Gespeg Copper Resources Inc.

TSX VENTURE : GCR


Gespeg Copper Resources Inc.

October 22, 2012 09:00 ET

Gespeg Announces Brokered Private Placement and Concurrent Shares for Debt Settlement

SASKATOON, SASKATCHEWAN--(Marketwire - Oct. 22, 2012) -

THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

GESPEG COPPER RESOURCES INC. (the "Company" or "Gespeg") (TSX VENTURE:GCR) is pleased to announce that it has engaged MGI Securities Inc. ("MGI" or the "Agent") to act as agent on a best efforts basis in connection with a brokered private placement to raise gross proceeds of up to $1,750,000 (the "Private Placement"). The terms of the Private Placement are summarized below.

Concurrent with the Private Placement, Gespeg intends to settle a total of $772,920 of debt (the "Debt") with 49 North Resources Inc. (the "Shares for Debt Settlement"). The Debt consists of a promissory note payable to 49 North in the principal amount of $772,920 which was assumed by Gespeg in connection with its Qualifying Transaction (see Gespeg's news release dated December 30, 2011) . Pursuant to the Shares for Debt Settlement Gespeg will issue 49 North 2,576,400 common shares in the capital of Gespeg (at a deemed price of $0.30 per shares) in exchange for the retirement of the principal amount of the Debt and such additional common shares in the capital of Gespeg (also at a deemed price of $0.30 per share) to settle the 8% interest which has accrued on the Debt.

Under Multilateral Instrument 61-101- Protection of Minority Security Holders in Special Transactions ("MI 61-101") 49 North is a "related party" to Gespeg and the Shares for Debt Settlement is classified as a "related party transaction". The proposed shares for debt transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of the common shares issued to 49 North nor the fair market value of the proposed transaction exceeds 25% of Gespeg's market capitalization, as described in section 5.5 and 5.7 of MI 61-101.

It is possible that a material change report in respect of this transaction may not be filed at least 21 days in advance of the anticipated closing date of the issuance of the common shares to the related party. Gespeg believes a shorter period between this disclosure and the issuance of common shares is reasonable in light of its need to satisfy its outstanding debts in timely manner and the relative size of the related party transaction.

Private Placement

Under the Private Placement Gespeg will issue up to $1,000,000 in flow-through units. Gespeg Copper will issue up to 1000 units at a price 1000$ per unit. Each flow through unit will consist of 3200 flow through shares at .25 cents and 1000 common shares at .20 with one half warrant per common shares .Each whole warrant shall entitle the holder to purchase one additional common share (non-flow through) of Gespeg Copper at a per share price of $0.25 for a period of 24 months from closing of the offering.

Additionally, Gespeg Copper will issue up to 750 non-flow through units at a per unit price of $1000 for gross proceeds of up to $750,000. Each Non-Flow Through Unit will consist of 5000 common shares at .20 (non-flow through) with one half warrant per common share, each warrant entitling the purchase of one common share (non-flow through) of Gespeg Copper at a per share price of $0.25 for a period of 24 months from closing of the offering.

If the Common Shares close for 20 consecutive trading days at a volume weighted average trading price above $0.35, the Company will have the right to require conversion of the Warrants (the "Acceleration Right") at the exercise price therefor by providing a notice (the "Conversion Notice") to the Warrant holders via news release. Upon issuance of the Conversion Notice the holder must exercise the Warrants then held in accordance with their terms within 20 days of receipt of such notification (the "Conversion Deadline"), after which Conversion Deadline any unexercised Warrants will be deemed to have expired.

The FT Shares and the Units will be made available by way of private placement exemptions in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and such other jurisdictions within and outside of Canada as may be agreed upon by the Agent and Gespeg.

On closing of the Private Placement Gespeg will pay the Agent a cash commission equal to 8% of the gross proceeds of the FT Shares and Units placed by the Agent and will issue the Agent non-transferable broker warrants (the "Agent's Warrants") equal to 8% of the aggregate number of FT Shares and Units placed by the Agent. Each Agent's Warrant will entitle the Agent to purchase one Common Share at a price of $0.25 per Common Share for a period of 24 months following the closing of the Private Placement. The Agent's Warrants are subject to the Acceleration Right. Gespeg will also reimburse the Agent for reasonable fees and expenses incurred in connection with the Private Placement.

The gross proceeds from the sale of the FT Shares will be used by the Company to incur Canadian Exploration Expenses ("CEE") (within the meaning of the Income Tax Act (Canada) (the "ITA")), which will qualify as "flow-through mining expenditures" for the purposes of the ITA, related to the exploration of Gespeg's mineral properties in Quebec. The proceeds from the sale of the Units will be used to fund the continued exploration of Gespeg's mineral properties in Quebec and for general working capital purposes.

Closing of the Private Placement and the Shares for Debt Settlement is subject to a number of conditions including receipt of all necessary corporate and regulatory approvals, including the approval of the TSX Venture Exchange. All securities issued in connection with the Private Placement and the Shares for Debt Settlement will be subject to a statutory hold period of four months and a day from the date of issuance in accordance with applicable securities law.

About Gespeg Copper: Gespeg Copper is dedicated to creating shareholder value through the discovery of new copper deposits in the underexplored region of Gaspé, Québec, Canada.

The Gaspé Peninsula is a prolific copper district, having hosted the historic Noranda Mines camp, in operation from 1954 to 1999. The grades produced from this mine were among the highest mined to date.

This news release contains certain statements that may be deemed "forward-looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although Gespeg Copper believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or realities may differ materially from those in forward looking statements. Forward looking statements are based on the beliefs, estimates and opinions of Gespeg Copper management on the date the statements are made. Except as required by law, Gespeg Copper undertakes no obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions, or other factors, should change

Neither TSX Venture Exchange nor its Regulations Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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