OilVoice - Coretrack Acquires Globe Drill and Announces Proposed $10 million Capital Raising

Coretrack Acquires Globe Drill and Announces Proposed $10 million Capital Raising

Monday, January 18, 2010

Highlights
• Execution of Share Sale Agreement to acquire Globe Drill
• Proposed underwritten $10 million capital raising including a rights issue to shareholders to fund working capital
• Mr Warren Strange to join Coretrack Board on completion of acquisition of Globe Drill
• Exclusive world wide Intellectual Property Licence granted by Strange Investments
• Coretrack's Managing Director and CEO renews executive services agreement

Acquisition of Globe Drill
Coretrack Limited ('Coretrack' or 'the Company') is pleased to announce that it has executed a binding Share Sale Agreement ('SSA') to acquire Globe Drill Pty Ltd ('Globe Drill') ('Transaction'). Pursuant to the SSA, executed between the Company, Globe Drill, Strange Investments (WA) Pty Ltd ('SIPL') and the remaining Globe Drill shareholders ('the Vendors'), and Mr Warren Strange as covenantor and guarantor, Coretrack will acquire 100% of the issued share capital of Globe Drill.

Globe Drill is one of Australia's premier technology, manufacturing (and soon to be drilling services) companies, having been established by Mr Strange in 2005 as a specialist drill rig manufacturing company which develops cutting edge drilling equipment for the rapidly growing and increasingly important renewable energy sector. It is anticipated these rigs will result in significant time savings to exploration and production focused companies who require wells drilled to depths of up to 3000 metres. Globe Drill has a licence to use intellectual property rights which are owned by SIPL as trustee for the Strange Family Trust. As part of Transaction, SIPL will enter into a new licence agreement with Coretrack and Globe Drill in respect of these intellectual property rights ('IP Licence').

The Transaction, if completed, is expected to create a leading drilling technology and services company. With the acquisition of Globe Drill, Coretrack will be in a position to provide uniquely tailored technology, focused primarily on servicing the energy and mineral sectors and specialising in drilling at depths of up to 3000 metres with incredible efficiency and speed. This will open up market opportunities well beyond that in the conventional energy/mineral sectors, including geothermal, shale gas and coal bed methane.

As a result of the Transaction, Shareholders and other stakeholders can expect a larger, more diverse company with a specialised range of products and services. The merged entity will also employ some key industry professionals, R&D specialists, and engineering/manufacturing professionals. The Board is confident that the Transaction and successful integration of the Globe Drill business with Coretrack's existing business will make a positive contribution to Coretrack's revenue generation and overall profitability.

It is expected that post completion of the Transaction, Globe Drill will receive a research and development tax offset amount from the Australian Taxation Office in relation to Globe Drill's activities prior to 31 December 2009 ('R&D Tax Offset').

It is also anticipated that upon completion of the Transaction, Mr Strange will be appointed as executive director to the Board of Coretrack.

Capital Raising
To fund its working capital requirements going forward, Coretrack is pleased to announce it has signed a mandate ('Mandate') with Cygnet Capital Pty Ltd ('Cygnet') to raise approximately $10 million before costs ('Capital Raising'). The Capital Raising will include:
• A proposed placement pursuant to the Company's existing 15% placement capacity of 10,000,000 new fully paid ordinary shares ('Shares') to sophisticated investor clients of Cygnet, at an issue price of $0.22 each, to raise $2,200,000 (before costs) ('Placement');
• The underwriting by Cygnet of the exercise of the Company's Listed Options, which are exercisable at $0.20 on or before 28 February 2010. Cygnet will underwrite the 22,820,268 Listed Options that have not been exercised as at today's date, guaranteeing the Company $4,564,057 (before costs) on or around 28 February 2010; and
• a fully underwritten, pro rata, non renounceable rights issue of Shares to shareholders on the basis of 1 Share for every 5 Shares held, at an issue price of $0.22 ('Rights Issue') to raise approximately $3,652,704.

It is proposed that those parties allotted shares under the above mentioned Placement and those who have converted their Listed Options prior to the proposed Rights Issue record date of 9 February 2010 will be entitled to participate in the Rights Issue. Further information in relation to the Rights Issue will be provided in due course.

The funds raised from the Capital Raising will be applied towards completion of the Globe Drill GT3000 rig ( currently in production), reduction of gearing and general working capital purposes.
Cygnet has agreed to act as lead manager to the Capital Raising and underwriter in respect of the exercise of the Listed Options and Rights Issue. In consideration for these services, the Company has agreed to issue to Cygnet:
• that number of Shares that equates to 6% of the total capital raised via the Capital Raising at an issue price of $0.22;
• 2,000,000 Options for nil cash consideration, exercisable on or before 30 June 2011 at an exercise price of $0.40 each; and
• 2,000,000 Options for nil cash consideration, exercisable on or before 30 June 2011 at an exercise price of $0.50 each.

The Mandate is subject to Cygnet completing due diligence investigations on Coretrack within 3 business days of execution, to the full satisfaction of Cygnet, and Coretrack and Cygnet entering formal underwriting agreements within 7 days of execution, which agreements will contain standard out-clauses relating to various unforseen market and world events.

Renewal of CEO Contract
Coretrack announces that Managing Director and CEO, Mr Nanne van't Riet, has agreed to renew his Executive Services Agreement with the Company. Mr van't Riet's existing agreement is due to expire on 19 February 2010.

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