CALGARY, ALBERTA–(Marketwired – Jan. 15, 2016) – Canadian Spirit Resources Inc. (“CSRI” or the “Corporation”) (TSX VENTURE:SPI)(OTCBB:CSPUF) is pleased to announce that, effective January 14, 2016, it has closed its previously announced private placement of Units (see News Release dated December 1, 2015). The private placement offering was initially for a minimum of 7,625,000 and a maximum of 12,500,000 Units of the Corporation at a price of $0.20 per Unit. The private placement, conditionally approved by the TSX Venture Exchange on December 31, 2015, was later revised to a minimum of 4,825,000 Units, the amount upon which the Corporation has closed.
Each Unit issued pursuant to the private placement consists of one common share of the Corporation and one-half of one common share purchase warrant (“Warrants”). Each whole Warrant entitles the holder to purchase an additional common share of the Corporation for a period of one year at an exercise price of $0.25 per share.
The gross proceeds raised from the sale of the Units were $965,000. Finders’ fees of $25,500 were paid in connection with the closing. All securities issued pursuant to the private placement are subject to a restricted resale period under Canadian securities laws until May 15, 2016.
The total amount of the Unit private placement, along with the additional funds of $2.5 million raised by way of a Flow-through Shares private placement in December 2015 (see News Release dated December 14, 2015), will be used to drill a 100% working interest vertical test well on the western portion of the Corporation’s lands at Farrell Creek, British Columbia and for general corporate purposes. This well is expected to be spud at the beginning of February and will serve to retain land and to further delineate the Montney potential on the Corporation’s 100% working interest lands.
The private placement was a related party transaction under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”).
The Unit private placement was a related party transaction as Richard Couillard, President and Chief Executive Officer of the Corporation and Elmag Investments Inc., an insider of the Corporation purchased 200,000 and 2,500,000 Units, respectively. Following completion of the private placement Richard Couillard owns 943,350 common shares of the Corporation or 0.65% of the outstanding common shares of the Corporation, and Elmag Investments Inc. owns 51,396,000 common shares of the Corporation or 35.16% of the outstanding common shares of the Corporation.
The private placement was exempt from the formal valuation and minority shareholder vote requirements of MI 61-101 as the fair market value of the insiders’ participation in the private placement did not exceed 25% of the Corporation’s market capitalization. The private placement was approved by Donald Gardner, Alfred Sorensen and Jeffrey Dyck, Directors of the Corporation, who did not participate in the private placement.
In commenting on the private placement, Rich Couillard, President and Chief Executive Officer of CSRI stated: “Given the current economic uncertainty facing our industry, it is extremely gratifying to have successfully completed these recent private placements. It is a testimony to our shareholders who believe in and support the opportunity that CSRI represents. Recent announcements regarding LNG projects in British Columbia provide continued encouragement for CSRI to maintain its strategy of land retention and delineation of the significant resource base on Corporation lands.”
With the closing of the two recent private placements, the Corporation currently has $4.4 million cash on hand and no debt. This provides adequate funding for the drilling of the 100% working interest vertical test well and for other corporate purposes in 2016.
CSRI is a natural resources company focusing on the identification and development of opportunities in the unconventional natural gas sector of the energy industry.
On behalf of the Board of Directors, CANADIAN SPIRIT RESOURCES INC.
Richard Couillard, President and Chief Executive Officer
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Canadian Spirit Resources Inc.