West African Iron Ore Corp. (TSX-V: WAI) West African Iron Ore Corp. ("WAI" or the "Company") is pleased to announce that it has arranged a CAD$2.0 million unsecured convertible debenture financing agreement with Sky Alliance Resources Inc. ("SARI").

 

SARI has agreed to finance up to CAD$2.0 million by way of up to four drawdowns of CAD$500,000. Each drawdown will be in the form of a convertible debenture (collectively the "Debentures") with a term of 5 years and an 8% annual interest rate. During the term of the Debentures, SARI will have the option to convert all or any portion of the outstanding Debentures into common shares of the Company at a conversion price of CAD$0.10 per share for the first CAD$500,000 drawdown. All other drawdowns will have the option to convert any portion of the outstanding Debentures at the market price at the time of drawdown, subject to a minimum conversion price of CAD$0.10 per share. Subject to TSX-V approval, the remaining CAD$1.5 can be drawn down at WAI's election after completion of a resource report in a form prescribed by National Instrument 43-101 with respect to the Forécariah tenement. WAI will provide written notice to SARI of the requirement for funding and set forth the amount required.

 

Management believes the current financing agreement will be sufficient to fund the Company's operations through the release of its initial NI43-101 technical report and until additional longer-term funding sources can be arranged.

 

SARI has ownership and control, directly and through a wholly-owned subsidiary, of 24,697,000 common shares of WAI, representing 14.09% of the issued and outstanding common shares of the Company. The first draw down of the debenture is convertible into 5,000,000 common shares of WAI. Assuming conversion of the debenture, SARI would have ownership and control of 29,697,000 common shares, representing 16.49% of the then issued and outstanding common shares of WAI. SARI has acquired the debenture for investment purposes and, as disclosed in the Early Warning Report, assuming additional drawdowns of the credit facility, may acquire additional debentures or other securities of WAI. SARI's shareholders plan to fully support WAI's efforts to complete its initial NI43-101 technical report and raise additional funds to further WAI's business.

 

SARI is a privately owned, international mining and consulting firm based in Hong Kong and registered in the British Virgin Islands. SARI was created in December 2006, to generate investment opportunities for the Asian metals industry while providing sustainable and transparent foreign direct investment for West Africa. SARI's board of directors has strong corporate finance and mining expertise, as well as considerable experience operating in Africa, Asia, North America and Europe.