Magnum Energy Inc.

Magnum Energy Inc.

April 12, 2011 13:18 ET

Magnum Energy Files Preliminary Short Form Prospectus for Offering of Units

CALGARY, ALBERTA--(Marketwire - April 12, 2011) -


MAGNUM ENERGY INC. (the "Corporation")(TSX VENTURE:MEN) is pleased to announce that it has filed a preliminary short form prospectus with the securities regulatory authorities in the provinces of British Columbia, Alberta, Saskatchewan and Ontario in connection with a public offering (the "Offering") of a minimum of 8,333,334 units and a maximum of 13,333,334 units (each a "Unit") at a price of $0.30 per Unit (the "Offering Price"), for minimum total gross proceeds of $2,500,000.20 and maximum total gross proceeds of $4,000,000.20. Each Unit will consist of one Class A Voting common share of the Corporation (a "Class A Common Share") and one-half of a non-transferable Class A Common Share purchase warrant (each whole warrant a "Warrant"). Each whole Warrant will entitle the holder thereof to purchase one Class A Common Share (a "Warrant Share") at an exercise price of $0.45 per Warrant Share for a period of one year from the date of issuance. The Warrant Share will be subject to an acceleration clause whereby if, on any 20 consecutive trading days occurring after four months and a day have elapsed following issuance of the Warrants, the closing sales price of the Corporation's Class A Common Shares (or the closing bid, if no sales were reported on a trading day, as quoted on the TSX Venture Exchange) is greater than $0.60, the Corporation may accelerate the expiry date of the Warrants to the 30th day on which the Corporation gives notice of such acceleration in accordance with the Warrants.

The Corporation has agreed to pay to Wolverton Securities Ltd. (the "Agent") a commission equal to 8.0% of the gross proceeds of the Offering (the "Agent's Fee"), payable in cash, Units (based on the Offering Price), or any combination thereof, at the Agent's election. As additional compensation, the Corporation has agreed to grant to the Agents non-transferable options (the "Compensation Options") to purchase that number of Units which is equal to 8.0% of the number of Units sold under the Offering, at $0.30 per Unit, until that date which is 24 months after the closing of the Offering. The Corporation has also agreed to pay to the Agent a corporate finance fee of $30,000 (plus applicable taxes) of which $10,000 has been paid and the remaining $20,000 will be paid upon closing of the Offering in cash, Units or a combination thereof, at the Agent's election. Additionally, all reasonable expenses of or incidental to the issue of the Units, including legal fees, will be reimbursed to the Agent whether or not the financing is completed. The Agent will also be granted a right of first refusal for a period of 12 months from the closing of the Offering to participate in and act as an agent of the Corporation with respect to subsequent public or private equity or debt financings undertaken by the Corporation.

The proceeds from the Offering will be used to partially pay for the Corporation's share of the consideration paid in the recent acquisition of Viking oil producing property and other assets in Provost, Alberta (see further details in News Releases dated February 3, March 10 and March 16, 2011 and the preliminary short form prospectus). Proceeds will also be used to partially repay bank indebtedness, for capital expenditures to be incurred in the Provost and Sedalia area of Alberta, and for general working capital.

The Offering will be subject to certain conditions, including but not limited to the receipt of all necessary approvals from the TSX Venture Exchange and the securities regulatory authorities of British Columbia, Alberta, Saskatchewan and Ontario.


Richard A. Nemeth, President

Forward-looking Statements

This news release contains certain forward-looking information and statements that are based on the Corporation's current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In this news release, such forward-looking information and statements can be identified by terminology such as "will", "to be", "expected", "anticipated" and similar expressions.

In particular, this news release contains forward-looking statements and information relating to the planned use of proceeds and timing for the Offering. These forward-looking statements and information are being made by the Corporation based on certain assumptions that the Corporation has made in respect thereof as at the date of this document. These forward-looking statements are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties, including, but not limited to: non-performance of agreements in accordance with their terms; the impact of competition; commodity prices; regulatory environment and inability to obtain required regulatory approvals; fluctuations in operating results; the ability of the Corporation to raise sufficient capital to complete future projects and satisfy future commitments; labour and material shortages; and certain other risks detailed from time to time in the Corporation's public disclosure documents including, among other things, those detailed under the heading "Risk Factors" in the annual information form of the Corporation for the year ended August 31, 2010, dated March 18, 2011 and in its preliminary short form prospectus, both of which can be found at

Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted, forecasted or projected. Such forward-looking statements are expressly qualified by the above statements. The Corporation does not undertake any obligation to publicly update or revise any forward-looking statements or information contained herein, except as required by applicable laws.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The securities have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S. person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

Neither 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.

Contact Information