February 10, 2011 - Panorama Resources Ltd. (TSXV:PRA) (“Panorama” or the “Company”), and Ethiopian Potash Corp. (“EPC”) are pleased to announce the closing of EPC’s private placement of subscription receipts (the “EPC Private Placement”).
EPC Private Placement
As previously announced in the Company’s press releases dated October 26, 2010 and January 28, 2011, the EPC Private Placement is a condition to the completion of the proposed amalgamation of Panorama and EPC (the “Amalgamation”). The Amalgamation and related transactions remain subject to the receipt of all applicable shareholder and regulatory approvals.
The EPC Private Placement was a brokered private placement of subscription receipts of EPC for gross proceeds of $11 million to EPC. Each subscription receipt was sold at a price of $0.50 and is convertible into one unit of EPC (“EPC Unit”), as detailed below.
Gross proceeds from the EPC Private Placement have been deposited in escrow and will be held by the subscription receipt agent until the satisfaction of certain release conditions (“Escrow Release Conditions”), including the receipt of all regulatory approvals required to complete the Amalgamation.
Following the satisfaction or waiver of the Escrow Release Conditions, each EPC subscription receipt will entitle the holder thereof to receive, automatically and without payment of additional consideration, one EPC Unit. Each EPC Unit will be comprised of one EPC common share (“EPC Common Share”) and one EPC common share purchase warrant (“EPC Warrant”) entitling the holder thereof to acquire one EPC Common Share at an exercise price of $0.75 for a period of 18 months from the date of the satisfaction of the Escrow Release Conditions.
Use of Proceeds
The net proceeds of the EPC Private Placement will be used to aggressively develop and fast- track to production the Danakil Potash Permits in Ethiopia. EPC, as the resulting issuer of the Amalgamation, anticipates that it will commence drilling with two rigs in March, 2011, focusing up-dip of the Musley deposit in the southwest corner of the Property, as well as on the eastern side of the Property (where potash was historically mined at Colluli). Other participants in the Danakil potash belt have recently released significant shallow drill intercepts of potash from the Colluli area. For additional information on the Property and the 128 million ton resource grading 21%, please see the Technical Report (discussed below). The net proceeds will also be used to meet expenditure requirements of the resulting issuer post-Amalgamation.
Shareholder Meeting
As previously announced, Panorama’s shareholder meeting to consider, and if thought advisable, approve the Amalgamation and related transactions will be held on Friday, February 25, 2011.
Release of Proceeds from Escrow
Upon completion of the Amalgamation, the EPC Common Shares and the EPC Warrants comprising the EPC Units will be exchanged for common shares of the resulting issuer (each, a “Resulting Issuer Common Share”) and warrants of the resulting issuer (the “Resulting Issuer Warrants”), respectively, in accordance with the terms and conditions of the Amalgamation. Conditional on the completion of the Amalgamation, each Resulting Issuer Warrant will entitle the holder thereof to receive, upon exercise of the Resulting Issuer Warrant within 18 months of satisfaction of the Escrow Release Conditions and payment of the $0.75 exercise price, one additional Resulting Issuer Common Share, subject to the terms set forth in the certificate representing the Resulting Issuer Warrant.
In the event the Escrow Release Conditions are not met prior to 5:00 p.m. (Toronto time) on Monday, March 28, 2011, subject to extension in certain circumstances (the “Release Deadline”), the subscription receipt agent shall return the subscription proceeds to each holder of EPC subscription receipts on a pro rata basis, following which such EPC subscription receipts shall be automatically cancelled and be of no further force and effect.
Upon satisfaction of the Escrow Release Conditions, BayFront Capital Partners Ltd., Salman Partners Inc. and Fraser Mackenzie Limited (the “Agents”) will receive a cash commission equal to 7% of the aggregate gross proceeds of the EPC Private Placement. At closing of the EPC Private Placement, the Agents were granted that number of EPC broker warrants (each, an “EPC Broker Warrant”) equal to 8% of the number of EPC subscription receipts sold in the EPC Private Placement. Each EPC Broker Warrant will be exercisable to acquire one EPC Unit for a period of 18 months from closing of the EPC Private Placement, being August 10, 2012. The EPC Agents were also reimbursed for their reasonable expenses.
Upon completion of the Amalgamation, any unexercised EPC Broker Warrants will be exchanged for broker warrants of the resulting issuer having the same terms and conditions as the EPC Broker Warrants, and any EPC Common Shares and EPC Warrants issued upon the exercise of EPC Broker Warrants prior to the completion of the Amalgamation will be exchanged for Resulting Issuer Common Shares and Resulting Issuer Warrants, respectively, on the same terms as set out above, all in accordance with the terms and conditions of the Amalgamation.
Technical Report
Panorama and EPC are pleased to announce that they have filed a National Instrument 43-101 compliant technical report (the “Technical Report”) dated February 1, 2011 in respect to the preliminary resource assessment study of certain mineral property permits in Ethiopia known as the “Danakil Potash Permits” (the “Property”). Subsequent to the printing and mailing of the information circular (the “Circular”) in respect to the upcoming meeting of shareholders of Panorama scheduled to be held on February 25, 2011, the original version of the Technical Report dated November 4, 2010 (as referenced in the Circular) was revised to include expanded disclosure regarding the terms of the Option (defined below). No information regarding the Property has changed. A copy of the Technical Report is available under the Company’s SEDAR profile at www.sedar.com. As previously announced in Panorama’s press release dated October 26, 2010, EPC will be granted, upon closing, an option (the “Option”) to acquire all of the issued and outstanding shares of G and B Central African Resources Ltd. (“G&B”) and thereby acquire G&B’s 100% interest in the Property.
Forward Looking Statements
Certain information set forth in this press release, including management's assessment of future plans and operations and the completion of the Amalgamation and EPC Private Placement, contains forward looking statements. The use of any of the words "anticipate", "continue", "estimate”, "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward looking statements. By their nature, forward looking statements are subject to numerous risks and uncertainties, some of which are beyond management's control, including the receipt of third party approvals, including shareholder and regulatory approvals, satisfaction or waiver of the Escrow Release Conditions, impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve or resource estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources.
Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward looking statements. Actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward looking statements. No assurance can be given that any of the events anticipated will transpire or occur, or if any of them do so, what benefits will derive from them. Except as required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
Completion of the transaction is subject to a number of conditions, including TSX Venture Exchange acceptance and disinterested shareholder approval. The transaction cannot close until the requisite shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the transaction, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the securities of Panorama Resources Ltd. should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
For further information:
Panorama Resources Ltd., Suite 2150-885 West Georgia Street, Vancouver, British Columbia, Canada, V6C 3E8, Telephone: (604) 683-0564, Fax: (604) 602-9311
Ethiopian Potash Corp., 200 Bay Street, Suite 3800, Royal Bank Plaza, South Tower, Toronto, Ontario, Canada, M5J 2Z4, Telephone: (416) 702-2410, Fax: (416) 216-3930
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.