Solara Exploration Closes Debenture Financing

Solara Exploration Ltd. (TSX VENTURE:SAA.A) (TSX VENTURE:SAA.B) has closed its first private placement of fixed rate convertible debentures for aggregate gross proceeds of $2,150,000. Pursuant to the Financing, Solara issued 2,150 Convertible Debentures at a price of $1,000 per debenture. The Debentures have a coupon of 8.5% per annum, payable semi-annually in arrears commencing six months from closing and thereafter every six months until maturity. Each $1,000 Debenture is convertible at the option of the holder at any time prior to July 7, 2011 or the redemption date into 667 Class A Shares of the Company at a price of $1.50 per share. Each Debenture is accompanied by 500 detached bonus warrants. Each full bonus warrant plus $1.80 will entitle the warrant holder to purchase one Class A Share of the Company up until December 31, 2007. The Debentures are redeemable at the option of the Company at any time after July 6, 2007 at $1,050 per Debenture, provided that the average trading price of the Company exceeds $1.80 for twenty consecutive days prior to the Notice Date.

The net proceeds of the Offering will be used for asset acquisitions and the drilling, development, tie-in and completion of the Company's oil and gas properties in western Canada. The Financing was sold pursuant to securities exemptions in the provinces of Alberta, British Columbia and Ontario. All securities issued pursuant to the Financing are subject to a four-month hold period pursuant to applicable securities legislation. Blackmont Capital Inc. of Toronto, Ontario acted as Agent on the Financing. The Agent was paid a cash fee of 7% of the gross proceeds and 7% warrants.

Solara Exploration is an emerging junior oil and gas company focused on the exploration, development and acquisition of oil and natural gas in western Canada.