VANCOUVER, BC, June 11, 2020 /CNW/ - Reconnaissance Energy
Africa Ltd. (the "Company" or
"ReconAfrica") (TSXV: RECO) (OTC: RECAF) (Frankfurt: 0XD) is pleased to announce it has
been granted a petroleum licence in northwestern Botswana for 2.45 million acres (9,921 km2)
(the "Licence") and has entered into a farm-out option agreement on
these lands. The Botswana lands
are contiguous to the Company's 6.3 million acre petroleum licence
in northeast Namibia.
Eastern Extension of the Kavango Basin
As a result of acquiring and interpreting additional tight grid
regional aeromagnetic data, ReconAfrica feels it has definitively
established the eastern boundary of the Kavango basin, where a deep
and high potential section of the basin extends from northeast
Namibia into northwest
Botswana. As a consequence,
ReconAfrica has successfully acquired the Licence covering the
eastern part of the entire Kavango basin.
Terms of the Licence are as follows:
- 100% working interest in all petroleum rights from surface to
basement
- An initial 4-year exploration period, with renewals up to an
additional 10 years, in accordance with the Botswana Petroleum
(Exploration and Production) Act
- Upon declaration of commercial production, the operator holds
the right to enter into a 25-year production licence with a 20-year
renewal period, in accordance with the Botswana Petroleum
(Exploration and Production) Act
- Royalties associated with the production licence will be
subject to negotiation, in accordance with the Botswana
Petroleum (Exploration and Production) Act, and generally range
from 3 to 10% of gross revenue from production
- The Company has committed to a minimum work program of
US$432,000 over the first 4-year
exploration period
- The corporate tax rate in Botswana is 22%
A new and more regional isometric of the deep Kavango basin can
be seen on the Company's website - Isometric
Farm-out Option Agreement
The acquisition and analysis process of the Botswana lands and initial data set used to
define the most eastern portion of the Kavango basin in
Botswana was initiated over the
past several years by a private company, controlled by Mr.
Craig Steinke, a related party to
ReconAfrica.
While Mr. Steinke was proceeding with the application process,
he proposed a joint venture with ReconAfrica. In consideration of
Mr. Steinke allowing ReconAfrica to lead the acquisition and
operate the Botswana lands, the
Company, through its wholly-owned Botswana subsidiary, has entered into a
farm-out option agreement (the "Agreement") with a private company
wholly-owned by Mr. Steinke (the "Farmee") under the following
terms:
- The farm-out option will carry a 3-year term providing the
Farmee with the right to acquire a 50% working interest in the
Licence (the "Option")
- Initial payment from the Farmee to ReconAfrica is C$100,000
- If the Option is exercised within 18 months of the date the
Licence was awarded, the Farmee will pay ReconAfrica C$1,000,000 upon transfer of the Licence
following exercise
- If the Option is exercised between 18 months and 36 months from
the date the Licence was awarded to ReconAfrica, the Farmee will
pay ReconAfrica C$1,500,000 upon
transfer of the Licence following exercise
The Agreement is subject to certain conditions, including the
approval of the Botswana Department of Mines and Ministry of
Mineral Resources, Green Technology and Energy Security ("MMR") to
the transfer of the Licence upon exercise of the Option.
The Agreement may be terminated if the MMR does not provide its
approval to the transfer within six months following exercise of
the Option, the transfer is not completed within six months
following the exercise of the Option, or by mutual agreement.
Drilling Update
Due to travel restrictions precipitated by the COVID-19
pandemic, the Company has deferred drilling operations which were
originally scheduled to commence by June 30,
2020. As Namibia was only
lightly affected by the COVID-19 virus, with only 29 confirmed
cases (16 recoveries and 13 active cases) as of the date of this
news release, guidance from Namibia on the timing of lifting international
travel restrictions suggests international travel will commence in
July or August, 2020. As a result, ReconAfrica's revised drilling
schedule, subject to the lifting of travel restrictions in a timely
manner, includes shipping the Company's Crown 750 drilling rig from
Houston, Texas to Walvis Bay,
Namibia on or before the second
week of September with an anticipated spud, of the first of the
three initial wells, late October, 2020.
Regulatory
The Agreement is not an "Arm's Length Transaction" as such term
is defined by the TSX Venture Exchange (the "TSXV") and therefore
constitutes a "related party transaction" as such term is defined
in Multilateral Instrument 61-101 – Protection of Minority
Security Holders in Special Transactions ("MI 61-101").
Craig Steinke, the sole director and
shareholder of the Farmee, has beneficial ownership of more than
10% of ReconAfrica's common shares.
In respect of the requirements of MI 61-101 and TSXV Policy 5.9,
the Company relied on the exemptions from the formal valuation and
minority shareholder approval requirements under MI 61-101. The
Company was exempt from the formal valuation requirements of MI
61-101 as no securities of the Company are listed on the specified
markets outlined therein. Additionally, the Company was exempt from
the minority shareholder approval requirements of MI 61-101 as the
fair market value of the transaction is less than 25% of the
Company's market capitalization.
In addition, the Agreement constitutes a "Reviewable
Transaction" in accordance with TSXV Policy 5.6 and is subject to
acceptance of the TSXV.
A material change report respecting the Agreement will be filed
less than 21 days before the anticipated closing date. This
abbreviated period is reasonable and necessary in the circumstance
as the Company wishes to complete the transaction in a timely
manner. A copy of such material change report will be provided to
any shareholder of the Company upon request, without charge.
ReconAfrica is a junior oil and gas company engaged
in the opening of the newly discovered deep Kavango Sedimentary
Basin, in northeastern Namibia and
northwestern Botswana where the
Company holds petroleum licences comprising approximately 8.75
million contiguous acres.
Neither the TSXV nor its Regulation Services Provider (as
that term is defined in policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this
release.
Cautionary Note Regarding Forward-Looking
Information: Certain statements contained in this press
release constitute forward-looking information. These statements
relate to future events or future performance. Such statements
include, without limitation: the receipt of the MMR approval to the
transfer upon exercise of the Option, the entry of the Company and
the Farmee into a joint operating agreement, the receipt of the
TSXV's acceptance of the Agreement and the anticipated
recommencement of drilling. The use of any of the words "could",
"intend", "expect", "believe", "will", "projected", "estimated",
"suggests" and similar expressions and statements relating to
matters that are not historical facts are intended to identify
forward-looking information and are based on ReconAfrica's current
belief or assumptions as to the outcome and timing of such future
events. Actual future results may differ materially. Various
assumptions or factors are typically applied in drawing conclusions
or making the forecasts or projections set out in forward-looking
information. Those assumptions and factors are based on information
currently available to ReconAfrica. The forward-looking information
contained in this release is made as of the date hereof and
ReconAfrica undertakes no obligation to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise, except as required by
applicable securities laws. Because of the risks, uncertainties and
assumptions contained herein, investors should not place undue
reliance on forward-looking information. The foregoing statements
expressly qualify any forward-looking information contained
herein.
SOURCE Reconnaissance Energy Africa Ltd.