Aggregate Gross Proceeds of $100 Million

CALGARY, ALBERTA--(Marketwired - Oct. 29, 2014) -

NOT FOR DISSEMINATION IN THE UNITED STATES. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW.

Elkwater Resources Ltd. ("Elkwater" or the "Company") (TSX VENTURE:ELW) (to be renamed "Striker Exploration Corp.") is pleased to announce that the Company has closed a bought deal financing of subscription receipts of the Company co-led by Desjardins Capital Markets ("Desjardins"), TD Securities Inc. (together with Desjardins, the "Joint Bookrunners") and FirstEnergy Capital Corp. (together with the Joint Bookrunners, the "Co-Lead Underwriters"), and included Dundee Securities Ltd., Clarus Securities Inc., National Bank Financial Inc., Canaccord Genuity Corp., Cormark Securities Inc., GMP Securities L.P. and Scotia Capital Inc. (together with the Co-Lead Underwriters, the "Underwriters"), whereby the Company issued 240,000,000 Subscription Receipts at a price of $0.375 per Subscription Receipt for aggregate gross proceeds of $90.0 million (the "Offering"). Upon completion of the Flow-Through Offerings (as defined below), the Company will have raised aggregate gross proceeds of $100 million.

The Company and the same syndicate of Underwriters have entered into a bought deal agreement pursuant to which the Company will issue, on a private placement basis, 11,112,000 common shares of the Company ("Common Shares") to be issued on a "flow-through" basis pursuant to the Income Tax Act (Canada) (the "Tax Act") (the "CEE Flow-Through Shares") at an issue price of $0.45 per CEE Flow-Through Share for aggregate gross proceeds of $5,000,400 (the "CEE Offering"). In addition, the Company has entered into an agreement with a subscriber pursuant to which the Company will issue, on a non-brokered private placement basis, 11,905,000 Common Shares to be issued on a "flow-through" basis pursuant to the Tax Act (the "CDE Flow-Through Shares") at an issue price of $0.42 per CDE Flow-Through Share for aggregate gross proceeds of $5,000,100 (the "CDE Offering", and together with the CEE Offering, the "Flow-Through Offerings"). Closing of the CEE Offering and the CDE Offering is anticipated to occur on or about November 5, 2014 and is subject to the approval of the TSX Venture Exchange (the "TSXV"). The gross proceeds from the CEE Offering and the CDE Offering will be used to incur and renounce Canadian exploration expenses and Canadian development expenses, respectively, pursuant to the Tax Act.

The Subscription Receipts were issued pursuant to a subscription receipt agreement (the "Subscription Receipt Agreement") between the Company, the Co-Lead Underwriters and a trust company, as escrow agent. Pursuant to the Subscription Receipt Agreement, the gross proceeds from the Offering will be held in escrow pending delivery of notice (the "Release Notice") of all conditions to the completion of: (i) the previously announced acquisition of all of the issued and outstanding shares of Exoro Energy Inc. (the "Exoro Acquisition"); and (ii) the previously announced acquisition of certain assets in the Killam area of East Central Alberta (the "Killam Asset Acquisition" and together with the Exoro Acquisition, the "Acquisitions") (other than the funding of the aggregate cash consideration required pursuant to the Exoro Acquisition and the payment of the purchase price in respect of the Killam Asset Acquisition), being met (the "Escrow Release Conditions"). If: (i) the Escrow Release Conditions are not satisfied by 5:00 p.m. on December 20, 2014; (ii) either of the agreements with respect to the Acquisitions are terminated in accordance with their respective terms at any earlier time; or (iii) Elkwater has advised the Underwriters or announced to the public that it does not intend to proceed with one or both of the Acquisitions, holders of Subscription Receipts shall receive the full subscription price attributable to the Subscription Receipts together with any interest that was earned thereon during the term of escrow.

Each Subscription Receipt will entitle the holder thereof to receive one Common Share and one-half of one Common Share purchase warrant (each whole warrant being a "Warrant"), without any further payment or action on the part of the holder thereof, upon the Escrow Release Conditions (as defined below) having been satisfied and the earlier of: (i) March 2, 2015; and (ii) the issuance of a final passport decision document evidencing a receipt on behalf of each of the securities regulatory authorities in each of the provinces of Canada in which Subscription Receipts have been sold (the "Qualifying Provinces"), pursuant to Multilateral Instrument 11-102 -Passport System (the "Final Receipt") for a final prospectus (the "Prospectus") qualifying the issuance of the Common Shares and the Warrants underlying the Subscription Receipts. Each Warrant shall entitle the holder thereof to purchase one Common Share (a "Warrant Share") at a price of $0.50 per Warrant Share until April 29, 2016. The Warrants shall provide that, if during the 18 month period ending April 29, 2016, the Company's volume weighted average share price for 20 consecutive trading days on the TSX Venture Exchange (the "TSXV") (or other applicable exchange) equals or exceeds $0.65 per Common Share, the Company may give notice to the holders of the Warrants that the Warrants will expire 30 days from the date of receipt of the notice, during which 30 day period the holders may exercise their Warrants in accordance with their terms.

The Company has agreed to use its reasonable commercial efforts to file the Prospectus qualifying the Common Shares and the Warrants to be issued upon the exercise of the Subscription Receipts in each of the Qualifying Provinces and obtain the Final Receipt within 30 days from the date of delivery of the Release Notice.

The Offering is subject to the final approval of the TSXV.

This press release is not an offer of subscription receipts or common shares for sale in the United States. The subscription receipts and common shares may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended, or an exemption from such registration. The Company has not registered and will not register the subscription receipts or common shares under the U.S. Securities Act of 1933, as amended. The Company does not intend to engage in a public offering of common shares in the United States.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

About Elkwater

Elkwater is a publicly traded Calgary, Alberta-based company engaged in the oil and gas exploration and development industry. Elkwater shares are listed on the TSX Venture Exchange under the trading symbol "ELW".

Forward-Looking and Cautionary Statements

Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, timing for satisfaction of the Escrow Release Conditions, the closing of the Flow-Through Offerings, the renunciations under the Tax Act and changing the name of the Company to "Striker Exploration Corp." . Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. The forward-looking statements are founded on the basis of expectations and assumptions made by Elkwater which include, but are not limited to, the timing for and completion of the Acquisitions, the ability of the Company to incur and renounce Canadian exploration expense and Canadian development expense and receiving all approvals (including regulatory approvals) in a timely manner. Forward-looking statements are subject to a wide range of risks and uncertainties, and although Elkwater believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized.

Although the Company believes that the expectations reflected in its forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because the Company can give no assurance that such expectations will prove to be correct. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.

Any number of important factors could cause actual results to differ materially from those in the forward -looking statements including, but not limited to, regulatory and third party approvals not being obtained in the manner or timing anticipated, the ability to implement corporate strategies, the state of domestic capital markets, the ability to obtain financing, changes in general market conditions and other factors more fully described from time to time in the reports and filings made by Elkwater with securities regulatory authorities.

Forward-looking information is based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward-looking information. The forward-looking information contained in this press release is made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward looking information contained in this press release is expressly qualified by this cautionary statement.

This press release is not an offer of subscription receipts or common shares for sale in the United States. The subscription receipts and common shares may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended, or an exemption from such registration. The Company has not registered and will not register the subscription receipts or common shares under the U.S. Securities Act of 1933, as amended. The Company does not intend to engage in a public offering of common shares in the United States.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

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

  • Elkwater Resources Ltd.
    Doug Bailey
    President and Chief Executive Officer
    403-262-0242

    Elkwater Resources Ltd.
    Neil Burrows
    Vice President, Finance and Chief Financial Officer
    403-262-0242