Giant Bay plans acquisition of TRennessee group

Concerned about near-term cash flow from its bioleaching division, Vancouver- based Giant Bay Resources has concluded a memorandum of agreement to acquire the Banco group of companies of Nashville, Tenn.

Banco Resources is a public company which, along with its associates, owns 120 oil and gas wells, approximately 16,000 acres of leased land, and a 60-mile gas gathering and transmission line in Fentress Cty., Tenn.

In a 2-stage transaction, Giant Bay will acquire 100% of Banco’s associated companies and about 80% of Banco’s issued capital in exchange for 1.45 million Giant Bay shares and $250,000(US) plus other cash payments contingent on cash flow from Banco wells. In the second stage, Giant Bay would offer to acquire for cash or stock at its option the remaining 20% of Banco shares held by the public and the Potts family.

Giant Bay President Claus Jensen believes the oil and gas properties will show a positive cash flow of several million dollars annually within six months of closing. “While I am still very optimistic about the potential of biological gold leaching, with the oil and gas flow this transaction will generate, many more opportunities will be available.”

Most of the 120 wells have to be reworked and stimulated and some 2-12 miles of gas pipe line must be built before the gas wells achieve production.

Jensen says a petroleum engineer has established total reserves of approximately eight million bbl oil and 25 billion cu ft of natural gas for the properties. And with gas prices starting to recover and oil prices relatively low, the companies feel they will be able to acquire additional oil and gas reserves nearby at reasonable prices. The agreement requires board approval of both companies.