Norex Exploration Services Inc.
TSX : NRX

Norex Exploration Services Inc.

September 16, 2007 21:49 ET

Norex Provides Update on SAE Acquisition and Financing

CALGARY, ALBERTA--(Marketwire - Sept. 16, 2007) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Further to its press releases of August 7, 2007 and September 7, 2007, Norex Exploration Services Inc. (TSX:NRX) ("Norex" or the "Company") confirms that it has received conditional listing approval from the Toronto Stock Exchange (the "TSX") for the securities to be issued pursuant to its previously announced offering of up to 14,286,000 units (the "Units") at a price of $1.05 per Unit (the "Offering") and its proposed acquisition (the "Acquisition") of South American Exploration, LLC ("SAE").

The Acquisition and the Offering are to close concurrently, with closing currently anticipated to be held on September 21, 2007.

Each Unit consists of one common share (a "Common Share") and one half of one Common Share purchase warrant (a "Warrant"). Each Warrant will entitle the holder thereof to purchase one Common Share at a price of $1.60 per share until the date which is 18 months from the closing date. The Offering is being conducted on a best efforts basis through a syndicate of agents led by Westwind Partners Inc. and including BMO Nesbitt Burns Inc. and Blackmont Capital Inc. (collectively, the "Agents"). The Company has granted the Agents an option (the "Option") to acquire up to an additional 1,429,000 Units on the same terms and conditions, such Option being exercisable at any time up to two business days prior to the closing of the Offering. If the maximum number of Units were issued, and all of the Warrants were exercised, 23,572,500 Common Shares would be issued, representing approximately 61.1% of the Company's 38,600,986 currently issued and outstanding Common Shares, prior to giving effect to the Acquisition.

Subsequent to closing, if the SAE division were to meet all of its financial targets under the Acquisition (as described in the Company's August 7, 2007 press release), up to 13,668,737 Common Shares would be issued pursuant to the terms of the Acquisition, representing approximately 35.4% of the currently issued and outstanding Common Shares (on a non-diluted basis), prior to giving effect to the Offering. The foregoing assumes the issuance of the Common Shares at a price of $1.31 and an exchange rate of $USD 1.000 = $CDN 0.9494. The issuance of the Common Shares to the vendors pursuant to the Acquisition may create a new "insider" for the purposes of applicable securities laws, being Fairweather International, Inc., a private company controlled by one of such vendors. Fairweather International, Inc. is currently anticipated to receive up to 9,226,397 Common Shares, being 67.5% of any Common Shares issued pursuant to the Acquisition.

ARC Energy Venture Fund 4 ("ARC"), the Company's largest shareholder (holding 20,268,657 Common Shares, or approximately 52.5% of the issued and outstanding Common Shares (on a non-diluted basis)), has expressed a desire to participate in the Offering to a maximum of $6.0 million (being 5,714,285 Units, equal to approximately 14.8% of the currently issued and outstanding Common Shares or approximately 22.2% assuming the exercise of the Warrants issued to ARC only), on identical terms to the other arms' length investors. Following closing of the Offering and the Acquisition, ARC would hold 28,840,084 Common Shares (assuming the exercise of the Warrants issued to ARC) or approximately 40.7% of the 70,841,865 then issued and outstanding Common Shares (assuming the exercise of the Warrants issued to ARC only).

In accordance with the policies of the TSX: (i) as ARC is an "insider" of the Company and wishes to participate in the Offering in an amount in excess of 10% of the total Offering, the TSX will require the written consent to the Offering by holders of more than 50% of the Common Shares, excluding those Common Shares held by ARC; and (ii) as the Acquisition could result in the issuance of a number of Common Shares greater than 25% of the issued and outstanding Common Shares (on a non-diluted basis), the TSX will require the written consent to the Acquisition by holders of more than 50% of the Common Shares. Norex anticipates that such written consents will be forthcoming prior to closing.

Norex, its division, Conquest Seismic Services, and its US subsidiary, Conquest Seismic Services, Inc., provide premium 2D, 3D and 4D land-based seismic data acquisition services in Canada and the United States. Norex is the largest operator of ARAMARIES® recording equipment in Canada and provides state-of-the-art technology to the North American oil and gas industry. Norex trades on the TSX under the symbol "NRX."

This news release shall not constitute an offer to sell or the solicitation of an offer to buy the Units in any jurisdiction. The Units offered will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to a U.S. person, absent registration, or an applicable exemption therefrom.

Advisory Respecting Forward-Looking Statements:

This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "confident", "might" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this news release contains forward-looking information and statements pertaining to the following: (i) the completion of the Acquisition; (ii) the successful completion of financing necessary to complete the Acquisition, including Norex's ability to raise capital and its ability to obtain all necessary exemptive relief from applicable securities regulatory authorities, including the TSX; and (iii) other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release.

The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated and described in the forward-looking statements. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements.

Norex cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information and statements contained in this news release speak only as of the date of this news release, and the Company assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Norex Exploration Services Inc.
    Paul A. Crilly
    President and Chief Executive Officer
    (403) 216-5929
    or
    Norex Exploration Services Inc.
    Rob Morin
    Vice-President, Finance and Chief Financial Officer
    (403) 216-5923