In consideration, Valkyries will receive an upfront cash payment of US $4.6 million and a potential deferred bonus payment. Any bonus payment will be calculated on the basis of US $1 per oil equivalent barrel of additional net proved reserves in respect of 3 selected properties, effective on the second anniversary of the transaction and as certified by an independent reserves evaluator acceptable to both parties. The transaction will be effective as of September 1, 2005 and is subject to all requisite regulatory approvals. No finder's fee is payable in respect of the transaction.
Certain insiders of Valkyries are also insiders of Newmex and, as such, the transaction constitutes a non-arm's length acquisition and a Reviewable Transaction under the rules and policies of the TSX Venture Exchange.
Valkyries President and CEO Keith Hill stated, "While we have enjoyed a great deal of success on our U.S. properties during the start-up phase of the Company, the size and scale of the reserves are no longer material to our company's objectives. The structure of the deal will provide funding and allow us to focus on developing our core assets in Russia while retaining some of the upside potential through the deferred bonus payments."
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