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Reconnaissance Energy Africa Ltd
Symbol RECO
Shares Issued 72,138,145
Close 2020-08-20 C$ 0.62
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Reconnaissance Energy closes $23-million unit offering

2020-08-20 11:10 ET - News Release

Mr. Jay Park reports

RECONAFRICA ANNOUNCES COMPLETION OF C$23 MILLION PUBLIC OFFERING

Reconnaissance Energy Africa Ltd. has completed its previously announced public offering of units for gross proceeds of approximately $23-million, including the partial exercise of the overallotment option. The offering was completed by way of a short form prospectus filed in all of the provinces of Canada, except Quebec, and the units were sold elsewhere outside of Canada on a private placement basis.

Pursuant to the offering, a total of 32,855,409 units were sold at a price of 70 cents per unit. Each unit consists of one common share in the capital of the company and one common share purchase warrant. Each warrant entitles the holder to acquire one common share at a price of $1 until Aug. 20, 2025. The warrants are subject to an acceleration of the expiry date to a date that is 30 calendar days following a notice to be provided to the holders of the warrants by the company in the event that the daily volume-weighted average trading price of the common shares on the TSX Venture Exchange for any period of 20 consecutive trading days equals or exceeds $3.

The offering was made through Haywood Securities Inc. The agent received a cash commission equal to 6 per cent of the gross proceeds of the offering (other than from the sale of 7,125,639 units to purchasers on the president's list for aggregate gross proceeds of approximately $5-million, for which a 1.5-per-cent cash commission was paid). In addition, the agent was issued compensation options in an amount equal to 6 per cent of the number of units sold under the offering (other than with respect to those sold to purchasers on the president's list, for which no compensation options were issued). Each compensation option entitles the holder to acquire one unit at a price of 70 cents until Aug. 20, 2025.

The exchange has conditionally accepted the warrants for listing. It is anticipated that the warrants will commence trading on the exchange under the symbol RECO.WT on or about Aug. 24, 2020.

The net proceeds from the offering will be used for the transportation costs of shipping the company's drilling rig from Houston, Tex., to Namibia and to complete the three-well drilling program and acquire/process 2-D seismic data in the Kavango basin, together with working capital.

"We are very pleased with the results of this offering, as it was necessary to increase the maximum size of the offering twice to $22-million to accommodate demand, and the agent also partially exercised the overallotment option," said Jay Park, chief executive officer of Reconnaissance Energy Africa. "With the funds raised from this offering, ReconAfrica will fully perform our three-well drilling program, and acquire and interpret 2-D seismic data. Performance of these operations will significantly exceed our work obligation during the current phase of our exploration licence."

Certain officers of the company have participated in the offering and were issued an aggregate of 957,477 units. Such participation in the offering constitutes a related party transaction, as defined in Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. The offering is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101, as neither the fair market value of the securities issued to related parties nor the consideration paid for such securities exceeds 25 per cent of the company's market capitalization. The company did not file a material change report 21 days prior to the closing of the offering, as the participation of insiders of the company in the offering had not been confirmed at that time and the shorter time period was necessary in order to permit the company to close the offering in a time frame consistent with usual market practices for transactions of this nature.

About Reconnaissance Energy Africa Ltd.

Reconnaissance Energy Africa is a junior oil and gas company engaged in the opening of the newly discovered Kavango sedimentary basin, located in northeastern Namibia and northwestern Botswana, where the company holds petroleum licences comprising approximately 8.75 million contiguous acres.

We seek Safe Harbor.

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