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Lion Energy Corp. (the "Company" or "Lion
Energy") (TSXV:LEO.V)
is pleased to announce that it has entered into a non-binding letter of
intent with Africa Oil Corp. ("Africa Oil", AOI - TSXV, AOI
- NASDAQ OMX), a publicly traded oil and gas company listed on the TSX
Venture Exchange and NASDAQ OMX, which sets out the basic terms and
conditions pursuant to which Africa Oil proposes to acquire all of the issued
and outstanding common shares of Lion Energy. Under the letter of
intent the parties will negotiate and enter into a definitive agreement
pursuant to which Africa Oil will acquire Lion Energy, by way of a plan of
arrangement. The letter of intent provides that each share of Lion Energy
will be exchanged for 0.2 shares of Africa Oil. The Company currently has
86,118,177 common shares issued and outstanding, 2,580,000 share options with
a weighted average exercise price of $0.16 per share, and 11,445,000
warrants. The Company is also obligated to issue up to 50,000 common shares
in another, unrelated transaction. It is proposed that each warrant
will be exchanged into an equivalent number of warrants of Africa Oil,
adjusted for 0.2:1 ratio noted above.
Lion is presently a joint venture partner of Africa Oil in Kenya and Puntland (Somalia) with respect to the following Blocks:
Block 9 (Kenya)
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Lion 33.3%
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Africa Oil 66.7%
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Block 10BB (Kenya)
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Lion 10%
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Africa Oil 40%
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Tullow Oil plc. 50%
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Dharoor Valley (Puntland)
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Lion 15%
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Africa Oil 45%
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others 40%
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Nugaal Valley (Puntland)
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Lion 15%
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Africa Oil 45% *
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others 40%
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* Subject to Africa Oil fulfilling its sole funding obligation to
Range Resources Ltd.
In addition to the above properties, Lion has cash, cash receivables
and tradable securities with an approximate aggregate value of $30,352,336.
Assuming satisfactory completion of due diligence, it is anticipated
that the definitive arrangement agreement will be entered into by March 25,
2011. The definitive agreement will provide for conditions precedent
that are standard for a transaction of this nature, including receipt of all
regulatory, partner and third party approvals, TSX Venture Exchange approval
and approval by Lion Energy's shareholders. Lock-up agreements have
been entered into between Africa Oil and the Company's directors and certain
of its principal shareholders who hold, in aggregate, 29.23% of the issued
and outstanding common shares of Lion Energy.
Lion Energy has engaged Haywood Securities Inc. as its financial
advisor in respect of the proposed transaction.
John Nelson, the Company's President and CEO, said: "The plan of
arrangement with Africa Oil will expose our shareholders to a greater number
of highly prospective east African exploration blocks with much higher
working interests, partners with very strong technical teams and long term
financial capability. Africa Oil has a seasoned management team and
sufficient capital to fund additional exploration opportunities and
development programs in the event of a discovery."
Keith Hill, Africa Oil's President and Chief Executive Officer,
commented, "The acquisition of Lion consolidates our interest in the
East African rift basins in Kenya and Puntland (Somalia).
The cash portion of the deal will further strengthen our balance sheet to
allow us to fully fund the upcoming aggressive exploration drilling
campaign."
As indicated above, completion of the proposed transaction is subject
to a number of conditions, including shareholder approval. There can be no
assurance that the Transaction will be completed as proposed or at all.
On behalf of the Board,
LION ENERGY CORP.
John R. Nelson
President and Chief Executive Officer
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 NEWS
RELEASE
Forward-Looking Statements:
Certain information provided in this press release constitutes
forward-looking statements. The words "anticipate",
"expect", "project", "estimate",
"forecast" and similar expressions are intended to identify such
forward-looking statements. Specifically, this press release contains
forward-looking statements relating to the Transaction. The reader is
cautioned that assumptions used in the preparation of such information,
although considered reasonable at the time of preparation, may prove to be
incorrect. Actual results will vary from the information provided herein as a
result of numerous known and unknown risks and uncertainties and other
factors. You can find a discussion of those risks and uncertainties in our
Canadian securities filings. Such factors include, but are not limited to:
the failure to obtain necessary Lion shareholder approval with respect to the
Transaction, the failure to obtain necessary regulatory approvals or satisfy
the conditions to closing the Transaction, general economic, market and
business conditions; fluctuations in oil prices; the results of exploration
and development drilling; recompletions and related activities; timing and
rig availability, the uncertainty of reserve estimates; changes in
environmental and other regulations; risks associated with oil and gas
operations; and other factors, many of which are beyond the control of Lion.
Except as may be required by applicable securities laws, Lion assumes no
obligation to publicly update or revise any forward-looking statements made
herein or otherwise, whether as a result of new information, future events or
otherwise.
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