James Bay Resources Limited
CNSX : JBR

James Bay Resources Limited

May 29, 2015 17:03 ET

James Bay Resources Announces Closing of Second Tranche of Offering

TORONTO, ONTARIO--(Marketwired - May 29, 2015) -

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James Bay Resources Limited ("James Bay" or the "Company") (CSE:JBR) announced that it has raised gross proceeds of $1.325 million by way of a non-brokered private placement (the "Offering") of an aggregate principal amount of $1.325 million of unsecured convertible debentures (the "Debentures"). The Offering is the second tranche of the Company's ongoing financing for gross proceeds to date of $2.925 million, as previously announced in its press releases dated April 16 and 30, 2015. A final tranche for the remaining $75,000 is expected to close in the first week of June. Net proceeds from the Offering will be used to fund the Company's working capital needs, including in particular any litigation issues stemming from the Company's enforcement of its right to acquire a 45% participating interest in OML 25 in Nigeria (the "Litigation"), as further disclosed in the Company's news releases dated March 9, 2015 and January 26, 2015.

Each Debenture bears interest at a rate of 15%, payable semi-annually, and has a maturity date that is three years following the date the Debenture is issued (the "Maturity Date"). However, if the Litigation is settled or is subject to a final decision with funds received by the Company prior to the Maturity Date, the purchasers of Debentures under the Ongoing Financing, including the purchasers of Debentures under the Offering (the "Holders"), will have a right to demand payment in full of all amounts owing. In the event that the Company would be left with less than $1 million dollars in free cash upon such a demand occurring, the amount payable to each Holder shall be reduced pro-rata to ensure that the Company retains $1 million in free cash.

The Debentures are convertible, in whole or in part, at the option of the Holders, into common shares of the Company (each a "Common Share") at a conversion price of C$0.17 per Common Share (the "Conversion Rate"). Interest may also be converted into Common Shares at the market price at the date of any such conversion, at the option of the Holders. Any conversion of Debentures and interest accrued on the Debentures into Common Shares of the Company will be subject to receipt of all required approvals by the Company. The Debentures may be prepaid by the Company at any time, without penalty, on at least 15 days' notice to the Holders.

Upon completion of the final tranche of the Ongoing Financing, the Company will also concurrently sell and assign, pursuant to separate agreements with each Holder, a pro rata (based on all the Holders) entitlement for up to an aggregate of 30% of the net proceeds of the Litigation, if any (whether as a result of final judgement by a court of competent jurisdiction or settlement for which no appeal or further proceeding may be taken (the "Final Award")), after deduction of all related costs and taxes incurred by the Company in the Litigation (the "Net Final Amount"), payable to the Holders within 60 days from the receipt of the Final Award, if any. In the event the Company prepays the Debentures in full prior to that date which is one year from the date of issue and prior to date of the Final Award, then the amount payable to the Holders under the agreement will be adjusted to reflect an aggregate entitlement of 15%.

Mr. Mark Brennan, a director of the Company, purchased an aggregate of $175,000 of Debentures in the Offering. Mr. Brennan will also enter into a separate agreement of purchase and sale entitling him to a pro rata share of the Net Final Amount of any Litigation, as described above. The Financing was considered and approved by the board of directors of the Company, with Mr. Shefsky and Brennan declaring a conflict and recusing themselves from voting on the Offering. There was no materially contrary view or abstention by any director approving the Offering. Following completion of the Offering, Mr. Brennan owns or controls, directly and indirectly, an aggregate of 4,902,000 Common Shares. Assuming the conversion into Common Shares of the full principal amount of the Debentures purchased by Mr. Brennan in the Offering, Mr. Brennan will beneficially own or control, directly and indirectly, an aggregate of 5,931,411 Common Shares, or 12.51% of the issued and outstanding Common Shares on a partially-diluted basis.

Pursuant to Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"), the issuance of Debentures to Mr. Brennan is a "related party transaction". The Company is exempt from the requirements to obtain a formal valuation or minority shareholder approval in connection with the Offering in reliance on sections 5.5(b) and 5.7(b), respectively, of MI 61-101, as the Company is not listed on a stock exchange specified in section 5.5(b) of MI 61-101 and neither the fair market value of the Debentures that were and may be purchased by Mr. Brennan, nor the proceeds of the Offering received and to be received by the Company in respect of Mr. Brennan's participation in the Offering, exceeds $2.5 million. The material change report in respect of the Offering is being filed less than 21 days before the closing of the Offering as the Company requires the net proceeds from the Offering immediately in order to fund its working capital needs, including the Litigation.

The securities offered will not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

About James Bay Resources Limited

James Bay is a Canadian resource company with 41,474,070 shares outstanding and trades on the Canadian Securities Exchange under the symbol "JBR". Please visit the James Bay website at www.jamesbayresources.com.

Disclaimer

This news release includes certain statements that may be deemed "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the Corporation's operations, exploration and development plans, expansion plans, estimates, expectations, forecasts, objectives, predictions and projections of the future. Generally, these forward-looking statements can be identified by the forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "projects", "intends", "anticipates", or "does not anticipate", or "believes", or "variations of such words and phrases or state that certain actions, events or results "may", "can", "could", "would", "might", or "will" be taken", "occur" or "be achieved". Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of James Bay Resources Limited to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the Company's Ongoing Financing and the change of business and the oil and gas industry in Nigeria generally, risks related to operations, construction delays and cost overruns, the actual results of exploration, development and construction activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, future copper prices, as well as those factors discussed in the sections relating to risk factors of our business filed in James Bay Resources Limited's required securities filings on SEDAR. Although James Bay Resources Limited has attempted to identify important factors that could cause results to differ materially from those contained in forward-looking statements, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended.

There can be no assurance that any forward-looking statements will prove accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. James Bay Resources Limited does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws.

The Canadian Securities Exchange does not accept responsibility for the adequacy or accuracy of this news release.

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