Africa Oil Corp

[MWM]

LION ENERGY ENTERS LETTER OF INTENT WITH AFRICA OIL CORP. FOR BUSINESS COMBINATION
Tuesday, March 08, 2011

TSX.V - LEO

VANCOUVER, March 8 /CNW/ - Lion Energy Corp. (the "Company" or "Lion Energy") (TSXV: LEO) is pleased to announce that it has entered into anon-binding letter of intent with Africa Oil Corp. ("Africa Oil", AOI - TSXV, AOI - NASDAQ OMX), a publicly traded oil andgas company listed on the TSX Venture Exchange and NASDAQ OMX, whichsets out the basic terms and conditions pursuant to which Africa Oilproposes to acquire all of the issued and outstanding common shares ofLion Energy. Under the letter of intent the parties will negotiate andenter into a definitive agreement pursuant to which Africa Oil willacquire Lion Energy, by way of a plan of arrangement. The letter ofintent provides that each share of Lion Energy will be exchanged for0.2 shares of Africa Oil. The Company currently has 86,118,177 commonshares issued and outstanding, 2,580,000 share options with a weightedaverage exercise price of
.16 per share, and 11,445,000 warrants. TheCompany is also obligated to issue up to 50,000 common shares inanother, unrelated transaction. It is proposed that each warrant willbe exchanged into an equivalent number of warrants of Africa Oil,adjusted for 0.2:1 ratio noted above.

Lion is presently a joint venture partner of Africa Oil in Kenya andPuntland (Somalia) with respect to the following Blocks:

Block 9 (Kenya) Lion 33.3% Africa Oil 66.7%
Block 10BB (Kenya) Lion 10% Africa Oil 40% Tullow Oil plc. 50%
Dharoor Valley (Puntland) Lion 15% Africa Oil 45% others 40%
Nugaal Valley (Puntland) Lion 15% Africa Oil 45% * others 40%

* Subject to Africa Oil fulfilling its sole funding obligation to RangeResources Ltd.

In addition to the above properties, Lion has cash, cash receivables andtradable securities with an approximate aggregate value of $30,352,336.

Assuming satisfactory completion of due diligence, it is anticipatedthat the definitive arrangement agreement will be entered into by March25, 2011. The definitive agreement will provide for conditionsprecedent that are standard for a transaction of this nature, includingreceipt of all regulatory, partner and third party approvals, TSXVenture Exchange approval and approval by Lion Energy's shareholders.Lock-up agreements have been entered into between Africa Oil and theCompany's directors and certain of its principal shareholders who hold,in aggregate, 29.23% of the issued and outstanding common shares ofLion Energy.

Lion Energy has engaged Haywood Securities Inc. as its financial advisorin respect of the proposed transaction.

John Nelson, the Company's President and CEO, said: "The plan ofarrangement with Africa Oil will expose our shareholders to a greaternumber of highly prospective east African exploration blocks with muchhigher working interests, partners with very strong technical teams andlong term financial capability. Africa Oil has a seasoned managementteam and sufficient capital to fund additional explorationopportunities and development programs in the event of a discovery."

Keith Hill, Africa Oil's President and Chief Executive Officer,commented, "The acquisition of Lion consolidates our interest in theEast African rift basins in Kenya and Puntland (Somalia). The cashportion of the deal will further strengthen our balance sheet to allowus to fully fund the upcoming aggressive exploration drillingcampaign."

As indicated above, completion of the proposed transaction is subject toa number of conditions, including shareholder approval. There can be noassurance that the Transaction will be completed as proposed or at all.

On behalf of the Board,

LION ENERGY CORP.
John R. Nelson
President and Chief Executive Officer