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Ethiopian Potash Corp. Closes $11 Million Private Placement Financing

Published: 02/14/2011

By Chad Aboud, Eva Bellissimo, John P. Vettese

On February 10, 2011, Ethiopian Potash Corp. closed a brokered private placement of subscription receipts of EPC (the "EPC Private Placement") for gross proceeds of $11 million to EPC. Each subscription receipt was sold at a price of $0.50 and is convertible into one unit of EPC ("EPC Unit") comprised of one EPC common share and one EPC common share purchase warrant.

As previously announced, the EPC Private Placement was a condition to the completion of the proposed amalgamation of Panorama Resources Ltd. and EPC (the "Amalgamation"). Upon completion of the Amalgamation to form Ethiopian Potash Corp. (the "Company") on March 9, 2011, the net proceeds of the offering were released from escrow to the Company and each subscription receipt was ultimately exchanged for one common share and one common share purchase warrant entitling the holder thereof to acquire one common share of the Company at an exercise price of $0.75 for a period of 18 months.

BayFront Capital Partners Ltd., Salman Partners Inc. and Fraser Mackenzie Limited (the "Agents") received a cash commission. At closing of the EPC Private Placement, the Agents were granted that number of broker warrants (each, an "EPC Broker Warrant") equal to 8% of the number of EPC subscription receipts sold in the EPC Private Placement. Each EPC broker warrant was exercisable to acquire one EPC Unit for a period of 18 months from closing of the EPC Private Placement, being August 10, 2012.

Upon completion of the Amalgamation, any unexercised EPC Broker Warrants were exchanged for broker warrants of the Company having the same terms and conditions as the EPC Broker Warrants, and any EPC common shares and EPC warrants issued upon the exercise of EPC Broker Warrants prior to the completion of the Amalgamation were exchanged for common shares of the Company and for warrants of the Company, respectively, on the same terms as set out above, all in accordance with the terms and conditions of the Amalgamation.

The Company's common shares and warrants are listed on the TSX Venture Exchange under the symbols "FED" and "FED.WT," respectively.

Cassels Brock acted as counsel to the agents with a team that included John Vettese (Securities and Mining), Eva Bellissimo (Securities and Mining), Daniel Im (Securities) and Chad Aboud (Student).