Fairmount Energy Inc.

Fairmount Energy Inc.

October 16, 2006 12:59 ET

Fairmount Energy Announces Increase to Private Placement

CALGARY, ALBERTA--(CCNMatthews - Oct. 16, 2006) -

Not for distribution to U.S. newswire services or for dissemination in the United States of America.

Fairmount Energy Inc. ("Fairmount" or the "Corporation") (TSX VENTURE:FMT) is pleased to announce that further to its press release issued earlier today it has increased its financing by an additional 500,000 common shares to be issued on a flow-through basis and has now entered into an engagement agreement with an underwriting syndicate led by GMP Securities L.P. and including Acumen Capital Finance Partners Limited (the "Agents") relating to the offering, on a commercially reasonable efforts basis, of up to 2,040,000 common shares on a flow-through basis ("Flow-Through Shares") at a price of $1.95 per share, for aggregate gross proceeds of $3,978,000. Fairmount has also granted to the Agents an option to purchase an additional 515,000 Flow-Through Shares at $1.95 per share for further proceeds of $1,004,250. The option is exercisable prior to closing. If fully subscribed the total gross proceeds of the offering would total $4,982,250. In consideration of their services, the Agents will receive a cash commission on the gross proceeds raised.

The Flow-Through Shares will be issued pursuant to prospectus exemptions available under applicable securities legislation in each of the provinces of Canada other than Quebec. Up to 300,000 Flow-Through Shares may be purchased by officers, directors and employees of the Corporation.

The net proceeds of the offering will be used to fund the Corporation's ongoing exploration and development activities. The proceeds from the sale of the Flow-Through Shares will be used to incur eligible Canadian Exploration Expenses ("CEE") and / or deemed CEE as defined in the Income Tax Act (Canada) which will be renounced in favor of the subscribers for the 2006 taxation year.

Closing of the offering is expected to occur on or about October 26, 2006 subject to the receipt of all requisite regulatory and stock exchange approvals. The shares issued pursuant to the offering will be subject to a four-month hold period from the date of the closings of the private placement. The Flow-Through Shares have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act.

ADVISORY: This press release contains forward-looking statements. More particularly, this press release contains statements concerning the anticipated closing date of the offering and the anticipated use of the proceeds of the offering.

Although Fairmount believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Fairmount can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties.

The closing of the offering could be delayed if Fairmount is not able to obtain the necessary regulatory and stock exchange approvals on the time lines it has planned. The offering will not be completed at all if these approvals are not obtained or some other condition to the closing is not satisfied. Accordingly, there is a risk that the offering will not be completed within the anticipated time or at all.

The forward-looking statements contained in this press release are made as of the date hereof and Fairmount undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

The TSX Venture Exchange Inc. does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Fairmount Energy Inc.
    Joseph S. Durante
    President and Chief Executive Officer
    (403) 355-0440
    Fairmount Energy Inc.
    Ryan Michaluk
    Vice President Finance and Chief Financial Officer
    (403) 355-0440