CALGARY, Nov. 29, 2017 /CNW/ - Sterling Resources Ltd.
(TSXV:SLG) ("Sterling" or the "Company") announces interim
operating and financial results for the three and nine month
periods ended September 30,
2017. Unless otherwise noted, all figures contained in this
release are denominated in United
States dollars. The Company's interim condensed
consolidated financial statements and management's discussion and
analysis ("MD&A") for the reporting period have been filed on
SEDAR at www.sedar.com and posted on the Company's website at
www.sterling-resources.com.
On November 9, 2017 Sterling
Resources Ltd. ("Sterling") and PetroTal Ltd. ("PetroTal") entered
into an arrangement agreement (the "Arrangement Agreement") whereby
Sterling and PetroTal will complete a business combination pursuant
to a plan of arrangement (the "Plan of Arrangement") under the
Alberta Business Corporations Act (the "PetroTal Transaction"). The
Plan of Arrangement will result in the amalgamation of Sterling and
PetroTal under the name Sterling Resources Ltd. ("New
Sterling").
Pursuant to the PetroTal Transaction, each common share of
PetroTal ("PetroTal Share") will be exchanged for 5.35 common
shares of Sterling ("Sterling Shares"), following which Sterling
and PetroTal will be amalgamated to form New Sterling. The PetroTal
Transaction is expected to constitute a "Reverse Takeover" pursuant
to the policies of the TSX Venture Exchange (the "TSXV") and is
subject to the acceptance of the TSXV. Sterling is at arms' length
to PetroTal.
In addition, PetroTal has entered into a share purchase
agreement dated as of November 9,
2017 (the "SPA") with Sterling, Gran Tierra Energy Inc.
("GTE"), and its wholly owned subsidiary Gran Tierra Energy
International Holdings Ltd. ("GTEIH"), to acquire Gran Tierra
Energy International (Peru)
Holdings B.V. ("GTE Peru"), an indirect wholly-owned subsidiary of
GTE. Pursuant to the SPA and in the manner set forth in the Plan of
Arrangement, New Sterling shall acquire all of the issued and
outstanding common shares in the capital of GTE Peru (the "GTE Peru
Shares") and, in consideration for the GTE Peru Shares, New
Sterling shall issue 187,265,918 common shares of New Sterling
("New Sterling Shares") to GTEIH at a deemed price of approximately
$0.1869 per New Sterling Share,
subject to adjustment in cash as set forth in the SPA (the
"Acquisition"). As additional consideration for the transactions
contemplated in the SPA, GTEIH shall receive a 20 per cent working
interest in Block 107 of the Bretaña field located in Peru at closing of the Acquisition and,
following the drilling of an initial exploration well, GTEIH may,
for no additional consideration, elect to either retain its 20 per
cent working interest (a "Positive Election") or transfer its 20
per cent working interest to New Sterling for no consideration.
From and after the date of a Positive Election, GTEIH will pay its
pro rata share of costs associated with its 20 per cent working
interest. GTE is at arms' length to PetroTal and Sterling.
In conjunction with the closing of the PetroTal Transaction,
PetroTal will enter into an agreement with a syndicate of
investment dealers (the "Agents") co-led by Eight Capital and
Pareto Securities AS and including PillarFour Securities Inc., for
a brokered private placement offering of subscription receipts
("Subscription Receipts") on a best efforts agency basis at a price
of US$1.00 per Subscription Receipt
for aggregate gross proceeds of a minimum of US$25 million (the "Financing"). The Financing is
expected to close on or about December 7,
2017. Each Subscription Receipt will be exchangeable into
one PetroTal Share without any further action required on the part
of the holder of the Subscription Receipt and without payment of
any additional consideration, upon the closing of the PetroTal
Transaction.
While Sterling anticipates the satisfactory completion of the
Proposed Transaction, in the event that PetroTal is unable to
complete the Financing on satisfactory terms, PetroTal and Sterling
will be unable to complete the Proposed Transaction. In that
circumstance, Sterling will undertake steps to effect its
liquidation and winding up and the distribution of its remaining
assets to the Sterling Shareholders as soon as practicable and in
the manner previously disclosed to the Sterling Shareholders.
FINANCIAL AND OPERATING HIGHLIGHTS
- Net working capital was a surplus of $19.0 million as at September 30, 2017, and has increased during the
quarter from $17.2 million as at
June 30, 2017 following the reversal
of the provision for wind-up costs as it is no longer the intention
of the company to wind-up.
- For the nine month period ended September 30, 2017, the Company recorded a net
loss of $4.8 million ($0.03 per weighted average Common Share) from
continued operations and a loss of $242.9
million ($1.65 per weighted
average Common Share) from discontinued operations compared with a
net loss of $2.6 million
($0.01 per weighted average Common
Share) from continued operations and a net loss of $30.3 million ($0.10 per weighted average Common Share) from
discontinued operations in the nine month period ended September 30, 2016. The net loss in 2017,
compared to 2016, was much higher following the completion of the
ONE Transaction which resulted in a write-down of $172.0 million on the disposed operations.
- For the three month period ended September 30, 2017, the Company recorded a net
income of $1.7 million ($0.01 per weighted average Common Share) for
continued operations compared with a net loss of $1.1 million ($0.01
per weighted average Common Share) for continued operations and a
net loss of $4.9 million
($0.03 per weighted average Common
Share) for discontinued operations in the three month period ended
September 30, 2016. The net income in
2017, compared to the net loss in 2016, was mainly due to the
reversal of the provision for wind-up costs.
NON-GAAP FINANCIAL MEASURES
This news release contains references to "Net working capital"
which, as used in this news release, is defined as current assets
less current liabilities excluding the Cladhan funding arrangements
(now disposed of) and is used to monitor the short term financial
health of the company. Net working capital (deficit) provides
additional information that management believes is meaningful in
describing the Company's operational performance, liquidity and
capacity to fund capital expenditures and other activities. Net
working capital (deficit) does not have a standardized meaning
prescribed by GAAP and may not be comparable to similar measures
presented by other entities. Readers are cautioned that this
measure should not be construed as an alternative to other measures
of financial performance calculated in accordance with GAAP.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Filer Profile No. 00002072
FORWARD-LOOKING STATEMENTS
All statements included in
this news release that address activities, events or developments
that Sterling expects, believes or anticipates will, should or may
occur in the future are forward-looking statements. In
particular, this news release contains forward-looking statements
with respect to the PetroTal Transaction, the Acquisition and the
Financing and the wind‐up and dissolution of the Company.
These forward-looking statements involve numerous assumptions
made by Sterling based on its experience, perception of historical
trends, current conditions, expected future developments and other
factors it believes are appropriate in the circumstances. In
addition, these statements involve substantial known and unknown
risks and uncertainties that contribute to the possibility that the
predictions, forecasts, projections and other forward-looking
statements will prove inaccurate, certain of which are beyond
Sterling's control, including: the impact of general economic
conditions in the areas in which Sterling operates, civil unrest,
industry conditions, changes in laws and regulations including the
adoption of new environmental laws and regulations and changes in
how they are interpreted and enforced, increased competition, the
lack of availability of qualified personnel or management,
fluctuations in commodity prices, foreign exchange or interest
rates, stock market volatility and obtaining required approvals of
regulatory authorities. In addition, there are risks and
uncertainties associated with oil and gas operations. Readers
should also carefully consider the matters listed under the heading
"Risk Factors" in the Company's MD&A.
Undue reliance should not be placed on these forward-looking
statements, as there can be no assurance that the plans, intentions
or expectations upon which they are based will occur. Sterling's
actual results, performance or achievements could differ materially
from those expressed in, or implied by, these forward-looking
statements. These statements speak only as of the date of the news
release. Sterling does not intend and does not assume any
obligation to update these forward-looking statements except as
required by law.
ABOUT STERLING
Sterling Resources Ltd. is a
Canadian-listed company whose registered office is in Calgary, Alberta. The Common Shares are listed
and posted for trading on the TSXV under the symbol "SLG".
SOURCE Sterling Resources Ltd.