CALGARY, AB – PetroFrontier Corp. (“PetroFrontier” or “the Company”) (TSX-V:PFC) is pleased to announce that formal documents (the “Agreements“) have been completed and executed with Rhino Energy Pty Ltd. (“Rhino Energy”) which included an additional cash advance such that total funding in the amount of $3,500,000 has been provided to PetroFrontier (the “Initial Funding“). The Agreements contemplate that total funding of $24,000,000 will be contributed by Rhino Energy to advance development of PetroFrontier’s joint venture interests in the Cold Lake and Wabasca areas of Alberta (the “PFC Interests“).
Further particulars are as follows:
(a) Total funding in the amount of $24,000,000 (the “Funding“) will earn Rhino Energy a 49.9% interest in a joint venture entity that holds the PFC Interests (the “JV“). PetroFrontier will retain a 50.1% interest in the JV.
(b) The Initial Funding ($3,500,000) is to be supplemented by addition funding in up to two further tranches as follows;
1) a further $10,500,00 by May 31, 2022 (the “Additional First Tranche>”); and
2) a further $10,000,000 by May 31, 2023 (the “Additional Second Tranche“)
PetroFrontier has agreed to grant an extension of no more than 30 days if caused by regulatory delays.
(c) At closing of $14,000,000 in funding (from the Initial Advance plus the Additional First Tranche), Rhino Energy will have earned a 30% interest in the JV.
(d) Rhino Energy will earn an additional 19.9% interest in the JV (for a total of 49.9%) by funding the Additional Second Tranche.
(e) In the event that Rhino Energy has not provided the Additional First Tranche as set out above, Rhino Energy’s ability to earn an interest in the JV will terminate and PetroFrontier has agreed to assume the obligations under the Initial Funding as a loan to be repaid on or before June 1, 2023 (the “Loan Facility“) which will bear interest at a rate of 12% per annum. The Agreements include a promissory note and general security agreement granted by PetroFrontier securing the Initial Advance should it be converted into the Loan Facility. The Loan Facility will be subordinated to PetroFrontier’s existing credit facilities.
Closing of the Funding remains subject to a number of conditions including, but not limited to, obtaining requisite approvals including that of the TSX Venture Exchange. There can be no assurance that all conditions will be met or that regulatory body approval(s) will be obtained such that the Funding will be completed.