CALGARY, Dec. 6, 2016 /CNW/ – Montana Exploration Corp. (“Montana Exploration” or the “Company“) (TSXV: MTZ) today announced that it will be offering rights to holders of its common shares at the close of business on the record date of December 12, 2016, on the basis of one right for each common share held (the “Rights Offering“). Each four (4) rights will entitle the holder to subscribe for one common share of Montana Exploration Corp. upon payment of the subscription price of C$0.195 per common share. There are currently 49,790,875 common shares of the Company issued and outstanding. If all the rights issued under the rights offering are validly exercised, the Rights Offering will raise gross proceeds of approximately C$2.4 million. Vanco-Stock Ltd., a company controlled by a director of the Company, has given a written commitment to exercise its rights for proceeds of $1,321,442.
The rights will expire at 4:30 p.m. (Toronto Time) on January 13, 2017 (the “Expiry Time“), after which time unexercised rights will be void and of no value. Shareholders who fully exercise their rights will be entitled to subscribe for additional common shares, if available as a result of unexercised rights prior to the Expiry Time, subject to certain limitations as set out in the Company’s rights offering circular. The Company expects to close the Rights Offering on or about January 13, 2017.
Details of the Rights Offering will be set out in the rights offering notice and rights offering circular which will be available under Montana’s profile at www.SEDAR.com. The rights offering notice and accompanying rights certificate will be mailed to each registered eligible shareholder as at the record date. Registered shareholders who wish to exercise their rights must forward the completed rights certificate, together with the applicable funds, to the rights agent, Computershare Investor Services, Inc. (“Computershare“), on or before the Expiry Time. Shareholders who own their common shares through an intermediary, such as a bank, trust company, securities dealer or broker, will receive materials and instructions from their intermediary.
The Rights Offering will be conducted in Canada only. However, certain holders of common shares in jurisdictions outside of Canada may be able to participate in the Rights Offering where they can establish that the transaction is exempt under applicable legislation. If you are a holder of common shares and reside outside of Canada please see the rights offering notice and rights offering circular to determine your eligibility and the process and timing requirements to receive and, or, exercise your rights. The Company requests any U.S. shareholder or other ineligible holder interested in exercising their rights to contact the Company at their earliest convenience.
Funds raised through the Rights Offering will be used to pay for general and administrative (G&A) as well as geological, engineering and land (technical) expenses. The Company currently has G&A plus technical requirements of approximately $200,000 per month. The Company has taken steps to minimize its G&A and technical expenses while retaining sufficient resources to maintain the Company’s lands and to conduct the Drilling Program announced on September 27, 2016. Actions to reduce G&A expenses have included signing an office lease extension to March 31, 2017 at a reduced rate, maintaining administrative staff on a four-day work week, delaying payment of executive salaries, and payment of consulting services through equity-based compensation.
The Rights Offering is part of a broader financial plan for the Company (the “Financial Plan“) comprised of:
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(1) |
The Rights Offering governed by this Circular, for proceeds of up to $2.4 million; |
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(2) |
The farm-out transaction, pursuant to which a Drilling Program is being conducted (the Company will also receive prospect fees of USD$250,000 in conjunction with the farm out)(see the September 27, 2016 press release); |
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(3) |
Raising additional capital through the public markets to reduce or eliminate the working capital deficiency and to provide funds for further future drilling; |
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(4) |
Pursuing other farm out transactions in respect to the Company’s natural gas prospects and the remainder of the Company’s Shaunavon prospects; and |
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(5) |
The sale of non-core assets, including its Pine Mills field interests in Wood County, Texas, (see November 30, 2016 press release), and other non-core assets in the State of Montana. |
ABOUT MONTANA EXPLORATION CORP.
Montana Exploration Corp. is an oil and gas exploration and production company focusing on the Shaunavon oil and Eagle gas opportunities underlying its extensive land holdings and drilling rights in the state of Montana. In the United States, the company operates through its wholly-owned subsidiaries, Montana Land & Exploration, Inc., GFP Texas Inc. and GFP Central USA Inc. The company’s common shares are listed on the TSX Venture Exchange under the trading symbol “MTZ”. Additional information regarding the company is available at www.SEDAR.com or at www.MontanaExplorationCorp.com.
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