Canoro Resources Ltd. Issues Update and Clarification on Amguri Project

    



    
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<p><span class="xn-location">VANCOUVER</span>, British Columbia, <span class="xn-chron">Oct. 13</span> /CNW/ -- Canoro Resources Ltd. (the "Company") (TSXV: CNS) provides the following update with respect to recent events relating to its Amguri project and other matters in order to provide further detail to its prior disclosures as required by the TSX Venture Exchange.</p>
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    Amguri Production Sharing Contract

    
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<p>On <span class="xn-chron">June 1, 2010</span>, the Company received a Show Cause Notice (the "Notice") from the Government of <span class="xn-location">India</span> Ministry of Petroleum and Natural Gas (the "MOPNG") alleging that the Company had violated certain provisions of the Amguri production sharing contract (the "Amguri PSC") as a result of the transactions contemplated under the investment agreement between the Company and Mass Financial Corp. dated <span class="xn-chron">April 16, 2010</span> (the "Transaction").  The MOPNG alleged that the Transaction required their prior consent under Article 29 of the Amguri PSC.  As set out in the Company's news release dated <span class="xn-chron">June 11, 2010</span>, shortly after receiving the Notice, the Company responded to the MOPNG with a detailed submission that supported the Company's view that both the facts of the situation as well as the language of the Amguri PSC were not consistent with the position of the MOPNG set out in the Notice.  For further information respecting the Notice please refer to the Company's press release dated <span class="xn-chron">June 7, 2010</span>, which includes excerpts therefrom.</p>
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<p>On <span class="xn-chron">August 14, 2010</span>, the Company served notice on the MOPNG referring the matter of whether the Company violated the Amguri PSC, amongst other things, to an arbitration tribunal pursuant to the terms of the Amguri PSC.  Both the Company and the MOPNG have appointed a member to the arbitration panel pursuant to the terms of the Amguri PSC and are awaiting the appointment of a third arbitrator by the current members of panel.  Accordingly, arbitration proceedings have not yet commenced.</p>
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<p>On <span class="xn-chron">August 30, 2010</span>, the Company announced that the MOPNG had provided the Company notice that it was terminating the Amguri PSC.  Such notice was received by the Company after be the close of markets on <span class="xn-chron">Friday, August 27, 2010</span> and stated that the 90-day period required to given by the MOPNG in relation to its purported termination commenced on <span class="xn-chron">June 1, 2010</span> when the Notice was provided to the Company.  This communication was the first time that the MOPNG had claimed that it considered the Notice to also be the notice of termination and accordingly the 90-day notice period would run from the date of its <span class="xn-chron">June 1, 2010</span> Notice.</p>
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<p>In its press release dated <span class="xn-chron">August 31, 2010</span>, the Company announced that it had obtained an ad interim injunction from the High Court of <span class="xn-location">Delhi</span> prohibiting termination of the Amguri PSC.  The ad interim injunction is effective until <span class="xn-chron">November 2, 2010</span>, being the date of the next scheduled hearing of the matter and provides for the status quo operation of the project until such time.</p>
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<p>The question of whether the Company is in breach of the Amguri PSC remains subject to determination by an arbitration tribunal.  The Company and its local counsels believe that, the notice of termination of the Amguri PSC is contrary to the terms of the Amguri PSC.</p>
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<p>As set out in the Company's Management's Discussion and Analysis for the period ended <span class="xn-chron">June 30, 2010</span> (the "Q1 MD&A"), the Company's Amguri project is carried on its balance sheet as at <span class="xn-chron">June 30, 2010</span> at a value of approximately <span class="xn-money">$46 million</span>, with the total assets of the Company being <span class="xn-money">$94.3 million</span> as at such date.  A termination of the Amguri PSC may result in the Company losing all or a substantial portion of its investment in the Amguri project, and would have a material adverse effect on the results of operations and financial position of the Company.  For further information, please refer to the Company's Q1 MD&A, a copy of which is available under the Company's profile on SEDAR (<a href="http://www.sedar.com">www.sedar.com</a>).</p>
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<p>In the event of such loss, the Company believes it would have a legal claim against the MOPNG relating to the loss of its investment.  However, there can be no assurance as to whether such claim would ultimately be successful or the amount that may be recoverable.</p>
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    Amguri Joint Operating Agreement

    
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<p>On <span class="xn-chron">May 6, 2010</span>, the Company was served in <span class="xn-location">Delhi</span>, <span class="xn-location">India</span> with notice of a petition by Assam Company <span class="xn-location">India</span> Ltd. ("Assamco"), the Company's 40% joint venture partner in the Amguri field, to appear in the High Court of <span class="xn-location">Delhi</span> pertaining to a petition under section 9 of the Arbitration and Conciliation Act, 1996 (the "Petition").  In the Petition, Assamco claimed that the Company violated the Amguri PSC and Joint Operating Agreement ("JOA") as a result of the Transaction and sought injunctive relief from the Court in relation to the Transaction.  The Company appeared before the Court on <span class="xn-chron">May 18</span> and <span class="xn-chron">August 17, 2010</span> in response to various applications for injunctive relief sought by Assamco regarding the matters raised in the Petition, at both of which times the Court did not grant such relief. However, the Court did pass a lis pendens order which put third parties on notice that the matter is subject to challenge and an ultimate finding by an arbitration tribunal.</p>
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<p>On <span class="xn-chron">August 19, 2010</span>, the Company received notice from Assamco referring the various disputes between the parties respecting the Amguri JOA to arbitration, pursuant to the terms thereof.  Both Assamco and the Company have appointed a member to the arbitration panel pursuant to the terms of the Amguri JOA and are awaiting the appointment of a third arbitrator by the current members of the panel.  Accordingly, the arbitration proceedings have not yet commenced.</p>
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<p>The question of whether the Company is in breach of the JOA and PSC remains subject to determination by an arbitration tribunal.  The potential implications of these arbitration proceedings are not known at this time.</p>
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<p>On <span class="xn-chron">May 17, 2010</span>, the Corporation filed a Statement of Claim (as amended) in the Court of Queen's Bench, Alberta against Assamco for damages of <span class="xn-money">$200,000</span> and punitive damages of <span class="xn-money">$1,000,000</span> such that the aggregate claim is in the amount of <span class="xn-money">$1,200,000</span> plus solicitor client costs (the "Claim"). The Claim asserts that Assamco has repeatedly interfered with the Company's contractual relations, including interference in the Transaction, and has made defamatory statements against the Company.  Assamco has sought an order from the High Court of <span class="xn-location">Delhi</span> to restrain the Company from continuing the proceedings in <span class="xn-location">Canada</span> on jurisdictional grounds.  The Company through its counsel in <span class="xn-location">India</span> has agreed to not object to any extension of time for submission of a statement of defence, which Assamco may seek in connection with this litigation, while the High Court of <span class="xn-location">Delhi</span> is hearing arguments from counsel in the matter.  The next hearing before the High Court of <span class="xn-location">Delhi</span> is scheduled for <span class="xn-chron">November 15, 2010</span>.</p>
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    AA-ONN-2003/2 Bank Guarantees

    
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<p>On <span class="xn-chron">May 7, 2010</span>, the Company was informed that the Government of <span class="xn-location">India</span> had called a bank guarantee of approximately <span class="xn-money">$1.1 million</span> that had been provided relating to the AA-ONN-2003/2 exploration block for failure of the operator and partners to complete the minimum work commitment.   Export Development <span class="xn-location">Canada</span> ("EDC") had provided a counter guarantee for the entire amount and accordingly, on <span class="xn-chron">May 20, 2010</span>, reimbursed the Company's bank.  On <span class="xn-chron">July 9, 2010</span> the Company repaid EDC.  For further information please refer to the Q1 MD&A.</p>
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    For further information, please contact:

    
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    Rene Randall
    Tel: [phone]
    Email
     [email protected]


    or visit the Company's website at www.canoro.com





    

For further information: Rene Randall, [phone], [email protected] Web Site: http://www.canoro.com