In conjunction with the Private Placement, the Company's major shareholder, Primeline International Holdings Inc. will convert $7.9 million of debt into 5,266,667 Units of the Company, at a debt conversion price of $1.50 per Unit, such Units to be issued on the same terms and conditions as the Units issuable upon the Private Placement.
The Company also proposes to grant director, officers, employees and consultants stock options, under the Company's previously approved stock option plan, after giving effect to completion of the Private Placement and debt conversion, such options to be exercisable at a price of $1.50 per share for a term of five years.
The Company owns a 75% interest in the Petroleum Contract for Block 25/34 in the East China Sea, with the China National Offshore Oil Corporation ("CNOOC") and is the operator for the Block. The Company made the gas discovery, Lishui 36-1, in the Block which has two wells which flowed at 9.8 and 12 mmcfpd of natural gas. The Block encompasses 7,006 sq kms which contains the Lishui Gas play and many other potential prospects.
Proceeds from the Private Placement will be used for the following purposes: to acquire further 3D seismic to better define prospects near existing discoveries on Block 25/34; drill an additional appraisal/step-out exploration well; upon evaluation, drill one additional well to expand the current resource base; project development; and for general working capital purposes.
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