Era Resources Inc.
TSX VENTURE : ERX

Era Resources Inc.

October 27, 2016 22:02 ET

Era Resources Inc. Announces Proposed Financing with its Major Shareholder

TORONTO, ONTARIO--(Marketwired - Oct. 27, 2016) -

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

Era Resources Inc. ("Era" or the "Company") (TSX VENTURE:ERX) is pleased to announce it has entered into a binding agreement (the "Letter Agreement") with its major shareholder, Sentient Executive GP IV, Limited, acting as the general partner of Sentient GP IV, L.P., itself acting as the general partner of Sentient Global Resources Fund IV, L.P. (collectively, "Sentient") in connection with the proposed issuance of US$7,000,000 principal amount of convertible unsecured debentures (the "Debentures") of the Company (the "Transaction"). In addition to the Company, its wholly-owned subsidiaries, Yandera Mining Company Limited and Marengo Mining (PNG) Limited (collectively, the "PNG Subsidiaries") have executed the Letter Agreement as co-issuers of the Debentures.

Sentient intends to subscribe for the Debentures, which shall be issued on a private placement basis, following the approval of the Company's shareholders at the annual general and special meeting to be held on November 24, 2016 (the "Meeting"). Sentient is a "related party" of the Company as Sentient is a person that has beneficial ownership of, and control or direction over, directly or indirectly, securities of the Company carrying more than 10% of the voting rights attached to all the Company's outstanding voting securities. As a result, the transaction is considered a related party transaction for purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") and TSX Venture Exchange ("TSXV") Policy 5.9 - Protection of Minority Security Holders in Special Transactions. As a result, the Transaction will be subject to "minority shareholder approval" (within the meaning of MI 61-101) and as such the Company will be seeking such approval at the Meeting in accordance with TSXV policies and MI 61-101. The Transaction is also subject to approval by the TSXV.

The Debentures will mature on December 31, 2017, (the "Maturity Date"); the Debentures will not bear interest. Each US$1,000 principal amount of Debentures will be convertible into common shares of the Company ("Common Shares") at a conversion price of C$0.25 per Common Share (the "Conversion Price"). Each Debenture will be convertible, in whole or in part, at the option of Sentient and at any time, into Common Shares at the Conversion Price, for each US$1,000 principal amount of Debentures, subject to adjustment in certain circumstances as described below. In addition, the Debentures will be guaranteed by each of Marengo Mining (Australia) Limited and Yandera Mining Company (Holdings) Pty Limited.
Pursuant to the terms of the Letter Agreement, the Company and Sentient have agreed that the conversion price for the currently outstanding debentures of the Company in the aggregate principal amount of US$59,926,130 held by Sentient pursuant to the terms of prior debenture financings between the Company and Sentient (the "Prior Financings") will be adjusted to C$0.25 per common share of the Company upon the Company receiving the necessary shareholder approval at the Meeting and the requisite approvals from the TSXV.

As of the date hereof, Sentient and its related entities currently hold 2,499,530 Common Shares, representing approximately 22% of the issued and outstanding Common Shares. If the Transaction is completed and the Debentures are issued to Sentient then, assuming the conversion into Common Shares of the Debentures, Sentient could be issued up to an additional 36,699,600 Common Shares, for a total of 39,199,130 Common Shares owned, representing approximately 81.5% of the then issued and outstanding Common Shares.

If, in addition to the Debentures issuable under the Transaction, Sentient also converts all of the debentures issued pursuant to the Prior Financings into Common Shares, Sentient could be issued up to an additional 271,725,627 Common Shares, for a total of 310,924,757 Common Shares owned, representing approximately 97.2% of the then issued and outstanding Common Shares.

The proceeds from the Transaction will primarily be used for the development of the Company's Yandera Project, including ongoing exploration; business development opportunities; and general corporate purposes.

Cautionary Statement Regarding Forward-Looking Information

This news release contains forward looking information, including but not limited to statements with respect to ongoing exploration at Yandera and Pomiea. Such forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect" and "intend" and statements that an event or result "may", "will", "should", "could", or "might" occur or to be achieved and any other similar expressions.

In providing the forward-looking information in this news release, the Company has made numerous assumptions regarding: (i) the accuracy of exploration results received to date; (ii) anticipated costs and expenses; (iii) the accuracy of the Company's mineral resource estimate; (iv) the future price of copper and molybdenum; and (v) that the supply and demand for copper, molybdenum, and other metals develop as expected. Although management believes that the assumptions made and the expectations represented by such information are reasonable, there can be no assurance that the forward-looking information will prove to be accurate. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those contained in the forward-looking information, including actual results of exploration activities, changes in market conditions, risks relating to international operations, fluctuating metal prices and currency exchange rates, and other risks of the mining industry. Some of these risks, uncertainties and other factors are described under the heading "Risks Factors" in the Company's annual information form available on the Company's profile on SEDAR at www.sedar.com. Forward-looking information is based on estimates and opinions of management at the date the statements are made. Except as required by applicable securities laws, Era does not undertake any obligation to update forward-looking information even if circumstances or management's estimates or opinions should change. Readers should not place undue reliance on forward-looking information.

For further information on the Yandera Project and the resources contained therein, please refer to the Company's Canadian NI 43-101 technical report "NI 43-101 Technical Report: Updated Resource Estimate Yandera Copper Project, Papua New Guinea" dated June 19, 2015, and with an effective date of May 1, 2015, which is available on the Company's website and at the SEDAR website at www.sedar.com.

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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