West Hawk arranges $2.5-million private placement

2009-08-25 14:50 ET - News Release

Mr. Gonzalo Macchiavello reports

WEST HAWK ANNOUNCES $2.5 MILLION BROKERED PRIVATE PLACEMENT; SHARES FOR DEBT SETTLEMENT WITH OFFICERS AND EMPLOYEES

West Hawk Development Corp. has entered into an agreement with Union Securities Ltd. to act as the company's exclusive agent on a commercially reasonable efforts basis in connection with a private placement of up to 166,666,667 units for aggregate gross proceeds of up to $2.5-million. The company is also proposing to settle an aggregate of $332,589.50 in outstanding salaries payable to its officers and employees through the issuance of an aggregate of 6,651,790 shares at a deemed price of five cents per share. Both transactions are subject to the approval of the TSX Venture Exchange.

Terms of the proposed offering

Each unit sold in the offering will be issued at 1.5 cents per unit, and consist of one common share of the company and one-half of one common share purchase warrant. Each warrant is exercisable into one common share of the company for 24 months from closing at an exercise price of seven cents per warrant share during the first 12 months and 10 cents per warrant share thereafter for the balance of the term.

The company will grant to the agent an overallotment option to purchase up to an additional 10 per cent of the number of units issued pursuant to the offering at a price equal to the issue price per unit. If exercised, the overallotment option must be executed within 15 business days of the final closing date and completed within 30 business days of the final closing date of the offering. Assuming full exercise of the overallotment option, the company would issue an aggregate of 183,333,334 units and raise aggregate gross proceeds of $2.75-million.

The agent will receive a cash commission equal to 10 per cent of the aggregate gross proceeds of the offering, including proceeds raised pursuant to the overallotment option. The agent will also receive compensation options equal to 10 per cent of the aggregate number of units sold under the offering, including pursuant to the overallotment option. Each compensation option will entitle the holder to acquire, for a period of 24 months, one unit at a price of five cents per agent's unit. Each agent's unit will consist of one common share and one-half of one common share purchase warrant with each agent's warrant exercisable into one common share of the company for 24 months from closing at a price of 10 cents per share.

The offering is scheduled to close within approximately 30 days and is subject to the company receiving all necessary TSX Venture Exchange approvals. Proceeds from the offering will be used to finance planned exploration and assessment work on the company's Groundhog coal project in northwestern British Columbia and for general working capital purposes. The company's current focus for its Groundhog property is to test the core samples obtained during the company's October, 2008, drill program and, if warranted based on the results of the core samples, commission a current technical report, build a geological model, determine the right business structure to develop the Groundhog property and prepare a business plan.

"For the company this is an important step forward in the development of the Groundhog coal project. It is a pleasure to have Union Securities supporting this equity raising," said Gonzalo Torres Macchiavello, West Hawk Development president and chief executive officer.

We seek Safe Harbor.