West Hawk Development Corp.

West Hawk Development Corp.

September 06, 2007 19:48 ET

West Hawk Development Corp.: Initial Financing Closed on Figure Four Project

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 6, 2007) - West Hawk Development Corp. ("West Hawk") (TSX VENTURE:WHD)(FRANKFURT:H5N) (the "Company") has closed a financing transaction with an affiliate of Laurus Master Fund, Ltd. The proceeds of such financing are earmarked for completing the first four wells on the Figure Four property. The transaction was arranged by Hunter Wise Securities, LLC.

The terms of the financing, previously announced on August 22, 2007, were approved by the TSX Venture Exchange. West Hawk Energy (USA), LLC signed a secured note in the face amount of US$1,875,000 that carried an original issue discount resulting in proceeds of US$1.5 million. The note bears interest at the WSJ prime plus 4%, subject to a minimum rate of 10% and matures on August 22, 2008. West Hawk Energy (USA), LLC may prepay the note at any time by paying 100% of the unpaid principal amount of the note, together with accrued and unpaid interest. There are no monthly principal amortization payments on the note until December 1, 2007 at which time the note shall amortize in an amount equal to the greater of (a) US$208,333 per month and (b) 80% of net monthly revenues from the Figure Four project. The investor is also entitled to payment equivalent to a 5% overriding royalty interest in the Figure Four project. The Company paid a success fee of 6% of the proceeds in cash to Hunter Wise Securities, LLC and, subject to the acceptance of the TSX Venture Exchange, will also issue common stock of approximately 227,000 shares to Hunter Wise, representing a success fee equal to 3% of the gross proceeds.

The Company issued 625,000 shares in its capital to an affiliate of Laurus as a break-up fee. In addition, the Company granted the investor a share purchase warrant to acquire up to 2,294,966 common shares of the Company at a price of $0.24 (Cdn) per share for two years. The Company also issued the investor a second share purchase warrant to acquire 2,175,925 shares at $0.24 (Cdn) per share for two years. This second warrant will not be exercisable by the investor unless and until a proposed second financing is closed.

Subject to the four completed wells meeting performance milestones and certain other conditions, the investor has proposed to provide financing for a total of US$9.3 million to be evidenced by a term note. The term note will bear interest at WSJ prime plus 4%, subject to a minimum rate of 10% and will be due 36 months from advance. The proceeds of the note will be used to repay the first note (US$1,875,000), and to pay accounts payable and transaction expenses. The investor will be granted a 20% equity interest in the Figure Four project, through shares in a holding company, and a 40% equity interest in the four wells completed with the proceeds of the first note.

Both notes are secured by general security over all of the Company's and West Hawk Energy (USA), LLC's present and after acquired property, and a pledge of the Company's shares in West Hawk Energy (USA), LLC, which holds the Figure Four project.

The investor will have a right of first refusal to participate in any future funding of the Figure Four project, and subject to conditions and the funding of the above term notes, the investor proposes to provide additional follow-on financing in an amount to be determined, to assist the Company in funding up to 32 new wells in the Figure Four project.

Separately, the Company also announces that the Board of Directors has granted 1,750,000 share purchase options to certain directors and officers of the Company to purchase shares of the Company at $0.27 per share for a two year period. Subject to the consent of the TSX Venture Exchange, the Company will also grant 521,680 share purchase warrants at $0.27 per share as bonus compensation to a director and officer for a personal guarantee which he provided to the contractor conducting the well completion work.

On behalf of the Board of Directors,

Dr. Wm. Mark Hart, President and Chief Executive Officer

About the Company: West Hawk Development Corp is focused on providing valuable, high-demand energy products from a variety of sources. Assets include the Figure Four natural gas property located in the Piceance Basin, Colorado, being developed under a drilling and development agreement; the Tulita coal property in the Northwest Territories; the Groundhog coal property located in northwest British Columbia; and the Ellesmere Island, Nunavut Territory coal property.

Cautionary Note: This report contains forward looking statements, particularly those regarding cash flow, capital expenditures and investment plans. Resource estimates, unless specially noted, are considered speculative. The Company has filed a National Instrument 51-101 Report on the Figure Four property. The Company has filed National Instrument 43-101 Reports for each of the Tulita coal property in the Northwest Territories, the Nunavut Coal property and the Groundhog Coal property. Any and all other resource or reserve estimates are historical in nature, and should not be relied upon. By their nature, forward looking statements involve risk and uncertainties because they relate to events and depend on factors that will or may occur in the future. Actual results may vary depending upon exploration activities, industry production, commodity demand and pricing, currency exchange rates, and, but not limited to, general economic factors. Cautionary note to U.S. investors: The U.S. Securities and Exchange Commission specifically prohibits the use of certain terms, such as "reserves" unless such figures are based upon actual production or formation tests and can be shown to be economically and legally producible under existing economic and operating conditions.

The TSX Venture Exchange has not yet reviewed and does not take responsibility for the adequacy or accuracy of the content of this news release.

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