Sterling Resources Ltd.

Sterling Resources Ltd.

December 01, 2010 17:00 ET

Sterling Resources Ltd. Announces $65 Million Bought Deal Financing

CALGARY, ALBERTA--(Marketwire - Dec. 1, 2010) -


Sterling Resources Ltd. (TSX VENTURE:SLG) ("Sterling" or the "Company") is pleased to announce that it has entered into a bought deal financing agreement with a syndicate of underwriters (the "Underwriters") co-led by Wellington West Capital Markets Inc. and RBC Capital Markets to issue 21,670,000 common shares (the "Common Shares") at a price of $3.00 per Common Share (the "Offering Price") for gross proceeds of $65,010,000 (the "Offering").

Sterling has also granted the Underwriters an over-allotment option (the "Over-allotment Option") to purchase up to a further 3,250,500 Common Shares at the Offering Price, solely to cover over-allotments, if any. The Over-allotment Option will be exercisable in whole or in part, at the sole discretion of the Underwriters, until 30 days following the closing of the Offering. If the Over-allotment Option is exercised in full, the gross proceeds raised pursuant to the Offering will be $74,761,500.

The net proceeds of this Offering are intended to be used towards the planned appraisal programme on the Cladhan discovery in the first half of 2011, towards other exploration and appraisal activities in the UK, Romania, France and the Netherlands, towards initial pre-development work on the offshore Romania gas projects, and for other corporate purposes.

Since the last equity raise in August 2010, Sterling has initiated evaluation of the Cladhan discovery with two successful appraisal wells in September 2010 and a follow-on appraisal program of between two and four well bores (potentially two vertical wells and two sidetracks) is planned in the first half of 2011. Including purchase of some additional seismic, and coring, logging, fluid sampling and production testing as required, the estimated net cost of the programme is up to approximately $40 million depending on the extent of success.

The Offering is subject to certain customary conditions including the receipt of all regulatory approvals, including approval of the TSX Venture Exchange. The Common Shares will be offered by way of a short form prospectus in all of the provinces of Canada (excluding Quebec) and on a private placement basis elsewhere; including to Qualified Institutional Buyers in the United States pursuant to Rule 144A of the Securities Act of 1933, as amended, and in the United Kingdom and European Union. Closing is anticipated to occur on or about December 22, 2010.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction. The Common Shares have not been and will not be registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements being available.

Sterling Resources Ltd. is a Canadian-listed international oil and gas company headquartered in Calgary, Alberta with assets in the United Kingdom, Romania, and France. The Common Shares are listed and posted for trading on the TSX Venture Exchange under the symbol "SLG".

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Forward-Looking Statements

All statements included in this press release that address activities, events or developments that Sterling expects, believes or anticipates will or may occur in the future are forward-looking statements. Specific forward-looking statements in this press release include statements regarding the expected closing date of the Offering and the anticipated amount and use of proceeds. In addition, statements relating to reserves or resources are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions that the reserves and resources described can be profitably produced in the future. 

These forward-looking statements involve numerous assumptions made by Sterling based on its experience, perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. In addition, these statements involve substantial known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other-forward looking statements will prove inaccurate, certain of which are beyond Sterling's control, including: the impact of general economic conditions in the areas in which Sterling operates, civil unrest, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in commodity prices, foreign exchange or interest rates, stock market volatility and obtaining required approvals of regulatory authorities. In addition there are risks and uncertainties associated with oil and gas operations. Readers should also carefully consider the matters discussed under the heading "Risk Factors" in the Company's Annual Information Form. 

The closing of the Offering could be delayed if the Company is not able to obtain the necessary regulatory approvals on the timelines planned. The Offering will not be completed at all if these approvals are not obtained or some other condition to the closing is not satisfied. Accordingly there is a risk that the Offering will not be completed within the anticipated time, or at all. Further, the intended use of the net proceeds of the Offering might change if the board of directors determines that it would be in the best interests of the Company to deploy the proceeds for some other purpose.

Undue reliance should not be placed on these forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. Sterling's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements. These statements speak only as of the date of the press release. Sterling does not intend and does not assume any obligation to update these forward-looking statements except as required by law.

Financial outlook information contained in this press release about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this press release should not be used for purpose other than for which it is disclosed herein.

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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