High North Resources Ltd.

High North Resources Ltd.

August 28, 2014 09:10 ET

High North Resources Announces Revolving Credit Facility Indicative Term Sheet for Up to $10.0 Million and Update on Operations and Previously Announced Financing

CALGARY, ALBERTA--(Marketwired - Aug. 28, 2014) -


High North Resources Ltd. (TSX VENTURE:HN) (the "Company" or "High North") is pleased to provide an update on the following:

Credit Facility

High North has executed a non-binding, indicative term sheet dated August 26, 2014 (the "Term Sheet") with ATB Financial ("ATB") which provides for the grant to the Company of a reserve based revolving production loan facility of up to $10,000,000 (the "Revolving Facility"). The Revolving Facility is initially capped at $6,000,000 and may be increased to $10,000,000, subject to an evaluation of High North's material hydrocarbon assets, effective September 30, 2014. The Revolving Facility will be secured by a general security agreement conveying a first floating charge over all real and personal property and after acquired assets and an undertaking to grant, at the request of ATB, a first fixed charge on all property interests. The Company intends to use advances from the Revolving Facility for general corporate purposes related to the exploration, development, production and acquisition of domestic oil and natural gas reserves within the Western Canadian Sedimentary Basin, inclusive of the previously announced upcoming drilling program.

Operations Update

The Company is pleased to announce that Montney oil production sales for the month of July, 2014 of 8,400 barrels, an increase of 30% in one month from June, 2014. As at July 30, 2014, the Company had sold over 55,900 barrels of oil and increased its field netback to approximately $45.00 per barrel of oil. Currently gas is being flared while the Company moves forward with the installation of facilities to conserve gas and recover liquid by-products.

The Company has completed installation of larger surface equipment at the 9-3-76-21W5M surface pad (8-2, 9-2, and 16-2-76-21W5M producing wells) and at the 12-21-76-21W5M surface pad (which services the 8-21-76-21W5M producing well) and expects to recover clean oil and water by the end of September, 2014.

The Company is encouraged by the amount of Montney pay zone encountered at each of the step-out drilling locations to-date. The Company intends to continue to de-risk the play by drilling step-out locations in sections 9-76-21W5M and 17-76-21W5M subject to approval of flared volumes by the Alberta Energy Regulator.

Offering Update

In light of the foregoing developments, the Company has entered into an amended agreement with GMP Securities L.P. ("GMP"), National Bank Financial Inc. ("NBF"), and Integral Capital Markets as co-lead agents and Beacon Securities Ltd. (collectively, the "Agents"), and with GMP and NBF acting as co-bookrunners, to complete a private placement, on a commercially reasonable efforts basis, of up to 9,091,000 common shares in the capital of the Company, to be issued on a "flow-through" basis under the Income Tax Act (Canada) (the "Flow-Through Common Shares") at a price of $0.55 per Flow-Through Common Share for gross proceeds of up to $5,000,050 (the "Offering").

The Company believes that the proceeds from the Offering, together with the funds available under the Revolving Facility, will provide sufficient capital to meet the Corporation's ongoing capital requirements and minimizes dilution to the Company's shareholders.

The Company will use the proceeds from the Flow-Through Common Share offering to drill the two "Canadian Exploration Expense" (as defined in the Income Tax Act (Canada)) eligible Montney oil wells (i) section 17-76-21W5M and (ii) section 09-76-21W5M. The additional previously announced wells (section 03-76-21W5M and section 10-76-21W5M) will be deferred pending discussions on flaring underway with the Alberta Energy Regulator.

The Completion of the Offering is expected to occur on or about September 10, 2014, subject to certain conditions including, but not limited to, receipt of all necessary regulatory approvals including the approval of the TSX Venture Exchange. The Flow-Through Common Shares will have a hold period of four months from the date of closing. The Agents will be paid a fee equal to 6.0% of the gross proceeds of the Offering.

High North is a Calgary-based company that explores, develops and produces oil and natural gas in Western Canada. High North trades on the TSX Venture Exchange under the symbol HN.

Forward-looking Statements and Information

This news release contains certain "forward-looking statements" or "forward-looking information" (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Such forward-looking statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. 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 or be achieved. This news release contains forward-looking statements, pertaining to, among other things, the following: the timing, method, costs and recovery from future drilling operations; infrastructure development and the timing and effects thereof; facilities construction and equipment installation and the cost, timing and effects thereof; approval of the Company's application by the Alberta Energy Regulator, the ability of the Company to obtain the Revolving Facility and the amount of, terms and use of proceeds; the receipt of regulatory approval from the TSX Venture Exchange and the impact of the Offering on the Company. Statements regarding future production, capital expenditures and development plans are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These risks include, but are not limited to, inflation or lack of availability of goods and services, environmental risks, drilling risks, regulatory changes and certain other known and unknown risks detailed from time to time in High North's public disclosure documents, copies of which are available on High North's SEDAR profile 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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