Union Gold Inc. Enters Into a Binding Merger Agreement With Shoal Point Energy Ltd.
UNION GOLD INC. a TSXV listed Company, announces that it has today entered into an binding agreement (the “Letter Agreement”) with respect to a proposed amalgamation or plan of arrangement, or other form of merger or business combination (the “Transaction”) with Shoal Point Energy Ltd. (“Shoal Point”).
About Shoal Point Energy:
Shoal Point Energy Ltd. is a petroleum exploration and development company based in Calgary, Alberta, Canada. Shoal Point is presently drilling a high impact exploration well in Western Newfoundland. The “SPE et al Shoal Point 2K-39″ well is being drilled with partners Canadian Imperial Venture Corp (“Canadian Imperial”) based in St John’s Newfoundland and PDI Production Inc of St Johns, owned by Enegi Oil (“Enegi”) based in Manchester England. Shoal Point Energy Ltd. is the operator of the 2K39 well and post earn in will have a 45.5% working interest, Canadian Imperial will hold a 22.5% working interest and Enegi will hold a 32% working interest.
In addition to the Western Newfoundland prospect, Shoal Point also has an interest in the South Stoney Creek lands (approximately 40,000 acres) located in the Moncton Sub-basin of New Brunswick, which is a well established oil and gas producing area. Shoal plans to expand on these initial opportunities in Atlantic Canada as the management team has extensive experience in the area.
About Union Gold Inc.:
Along with liquid assets in excess $3.5 million, Union Gold has gold exploration projects located in South Western New Brunswick and Northern Ontario.
Summary of the Proposed Transaction
At the upcoming Annual General Meeting of Union Gold to be held on June 6th, 2008 and to effect the Transaction Union Gold proposes to split its common shares on a 2.5 new for one old basis. Security holders of Shoal will receive .66 Union Gold securities for each for each Shoal security post the Union Gold split. As result of this transaction former security holders of Shoal will own approximately 75% of the outstanding common shares of Union Gold and the current security holders of Union Gold will hold approximately 25% of the outstanding common shares of Union Gold. There will be approximately 47.5 M basic shares outstanding of the newly combined entity post the Transaction.
The parties to this Letter Agreement acknowledge that the final structure of the Transaction will be set forth in the Definitive Agreement and will be determined on the basis of tax, securities and corporate law advice in order to ensure the most efficient structure for each of the parties and their respective security holders.
Upon execution of the Letter Agreement, the parties agree to promptly begin negotiating in good faith with a view of entering into a mutually accepted definitive agreement (the “Definitive Agreement”) incorporating the terms hereof and other terms customary of a Transaction of this nature. The Definitive Agreement shall be executed by no later than June 6, 2008 unless that date is extended by mutual written agreement.
Investors are cautioned that, except as disclosed in the Definitive Agreement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Union Gold should be considered highly speculative.
Kingsdale Capital Markets Inc. has agreed to act as Advisor for the Transaction. An agreement to advise should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.
There can be no assurance that the Transaction will be completed as proposed or at all.
Contacts: Union Gold Inc. Jeffrey Becker President
Source: Union Gold Inc.