Long Run Explor Ltd Ord WFREF

Clarification on Sprott position from LRE Mgmt

[deisman]

I emailed LRE and below is their reply (if cut & paste works)

1./Where can I find the particulars of the 15,512,858 convertables that Sprott holds?
2./ From the 2013 financials there is a $6.85 value placed on each of those shares.  Where is that figure derived from?
3./ What effect does this share offering have on our financials & share/convertible numbers.
The convertible shares that Sprott Resource Corp. holds entitles them to all the same rights as a common share, with the exception that those shares do not vote in normal course shareholder votes.  The exception to this is in the case of a take-over bid.

 With yesterday’s announcement, Sprott has indicated that upon close of the secondary offering, they will be converting those convertible, non-voting shares into common equity on a 1 for 1 basis.  This means that upon close of this offering, LRE will have a single class of stock.  This is anticipated to close in 3 weeks, on May 21st.  Please let me know if you would like more information on these shares.   

In May of 2011, Westfire Energy (a predecessor company of Long Run) merged with Orion Oil and Gas.  The primary shareholder of Orion was Sprott.  Rather than be in a control position within Westfire, Sprott elected to receive non-voting shares, which would not trade on the TSX.  They would be exchangeable for a common share at Sprott’s request.  The value of that transaction at the time, placed a value on Orion’s assets which gave Sprott a cost base of $6.85 per share.  Hence the fair-market value of those shares.

This share offering will not have any impact on our financials or per share metrics as we have always counted the non-voting / convertible shares in our per share calculations, as if they were common shares.

 Please let me know if you have any further questions, or if anything is not clear.


Jason

Jason Fleury

Vice President, Business Development

Long Run Exploration Ltd.