Simba Energy Inc. (TSXV: SMB, Frankfurt: GDA, OTCQX:
SMBZF) (“Simba”), the onshore pan-African oil and gas explorer with
assets in Kenya, Guinea and Chad, is pleased to announce that it
has signed a memorandum of understanding (the “MOU”) with Ajax
Exploration Ltd. (“Ajax”), a privately-owned oil and gas company,
to farmout a 66% interest and operatorship of Block 2A, onshore
Kenya (“Block 2A”).
The MOU, which is to be superseded by definitive farmout
agreement (the “Farmout Agreement”) that Simba expects to be
finalized and executed shortly, is intended to set out the
principal commercial terms of the farmout only, which are as
follows:
Highlights of MOU:
- The transaction provides a significant
investment in Simba’s Kenya asset, delivering a fully carried
pre-drill exploration program and a commitment to drill and carry
Simba for one exploration well
- Ajax is to commit to a work program
including drilling one well for Simba representing a gross
investment of up to US$36.5 million (assuming a well cost of US$25
million in Kenya)
- Ajax will pay Simba up to US$3.1
million in back costs. In addition, Ajax will provide a net carry
of up to US$12.4 million (assuming a well cost of US$25
million)
The MOU provides that upon execution of the Farmout Agreement,
Ajax is to advance to Simba a loan of the sum of US$1,300,000 (the
“Loan”) to cover some back costs incurred by Simba prior to the
effective date of the Farmout Agreement and to concurrently issue a
2 year convertible loan note (the “Loan Note”) to evidence the
Loan. The Loan is to be extinguished and the Loan Note cancelled if
and when the Farmout Agreement receives Kenyan government approval
and Simba transfers the 66% interest in Block 2A to Ajax. Simba
anticipates receiving government approval later this year after
executing the Farmout Agreement and transferring the 66% interest
to Ajax shortly thereafter, said Agreement and transfer subject to
Kenya government approval; however, if such approval and transfer
has not occurred within 365 days after signing of such Farmout
Agreement, or in the event of default under the Loan Note, then
Ajax may elect to convert the Loan into Simba common shares at a
conversion price of C$0.075 per share during the first year, or
C$0.10 per share thereafter. The Loan is to bear interest at a rate
of 3% and permit Simba to prepay a minimum of US$250,000 at any
time without penalty. In addition, the Loan Note will restrict
Simba from creating, incurring or permitting the subsistence of any
security interest over the Kenya production sharing contract or
related assets, or from creating any indebtedness or securities or
entering into any other obligation that ranks in priority to the
Loan Note.
Hassan Hassan, Managing Director of Operations stated, “The MOU
with Ajax provides Simba and its stakeholders with the opportunity
to accelerate its exploration program in Kenya. Simba’s first
farmout agreement provides an attractive valuation marker for part
of its asset portfolio and delivers the required funding for our
upcoming exploration campaign.”
Andrew Shrager, Chairman of Ajax said, “This MOU represents a
second step in our relationship with Simba for its Kenya
exploration block. In 2012, our associate, GeoDynamics Worldwide
srl conducted a broad based grid Passive Seismic survey which
identified potential areas for further exploration efforts. We now
intend to apply our suite of technologies with the aim of speeding
up the exploration phase, and drill our first well in late
2014.”
The Farmout Agreement will be subject to governmental approval,
and the terms of the Farmout Agreement and the Loan will also be
subject to receipt of acceptance for filing by the TSX Venture
Exchange.
About Simba Energy:Simba Energy Inc. is a Pan-African oil
and gas exploration company with onshore PSCs in Kenya, Guinea and
Chad. Simba focuses on onshore oil and gas exploration in areas
that are under developed or not previously exploited.
Simba’s objective is to establish itself as a diversified
international explorer and developer with a growing oil and gas
acreage position with significant upside potential for
shareholders.
About Ajax:Ajax Exploration Limited is a newly formed oil
and gas exploration company with a particular focus on key
technical aspects of G&G analysis. Ajax utilizes a combination
of emergent technologies which have been proven in prior
exploration work that include passive seismic, ultra low frequency
active seismic, and a variety of remote sensing tools which it
believes significantly enhances the probability of drilling
success.
The company is privately owned, with principal backing from
private equity sources that have established businesses in oil and
gas trading, terminal construction and logistics, as well other
worldwide investments including satellite technology, media,
agriculture and real estate holdings.
ON BEHALF OF THE BOARD
"Robert Dinning", President & CEO
For further information, please contact: Mark Sommer,
mark@simbaenergy.ca , Toll Free: 1-855-777-4622, or Paul Vonk,
pvonk@simba-energy.com, +44 (0) 20 7930 8678; ; or visit:
www.simbaenergy.ca; or
Financial Public Relations (UK), Lionsgate Communications,
Jonathan Charles, jcharles@lionsgatecomms.com, + 44 (0)779 189
2509.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Forward-looking Information
Certain statements made and information contained herein may
constitute “forward-looking information” within the meaning of
applicable Canadian securities legislation. These statements relate
to future events or the Company’s future performance, business
prospects or opportunties. Forward-looking information includes,
but are not limited to, statements with respect to the receipt of
the Loan, the entering into and the receipt of Kenyan governmental
approval of the Farmout Agreement and the additional financing to
be received from, and the amount and timing of work to be conducted
by, Ajax under the Farmout Agreement. Often, but not always,
forward-looking information can be identified by the use of words
such as “plans”, “expects” or “does not expect”, “is expected”,
“budget”, “scheduled”, “estimates”, “forecasts”, “intends”,
“anticipates” or “does not anticipate”, or “believes” or variations
of such words and phrases or words and phrases that state or
indicate that certain actions, events or results “may”, “may have”,
“could”, “would”, “might” or “will” be taken, occur or be achieved.
Although management believes that the assumptions made and the
expectations represented by such forward-looking information are
reasonable, there can be no assurance that forward-looking
information herein will prove to be accurate. Forward-looking
information by its nature is based on assumptions and involve known
and unknown risks, uncertainties and other factors which may cause
Simba’s actual results, events or achievements to be materially
different from those anticipated by such forward-looking
information. Simba believes that the expectations reflected in the
forward-looking information is reasonable, but no assurance can be
given that these expectations will prove to be correct and such
forward-looking information should not be unduly relied upon. Simba
does not intend, and does not assume any obligation, to update the
forward-looking information, except as required by applicable laws.
The forward-looking information involves risks and uncertainties
relating to, among other things, changes in oil prices, results of
exploration and development activities, uninsured risks, regulatory
changes, defects in title, availability of materials and equipment,
timeliness of government or other regulatory approvals, actual
performance of facilities, availability of financing on reasonable
terms, availability of third party service providers, equipment and
processes relative to specifications and expectations and
unanticipated environmental impacts on operations. Actual results
may differ materially from those expressed or implied by such
forward-looking information.
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