VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 01/29/13 -- CaiTerra International Energy Corporation ("CaiTerra" or the "Company") (TSX VENTURE: CTI) is pleased to announce that it has signed a letter agreement to sell up to 50% of its interests in certain undeveloped mineral rights in the Faust area of Alberta (the "Faust Property") to an arm's length Alberta private company (the "Purchaser").
The Faust Property was recently acquired by CaiTerra on December 14, 2012 for a total cash payment of CDN$2,500,000 and is located just north of the prolific Swan Hills oil field and west of Black Pearl Resources Inc.'s Mooney Pool producing oil property and south of the Town of Slave Lake. The lands forming the Faust Property are Crown leases with varying expiry dates. The Faust Property comprises approximately 18,600 net acres (approximately 30 sections) of lands of interest that are not subject to expiry for the next 3 years and a further 3,840 net acres (6 sections) of lands of interest that have been continued through to the end of April 2013.
Subject to receipt of all necessary approvals, including the approval of the TSX Venture Exchange, the purchase and sale of the Faust Property (the "Transaction") is expected to be completed as follows:
-- upon the initial closing, which is intended to occur on or about February 1, 2013 (unless otherwise agreed to by the parties), the Purchaser will purchase 25% of CaiTerra's interest in and to the Faust Property in consideration for the cash payment of CDN$1,000,000;-- the Purchaser shall have the option to purchase an additional 25% of CaiTerra's interest in and to the Faust Property in consideration for an additional cash payment of CDN$1,000,000 (the "Option"); and-- the Option must be exercised by notice in writing to CaiTerra on or before February 13, 2013 and the closing of the purchase and sale of such additional 25% interest contemplated by the Option shall occur on or before February 15, 2013 (unless otherwise agreed to by the parties).
Each party has also covenanted and agreed to use commercially reasonable efforts to negotiate in good faith and enter into a definitive agreement (the "Definitive Agreement") and any other ancillary documents in respect of the Transaction on or before February 1, 2013, such Definitive Agreement and ancillary documents to be in form and substance satisfactory to the parties thereto, including representations and warranties to each party customary in transactions of this nature. The entering into of the Definitive Agreement and the completion of the Transaction will subject to a number of conditions including, without limitation, the following: (i) prior to entering into the Definitive Agreement, the Purchaser shall have completed its due diligence on the Faust Property to its satisfaction, acting reasonably, including, without limitation, being satisfied that CaiTerra has good and valid title to the Faust Property; and (ii) all director, shareholder, securities and regulatory approvals and acceptances (as required) and all third party consents (as required) having been obtained including, without limitation, the approval of the TSX Venture Exchange. Notwithstanding the above, the Purchaser has agreed that its own due diligence review will be limited to a review of the due diligence recently conducted by CaiTerra when CaiTerra acquired the Faust Property.