Contact says funded for the year; GoldSpring secures financing, extends debt; Frontline closes placement

By Kenneth Lim

Boston, June 26 - Contact Exploration Inc. said its newly raised C$11.51 million should last it through the end of the drilling season after an over-allotment option was fully exercised.

GoldSpring, Inc. said it has secured $2.5 million of convertible financing from an existing shareholder as well as extended the maturity of certain debts.

Meanwhile, Frontline Ltd. said it raised NOK 1.07 billion ($210 million) from a private stock placement.

Contact set for year

Contact Exploration said it completed a private placement of C$11.51 million worth of stock and warrant units.

The size of the deal was originally set at C$10.01 million with a greenshoe for an additional C$1.5 million. The over-allotment option was fully exercised.

The company sold 17.71 million units altogether at C$0.65 per unit on a bought-deal basis. Contact common stock (TSX: CEX) closed at C$0.58 on Thursday, higher by 7.41% or $0.04.

Each unit comprises one common share and one half-share warrant. Each whole warrant expires in two years and is exercisable at C$0.95.

Proceeds will be used for Contact's Nova Scotia and New Brunswick shale gas activities and general corporate purposes.

Contact is an exploration company based in Calgary, Alta.

"It's very important for us because for us to continue as a non-operating partner on our lands that we farm out, the shale gas discovery in Nova Scotia, we needed this money to continue the participation," Contact president and chief executive Darcy Spady told Prospect News.

The funds will allow Contact to hang on to the "three P's," Spady said.

"We have three P's here in Canada," he said. "The first P is participation, and we are involved as partners in the shale gas properties. We also have the second P, which is proximity, and we have proximity to almost every major play in the area. We are literally in proximity to every onshore play in the Maritimes. The third P is production, and we do have production reserves in our books."

The pricing of the deal was satisfactory, Spady said.

"I'm quite satisfied with it," he said. "It was sold at 65 cents, and that's been the higher end of the 52-week numbers, so I'm very pleased. It was a bought deal, which also pleases me. We tend to fluctuate less than our peers because we have some production. Every human being always wants more, but I thought it was a good deal."

Spady does not expect Contact to have to tap the capital markets again anytime soon.

"It'll last," he said. "It will fund most of the budget for the rest of the year maybe a little beyond that. We're funded for the rest of the drilling season. We also have a number of warrants out there that will probably be coming in as well."

GoldSpring offers convertibles

GoldSpring said it has secured convertible financing worth $2.5 million from an existing shareholder.

The company is issuing five-year 11% convertible senior debentures spread out over the next six months. The convertibles are convertible into restricted common stock at $0.015 per share, a 57% discount to the common stock's closing price on Wednesday.

GoldSpring stock (OTCBB: GSPG) closed at $0.032 on Thursday, down by about 7.74%.

The convertible were issued to an existing shareholder, who is an accredited investor, the company said in a press release. GoldSpring has already taken an initial $500,000.

GoldSpring said it also entered into an agreement with existing lenders to extend the maturity date of some indebtedness with terms ranging from an additional two years to an additional five years.

GoldSpring, a Gold Hill, Nev.-based mineral exploration and development company, said it will use the proceeds as additional capital.

"This financing, from a committed long-term shareholder, provides the company with additional capital to expand its drilling activities," GoldSpring chief executive Rob Faber said in the press release.

"By doing so, we hope to increase our resource base, making the company more attractive to potential strategic partners and increasing its financial flexibility. In addition, by extending the maturities of debt that had previously been in default, we have strengthened our balance sheet, which will allow the company to focus its attention on operations, and not capital raising."

Frontline closes placement

Frontline said it had completed its NOK 1.07 billion private stock placement, a day after announcing the offering.

The deal involved 3 million common shares at NOK 357 apiece. Frontline common stock (Oslo: FRO) finished Thursday at NOK 356, down by 0.28%.

Investor Hemen Holding Ltd. had committed to 2.3 million shares and was allocated 225,000 shares, giving it a 33.8% stake in the company after the sale.

The proceeds will be used to finance the company's planned acquisition of five double hull Suezmax tankers.

The oil tanker shipping business is based in Oslo, Norway.

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