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Lamplighter delays Blackdog deal until Oct. 7

2005-09-28 22:41 ET - News Release

Mr. Alykhan Mamdani reports

UPDATE ON PROPOSED REVERSE TAKE-OVER INVOLVING LAMPLIGHTER ENERGY LTD. AND BLACKDOG RESOURCES LTD.

Lamplighter Energy Ltd. and Blackdog Resources Ltd. contemplated entering into a formal amalgamation agreement by Sept. 26, 2005, but the parties have agreed to extend this date until Oct. 7, 2005. The parties have now commenced their due diligence review of each another and have concluded negotiations on substantially all of the business terms of the proposed amalgamation agreement.

It is proposed that pursuant to the amalgamation agreement to be entered into shortly, the shareholders of Lamplighter will receive one share of the new amalgamated company (Amalco) for each common share of Lamplighter at a deemed price of 20 cents per share. Each shareholder of Blackdog will also receive one share of Amalco at a deemed price of 20 cents per share for each common share of Blackdog that they own. It is expected that the name of Amalco will be Blackdog Resources Ltd.

Lamplighter currently has 3,096,320 issued and outstanding common shares and 309,632 options. No shareholder of Lamplighter owns greater than 10 per cent of the outstanding common shares. The corporation has issued convertible debentures to the directors of the corporation for gross proceeds of $37,500 at an interest rate of 12 per cent per year and may issue an additional $12,500 of debentures prior to completion of the reverse takeover. The debentures are convertible into units at a price of 20 cents per unit. Each unit consists of one common share and one-half of a common share purchase warrant. Each whole warrant entitles the holder to acquire a common share for 30 cents for a period of two years from issuance. As of its June 30, 2005, unaudited financial statements, Lamplighter had a balance of cash and receivables of approximately $10,000 and outstanding liabilities of $325,000. In addition, as of June 30, 2005, Talisman Energy Inc. placed a lien on the corporation's main asset, which is a producing oil field in southeastern Saskatchewan so the corporation effectively has no cash flow as of this date.

As part of the RTO, the corporation will be preparing a management information circular outlining the proposed transaction with Blackdog. The information circular will be delivered to shareholders of Lamplighter and Blackdog in connection with special shareholders meetings of both Lamplighter and Blackdog, where the shareholders will be asked to consider and approve the amalgamation. The amalgamation must be approved by at least two-thirds of the shareholders of Lamplighter and Blackdog who vote at the meetings. There can be no guarantee that both companies' shareholders will approve the amalgamation. It is contemplated that the directors of Blackdog will become the directors of Amalco, although one of the current directors of Lamplighter may remain on the board of directors of Amalco after completion of the RTO.

Concurrently with the closing of the RTO, Blackdog intends to raise an additional $2-million to $3-million. It is anticipated that even if the RTO is not completed, Blackdog will proceed with the private placement. Subject to market conditions, Blackdog anticipates issuing a combination of flow-through and non-flow-through shares under its private placement, with pricing between 35 cents to 50 cents per share. It is intended that the proceeds of the private placement will be used for the acquisition of oil and gas production and drilling prospects in Western Canada. To complete the RTO, it will be necessary for Amalco to complete the acquisition of oil and gas properties and for the resulting issuer to meet the minimum listing requirements of the TSX Venture Exchange. There is no assurance that the acquisition of any oil and gas properties will occur prior to execution of the amalgamation agreement or prior to the special shareholders meetings of Lamplighter and/or Blackdog.

In connection with the RTO, Lamplighter will apply to the TSX-V for exemption from sponsorship in accordance with TSX-V Policy 2.2.

Blackdog currently has 6,057,855 common shares outstanding and 2,313,928 common share purchase warrants exercisable at 30 cents for a period of two years from Aug. 25, 2005. Blackdog also has outstanding 70,000 options exercisable at 10 cents per share and 475,000 options exercisable at 20 cents per share granted to its directors and officers. Management members of Blackdog currently own 40.9 per cent of the issued and outstanding shares of Blackdog. Blackdog was incorporated under the Business Corporations Act (Alberta) on Sept. 28, 2004, and as of Aug. 31, 2005, management estimates that it has approximately $955,000 in cash, no long-term debt and payables of approximately $20,000. It has no oil and gas assets at this time.

Blackdog's management is as follows:

George J. Hill -- president and director

Mr. Hill has been the president and/or a director/officer of many successful public and private oil companies over the past 30 years. He has been associated with Bighorn Energy Ltd. (now Enterra Trust Ltd.), Fall River Resources Ltd., Ryan Energy Ltd. and Jennifer Petroleum Ltd. Mr. Hill graduated from Michigan Tech University with a bachelor of science degree in business. Mr. Hill owns 720,000 common shares of Blackdog and resides in Calgary, Alta.

David A. Corcoran -- vice-president of operations, corporate secretary and director

Mr. Corcoran was previously corporate secretary and a director of Fall River Resources Ltd., a TSX-V oil and gas company focused on exploration in Kansas. He has a bachelor of commerce degree from the University of Ottawa. Mr. Corcoran and his spouse currently own 720,000 common shares of Blackdog and reside in Calgary, Alta. Mr. Corcoran also owns 3,333 common shares of Lamplighter (which he acquired in 1998).

T.W. (Tim) Morgan -- director

Mr. Morgan is a co-founder, executive vice-president of operations and a director of Westjet Airlines Ltd. Mr. Morgan also sits on the board of AeroMechanical Services Ltd., a TSX-V company. Mr. Morgan is a graduate of Mount Royal College located in Calgary, Alta., and a member of its board of directors. He is a resident of Calgary, Alta.

Dr. Garth Von Hagen -- director

Dr. Von Hagen has previously served on the board of CV Technologies Inc., a natural products manufacturer listed on the TSX-V. Dr. Von Hagen graduated from the College of Dentistry at the University of Saskatchewan and is a practising dentist residing in Edmonton, Alta. He is also on the board and is a past chairman of Boyle McCauley Health Centre, a non-profit inner city health centre in Edmonton. Dr. Von Hagen is currently enrolled in the executive MBA program at the University of Calgary.

Darcy Morgan -- director

Mr. Morgan is a senior account executive with SAP Canada Ltd., a subsidiary of SAP AG Ltd. Over 80 per cent of world oil and gas production is managed with SAP's enterprise resource planning software. He has represented SAP to the major oil and gas explorers and producers in Canada since 1998. Previously, Mr. Morgan managed multiple marketing and sales initiatives with IBM Canada. Mr. Morgan graduated with a bachelor of commerce degree from the University of Calgary and resides in Calgary, Alta.

Not including any securities issued under the private placement, Amalco will have approximately 9,155,175 common shares, 2,313,928 warrants and 854,632 options outstanding. (Assuming that the debentures are converted, an additional 250,000 common shares and 125,000 warrants would be issued by Amalco.) The combined company will have approximately $300,000 in debt, usable tax losses of approximately $2.5-million, $925,000 in cash and production of approximately 28 barrels of oil per day of light crude. The 15-per-cent discounted value of Amalco's main asset, which is a five-well field in Whitebear, Sask., is approximately $339,668 (based on a wellhead price of $41.47 per boe). This value is before income tax and based on forecast pricing as assigned to the corporation's reserves by Dobson Resource Management Ltd. as of Jan. 1, 2005, in its National Instrument 51-101 compliant report. Amalco will also have an interest in a gas well in Manyberries, Alta., for which the report has assigned no reserves.

The common shares of Lamplighter will remain halted until the TSX-V has received the corporation's initial filing pursuant to the RTO.

Completion of the RTO is subject to a number of conditions, including but not limited to TSX-V acceptance and shareholder approval. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the information circular to be prepared in connection with the transaction, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the securities of Lamplighter should be considered highly speculative.