Sprott Resource Holdings Press Releases


Press Release

Sprott Resource Corp. Announces Closing of Acquisition of Auriga Energy Inc. by its Subsidiary Orion Oil & Gas Ltd.



TORONTO, Oct. 20 /CNW/ - Sprott Resource Corp. (TSX: SCP) - Sprott Resource Corp. ("SRC") is pleased to announce that Orion Oil and Gas Ltd. ("Orion"), a subsidiary of SRC, has closed its acquisition (the "Acquisition") of all of the issued and outstanding common shares of Auriga Energy Inc. ("Auriga"). In order to complete the Acquisition, SRC issued approximately 13.85 million common shares of SRC and approximately 42.45 million common shares of Orion to Auriga shareholders.

Immediately following the Acquisition, Orion completed a $61.5 million private placement (the "Private Placement") of which $53.8 million was funded by SRC. The balance of the Private Placement was funded by new management, associates of new management and former Auriga shareholders. The proceeds from the Private Placement have been used to repay all of Auriga's outstanding debt.

As a result of the closing of the Acquisition and the Private Placement, SRC owns approximately 79.3% of the issued and outstanding common shares of Orion.

SRC has provided Auriga with a short-term working capital loan of $10 million ("SRC Facility") to facilitate the timely execution of the winter drilling program. Orion management is at an advanced stage of discussion with a major Canadian bank with respect to a new committed credit facility (the "New Facility") to provide for longer term working capital financing. Once the New Facility is in place, the SRC Facility will be repaid and terminated.

SRC previously announced an agreement between Orion and Wintraysan Capital Corp. (TSXV:WTS.P) ("Wintraysan") whereby Wintraysan, pursuant to a plan of arrangement or similar form of transaction (the "Arrangement"), will acquire all of the issued and outstanding shares of Orion (see press release dated October 13, 2009). As well, SRC previously announced that Orion has also entered into an equity financing agreement with a syndicate of lenders co-led by Cormark Securities Inc., FirstEnergy Capital Corporation and TD Securities Inc. to raise $100 million through the sale of subscription receipts (the "Brokered Financing") (see press release dated October 15, 2009).

About Sprott Resource Corp.

SRC is a Canadian based company, the primary purpose of which is to invest, directly and indirectly, in natural resources. Through acquisitions, joint ventures and other investments, SRC seeks to provide its shareholders with exposure to the natural resource sector for the purposes of capital appreciation and real wealth preservation. SRC is well positioned to draw upon the considerable experience and expertise of both its Board of Directors and Sprott Consulting Limited Partnership ("SCLP"), of which Sprott Inc. is the sole limited partner. Pursuant to a management services agreement between SCLP and SRC, SCLP provides day-to-day business management for SRC as well as other management and administrative services.

Forward-looking Statements

This news release contains forward-looking statements and information ("forward looking statements") within the meaning of applicable securities laws relating to the proposal to complete the Arrangement, the Brokered Financing and the establishment of the New Facility. Readers are cautioned to not place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Arrangement, the Brokered Financing or the establishment of the New Facility, that the ultimate terms of the Arrangement, the Brokered Financing or the New Facility will differ from those that currently are contemplated, and that the Arrangement, the Brokered Financing or the New Facility will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The forward-looking statements contained in this document are made as of the date hereof and SRC does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

The subscription receipts offered pursuant to the Brokered Financing have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

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