GTO Resources Enters Deal to Acquire Finavera Gas

GTO Resources

GTO Resources has entered into a letter of intent to acquire Finavera Gas Ltd., a private Irish company which owns petroleum licenses covering the Lough Allen Basin straddling the border between the Republic of Ireland and Northern Ireland.

Highlights of the Transaction

Pursuant to the terms of the Letter of Intent, the Corporation will issue to the shareholders of Finavera approximately 41,437,283 common shares at a deemed price of CAD$0.75 per share for aggregate consideration of approximately $31,077,962. In addition, it is intended that warrants and options to purchase Common Shares will be issued to securityholders of Finavera in exchange for their outstanding Finavera warrants and options, respectively, on such terms and conditions as are acceptable to the TSX Venture Exchange. As the former securityholders of Finavera will own or control more than 50% of the Corporation upon completion of the Transaction, the Transaction is classified as a "Reverse Take Over" pursuant to Policy 5.2 of the Exchange and is subject to the approval of the Exchange. The Transaction is not a non-arm's length transaction pursuant to the policies of the Exchange.

In addition, it is intended that the Transaction will constitute the Corporation's "Reactivation Transaction" as such term is defined in Exchange Policy 2.6. In connection with the Transaction, the Corporation will apply to the Exchange to be transferred from NEX to the Exchange. It is expected that upon completion of the Transaction, the Corporation as the resulting issuer will be listed as a Tier 2 Oil & Gas Issuer under the policies of the Exchange.

It is expected that the Transaction will occur by way of plan or arrangement or other business combination subject to review of tax, accounting, corporate and securities law issues. Therefore, it is anticipated that the Transaction will be subject to approval by the shareholders of the Corporation. In the event such meeting is held, shareholders will be asked to approve the Transaction and to also approve a change of name of the Corporation to "Finavera Gas Inc." or a similar name reflecting the Corporation's focus on the business of Finavera.

Completion of the Transaction is subject to a number of conditions, including, but not limited to, completion of due diligence, the entering into of a formal agreement between the Corporation and Finavera and receipt of all required regulatory and shareholder approvals, as applicable. There can be no assurance that the Transaction will completed as proposed or at all.

The Financing

Concurrently with the closing of the Transaction, GTO intends to complete a private placement of Common Shares at a price of $0.75 per share to raise gross proceeds of up to $3,600,000 (the "Financing"). Finder's fees or commissions may be paid in connection with the Financing in amounts to be determined and which will be made in accordance with the policies of the Exchange and market practice. The Financing will close at the time of and will be conditional upon the closing of the Transaction.

GTO was incorporated under the laws of the Province of British Columbia on April 26, 1984 under the name "Chablis Resources Ltd.". On September 6, 1988, the Corporation changed its name to "Westhill Resources Ltd.". Effective March 3, 1992, the Corporation underwent a reorganization and changed its name to "Breckenridge Resources Ltd.". On September 25, 2003, the Corporation completed a reorganization and changed its name to "GTO Resources Inc."

The Corporation is a natural resource company engaged in the evaluation, acquisition, exploration and development of mineral resource properties.

Finavera is a private company based in the Republic of Ireland created to build a portfolio of assets in the oil and gas sector, with a particular focus on natural gas. Finavera has 100% ownership of two exploration licenses in the Republic of Ireland and one exploration license in Northern Ireland (the "Lough Allen Project"). In addition, Finavera owns 100% of Finavera UK Ltd. The Lough Allen Project consists of three onshore exploration licenses covering 1,630 square kilometers. It is anticipated that Ryder Scott Company will be retained to prepare a National Instrument 51-101 compliant technical report on the Lough Allen Project.