GTO Resources Inc.

October 27, 2006 14:21 ET

GTO Resources Inc. Enters Into Agreement to Acquire Finavera Gas Ltd.

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 27, 2006) - GTO Resources Inc. ("GTO" or the "Corporation") (NEX BOARD:GTR.H) is pleased to announce that it has entered into a letter of intent dated October 26, 2006 (the "Letter of Intent") to acquire Finavera Gas Ltd. ("Finavera"), a private Irish company which owns petroleum licences covering the Lough Allen Basin straddling the border between the Republic of Ireland and Northern Ireland (the "Transaction").

Highlights of the Transaction

Pursuant to the terms of the Letter of Intent, the Corporation will issue to the shareholders of Finavera approximately 41,437,283 common shares ("Common Shares") at a deemed price of CAD$0.75 per share for aggregate consideration of approximately $31,077,962. In addition, it is intended that warrants and options to purchase Common Shares will be issued to securityholders of Finavera in exchange for their outstanding Finavera warrants and options, respectively, on such terms and conditions as are acceptable to the TSX Venture Exchange (the "Exchange"). As the former securityholders of Finavera will own or control more than 50% of the Corporation upon completion of the Transaction, the Transaction is classified as a "Reverse Take Over" pursuant to Policy 5.2 of the Exchange and is subject to the approval of the Exchange. The Transaction is not a non-arm's length transaction pursuant to the policies of the Exchange.

In addition, it is intended that the Transaction will constitute the Corporation's "Reactivation Transaction" as such term is defined in Exchange Policy 2.6. In connection with the Transaction, the Corporation will apply to the Exchange to be transferred from NEX to the Exchange. It is expected that upon completion of the Transaction, the Corporation as the resulting issuer will be listed as a Tier 2 Oil & Gas Issuer under the policies of the Exchange.

It is expected that the Transaction will occur by way of plan or arrangement or other business combination subject to review of tax, accounting, corporate and securities law issues. Therefore, it is anticipated that the Transaction will be subject to approval by the shareholders of the Corporation. In the event such meeting is held, shareholders will be asked to approve the Transaction and to also approve a change of name of the Corporation to "Finavera Gas Inc." or a similar name reflecting the Corporation's focus on the business of Finavera.

Completion of the Transaction is subject to a number of conditions, including, but not limited to, completion of due diligence, the entering into of a formal agreement between the Corporation and Finavera and receipt of all required regulatory and shareholder approvals, as applicable. There can be no assurance that the Transaction will completed as proposed or at all.

The Financing

Concurrently with the closing of the Transaction, GTO intends to complete a private placement of Common Shares at a price of $0.75 per share to raise gross proceeds of up to $3,600,000 (the "Financing"). Finder's fees or commissions may be paid in connection with the Financing in amounts to be determined and which will be made in accordance with the policies of the Exchange and market practice. The Financing will close at the time of and will be conditional upon the closing of the Transaction.

About GTO

GTO was incorporated under the laws of the Province of British Columbia on April 26, 1984 under the name "Chablis Resources Ltd.". On September 6, 1988, the Corporation changed its name to "Westhill Resources Ltd.". Effective March 3, 1992, the Corporation underwent a reorganization and changed its name to "Breckenridge Resources Ltd.". On September 25, 2003, the Corporation completed a reorganization and changed its name to "GTO Resources Inc.".

The Corporation is a natural resource company engaged in the evaluation, acquisition, exploration and development of mineral resource properties.

About Finavera

Finavera is a private company based in the Republic of Ireland created to build a portfolio of assets in the oil and gas sector, with a particular focus on natural gas. Finavera has 100% ownership of two exploration licences in the Republic of Ireland and one exploration licence in Northern Ireland (the "Lough Allen Project"). In addition, Finavera owns 100% of Finavera UK Ltd. The Lough Allen Project consists of three onshore exploration licences covering 1,630 square kilometres. It is anticipated that Ryder Scott Company will be retained to prepare a National Instrument 51-101 compliant technical report on the Lough Allen Project.

Board of Directors, Management and Insiders

Upon completion of the Transaction, it is anticipated that the board of directors of the Corporation will be comprised of the current board of directors of Finavera and one representative from the present board of directors of the Corporation, namely A. Murray Sinclair:

John Orange

Mr. John Orange is currently the Chairman of the board of directors of Finavera and formerly Chief Executive of BP Oil UK ("BP"). Mr. Orange has been a member of the board of directors of Premier Oil and has been Senior Non-Executive Director since 1998. He was also a member of the board of directors of Atlas Copco (UK) Holdings until 2005. Mr. Orange graduated from Trinity College, Dublin, following which he became a barrister. He subsequently joined BP, where he progressed to become their Chief Legal Adviser.

Damien Reynolds

Mr. Damien Reynolds is co-founder and a director of Finavera and has been working in the junior resources sector for over twenty years. He has gained industry knowledge through founding, investing in and serving on the boards of a number of public exploration companies. Mr. Reynolds is the Chief Executive Officer of Longview Strategies Inc., a merchant bank.

Tom Davitt

Mr. Tom Davitt, director and founder of Finavera, is a geophysicist with over 13 years experience in the natural resource sector. As co-founder of the Finavera group of companies, Mr. Davitt has been the driving force behind the Project. Mr. Davitt has worked with multinational resource companies in a variety of technical, project management and business development roles.

Jason Bak

Mr. Jason Bak, director and founder of Finavera, has focused on developing resource companies over the past decade. He holds an Applied Physics degree from Simon Fraser University, BC, Canada. His work experience includes the management of programmes for companies such as BHP (now BHP-Billiton), Kennecott Canada Exploration Inc., (a division of Rio Tinto plc) as well as a series of junior explorers. He currently holds a number of board positions in private resource companies.

All information provided in this press release related to Finavera has been provided by management of Finavera and has not been independently verified by management of GTO.

The Common Shares of GTO will remain halted until certain requirements of the Exchange in connection with the Transaction have been satisfied. The Corporation is currently reviewing the policies of the Exchange regarding sponsorship requirements and a determination on the appointment of a sponsor will be made at a later date.

Completion of the transaction is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance and Shareholder approval. The transaction cannot close until the required Shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Information Circular to be prepared in connection with the transaction, any information released or received with respect to the Reverse Take-Over may not be accurate or complete and should not be relied upon. Trading in the securities of GTO Resources Inc. should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • GTO Resources Inc.
    A. Murray Sinclair
    (604) 689-1428