Africa Oil Corp

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AUG/25/09

Raytec Metals enters LOI for Lion Petroleum acquisition


2009-08-25 11:42 ET - News Release

Mr. Brian Thurston reports

RAYTEC TO ACQUIRE LION PETROLEUM CORP.

Raytec Metals Corp. has entered into a binding letter of intent with Lion Petroleum Corp., subject to certain conditions and completion of due diligence process. Lion is a privately held oil and gas exploration company based in Vancouver, B.C., with an exploration office in Nairobi, Kenya. Lion's principal assets are blocks 1 and 2B, both highly prospective exploration blocks in northeastern Kenya.

Blocks 1 and 2B

Lion is party to production sharing contracts (PSC) with the government of the Republic of Kenya, relating to blocks 1 and 2B. The PSCs grant Lion a 100-per-cent interest in the respective blocks, subject only to an 18-per-cent back-in right in favour of the Kenyan government.

Block 1 covers an area of approximately 31,781 square kilometres forming part of the western portion of the Mandera-Lugh basin that occupies part of the northeastern territory of Kenya and extends into Somalia and Ethiopia. Lion has entered into a farm-in agreement with East African Exploration Ltd. (EAX) of Dubai, UAE, on the block 1 concession. EAX may earn a 50-per-cent interest in block 1 by conducting a work program (minimum 600 kilometres of 2-D seismic) and making all the financial commitments required of Lion to the Kenyan government under the PSC.