Sprott Resource announces $100M equity financing by subsidiary Orion Oil & Gas

By The Canadian Press

TORONTO - Sprott Resource Corp. (TSX: SCP.TO) announced Thursday that a syndicate co-led by Cormark, FirstEnergy and TD Securities will use its best efforts to arrange a $100-million equity offering by Orion Oil & Gas, a Sprott subsidiary that is working on a reverse takeover of Wintraysan Capital Corp. (TSXV: WTS-P.V).

Orion was recently incorporated specifically to acquire Auriga Energy Inc, a private Alberta oil and gas company.

That Auriga Energy transaction, announced Sept. 28, was originally expected to close by the end of October but on Wednesday Orion said it expects the Auriga acquisition will close by no later than Nov. 15.

In connection with that deal but through a separate process, Orion plans to raise $100 million from the sale of subscription receipts at $5 per receipt.

Each subscription receipt will later be exchanged for one common share of the newly enlarged Orion company following the Wintraysan deal.

Orion announced Wednesday that Wintraysan will issue approximately 870 million of its common shares to "acquire" Orion through a stock swap. Orion shareholders will end up with 99 per cent of Wintraysan shares, making the transaction a reverse takeover of Wintraysan.

The deal is the qualifying transaction for Vancouver-based Wintraysan - a capital pool company under the rules of the TSX Venture Exchange-and was conditional upon completion of the $100-million financing.

In conjunction with the equity offering it is expected that Wintraysan will consolidate its shares on the basis of one new share for every 15 existing Wintraysan shares.

The proceeds of the financing will be held in escrow pending regulatory approval of the take over.

After this, the proceeds of the offering will be released to the new Orion company.

If the deal falls through, those holding the subscription receipts are entitled to a full return and interest earned on the escrowed funds.

The offering is scheduled to close by early December this year.

Sprott Resources is a Toronto-based company mineral exploration company with copper, silver and gold properties in South America and the United States.