Montana Exploration Corp. announces closing of strategic financing with McIntyre Partners and completion of restructuring transactions

TSX-V SYMBOL: MTZ

CALGARY, March 25, 2013 /CNW/ - Montana Exploration Corp. ("Montana") is pleased to announce closing on March 22, 2013 of the previously announced private placement (the "Private Placement") with Wolseley Ventures Limited (an affiliate of McIntyre Partners) (the "Investor") for aggregate gross proceeds of $3.5 million.  The Private Placement resulted in the issuance of 17,500,000 units at $0.20 per unit, each unit consisting of one common share in the capital of Montana and one warrant exercisable for one common share at a price of $0.25 for a period of 12 months.  The Investor has the ability to invest up to an additional $8.425 million upon the exercise of the warrants and a purchase option priced at $0.38 per common share.

Montana intends to use the net proceeds of the Private Placement to fulfill its initial obligations under its farmout and participation agreement, publicly disclosed on May 8, 2012, to drill wells targeting oil production and conduct seismic and other oilfield operations on Montana's substantial acreage position, an extension of the Shaunavon trend from Saskatchewan. Montana's joint venture partner under the agreement is a private Denver based exploration company which is supported by a substantial New York-based, private equity firm.

As a result of the shareholder approvals received on March 14, 2013 and the completion of the Private Placement, Montana has a considerably simplified capital structure consisting of common shares, warrants and options and has materially reduced its indebtedness, positioning the corporation to pursue its Shaunavon drilling program and other exploration prospects, with a high quality board and management team, a strong shareholder base and a competent and well financed joint venture partner.

Concurrently with closing of the Private Placement, Jack Moore has resigned from the board of directors of Montana and the board has appointed two nominees of McIntyre Partners, Julian McIntyre and Dr. Alex Kulpecz, as directors.  The board of directors proposes to renominate Jack Moore to the board at the next annual general meeting.

In addition to completion of the Private Placement, the following transactions which were conditions to closing of the Private Placement have also been completed:

(i)		Montana has entered into a purchase agreement with the Investor pursuant to which the Investor has the option, in its sole discretion, for a period of one year to tender a company to Montana for a value to be equal to the confirmed value of the cash and assets held by such company of up to $6,900,000.  It is the intention of the parties that the assets of the company will be cash (not to exceed $4,050,000) and interests that Montana and the Investor have jointly identified in Toole County, Montana, located approximately 100 miles west of Montana's current lands.  If this option is exercised by the Investor, Montana will pay the purchase price by the issuance of common shares at a price of $0.38 per common share, which would result in the issuance of up to 18,157,894 common shares;
(ii)		Montana has amended the terms of its Series A Convertible First Preferred Shares, Series B Convertible First Preferred Shares and Series C Convertible First Preferred Shares (collectively, the "Preferred Shares") to deem the conversion of the Preferred Shares into units (the "Preferred Units"), each Preferred Unit consisting of one common share (with an effective price of $0.40 based on the original subscription price, the consolidation of the common shares effective February 28, 2011 and the increase to the exchange ratio approved at last year's shareholders meeting) and one warrant to purchase an additional common share at an exercise price of $0.50 (reduced from $0.80) expiring on March 22, 2014 (an extension of approximately one year). Holders of Preferred Shares are entitled to receive a Preferred Unit for every eight (8) Series A Convertible First Preferred Shares or Series B Convertible First Preferred Shares and 1.25 Preferred Units for each Series C Convertible First Preferred Share submitted for conversation. Holders of Preferred Shares are reminded to complete and send their letter of transmittals to Computershare along with the share certificates representing Preferred Shares. Letters of Transmittal are available on SEDAR under Montana's profile at www.sedar.com.
(iii)		$2.46 million of the principal amount owing by Montana under its senior debt ("Senior Debt") to Rioco Partners, Ltd. has been converted into common shares at a conversion price of $0.25 per common share; and
(iv)		Rioco Partners, Ltd. has agreed to either acquire the indebtedness of the Corporation to Brookfield Bridge Lending Fund Inc. or to lend sufficient funds to the Corporation to re-pay the indebtedness, in either case on terms such that the amount of the indebtedness will be effectively extended for 18 months.

Cornerstone Capital Partnership LP and its sub-agents acted as financial advisors to Montana in connection with the above transactions and received 100,000 common shares issued at a deemed price of $0.25 per common share, a finder's fee associated with the Private Placement consisting of $263,000 in cash and 1,050,000 warrants to purchase common shares with an exercise price of $0.25 and a term expiring two years from the date hereof.

Now that the initial financing is complete, Montana intends to complete its previously announced rights offering at a price of $0.20 per common share in order to provide existing shareholders with the opportunity to purchase additional common shares at the same price as the equity issued to the Investor under the Private Placement.

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.

Caution Regarding Forward Looking Information

Certain statements contained in this document constitute "forward-looking statements" and/or "forward-looking information" within the meaning of applicable securities laws (collectively referred to as forward-looking statements). Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "intend", "forecast", "target", "project", "guidance", "may", "will", "should", "could", "estimate", "predict", "propose" or similar words suggesting future outcomes or language suggesting an outlook. Forward-looking statements in this press release include, but are not limited to the issuance of shares pursuant to the purchase option agreement; the selection of initial drilling locations; the initial cost of Shaunavon Wells; additional financing from the Investor and completion of the rights offering.

In addition, the proposed transactions are subject to Montana receiving regulatory approval from the TSX Venture Exchange.

Forward-looking statements and information contained in this press release are based on our current beliefs as well as assumptions made by, and information currently available to, us. Although we consider these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect.

By their very nature, the forward-looking statements included in this press release involve inherent risks and uncertainties, both general and specific, and risks that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, the volatility of oil and gas prices; production and development costs and capital expenditures; the imprecision of reserve estimates and estimates of recoverable quantities of oil, natural gas and liquids; Montana's ability to replace and expand oil and gas reserves; environmental claims and liabilities; incorrect assessments of value when making acquisitions; increases in debt service charges; the loss of key personnel; the marketability of production; defaults by third party operators; unforeseen title defects; fluctuations in foreign currency and exchange rates; inadequate insurance coverage; compliance with environmental laws and regulations; changes in tax and royalty laws; Montana's ability to access external sources of debt and equity capital; and Montana's ability to obtain equipment in a timely manner to carry out development activities. Readers are cautioned that the foregoing list of factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to Montana, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Furthermore, the forward-looking statements contained in this press release are made as of the date of this document and we do not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

SOURCE: Montana Exploration Corp.

Charles Selby, Chairman & CEO
Telephone: [phone] (ext 247)
Fax: [phone]
Email: [email protected]

Don Foulkes, President
Telephone: [phone] (ext 248)
Fax: [phone]
Email: [email protected]