AFRICA OIL CORP. has signed a Letter of Intent with Red Emperor Resources NL ("Red Emperor") pursuant to which Red Emperor will acquire a participating interest in the Dharoor and Nugaal Valley Blocks located in Puntland (Somalia).
p>AFRICA OIL CORP. has signed a Letter of Intent with Red Emperor Resources NL ("Red Emperor") pursuant to which Red Emperor will acquire a participating interest in the Dharoor and Nugaal Valley Blocks located in Puntland (Somalia).
Under the terms of the Letter of Intent, Red Emperor will earn a 10 per cent interest in both the Dharoor and Nugaal Valley Blocks and is committed to paying a disproportionate share of costs related to the one well drilling commitment included in the first exploration period of both the Dharoor and Nugaal Valley Production Sharing Agreements. Red Emperor may, at its own discretion, exercise a right to increase its participating interest by an additional 10 per cent in each of the Dharoor and Nugaal Blocks. Red Emperor must advise Africa Oil on or before 31 August 2010 if they wish to exercise this option.
The transaction is conditional on the parties finalising a formal farming agreement and the satisfaction of certain conditions, including due diligence, ministerial approval, and Red Emperor raising not less than AUS$2.8 mn, AUS$2 mn of which is to be deposited into escrow by not later than July 30, 2010, other regulatory approvals and, if required, shareholder approval.
A finder's fee in the amount of up to CDN$250,000, 50 per cent of which is payable in common shares of the Company, is payable to Komodo Capital Pty. Ltd. in connection with the farmout to Red Emperor.
The Company continues its efforts to identify international drilling and drilling related contractors willing to participate in operations in Puntland (Somalia) on commercially acceptable terms.
