Attached files
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): January 31, 2012
SANTOS RESOURCE CORP.
(Exact name of registrant as specified in its Charter)
Nevada 000-53520 98-0507846
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
One Riverway Drive, Suite 1700
Houston, Texas 77056
713-840-6495
(Address and telephone number of principal executive offices,
including zip code)
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(Former address if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of Registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On January 31, 2012, Santos Resource Corp. ("Registrant") entered into an
Option to Purchase and Sale and Purchase Agreement (the "Agreement") with
Liberty Petroleum Corporation ("Liberty"). The Agreement provides for the sale
and transfer of the Petroleum Exploration License (PEL) 512 (the "Prospect") in
the State of South Australia. The Prospect involves 584,651 gross acres
overlaying portions of the geological system generally referred to as the Cooper
and Eromanga basins. All descriptions of the terms, provisions and conditions
of the Agreement are qualified in their entirety by reference to the copy
thereof that is attached as Exhibit 10.1 hereto and is incorporated herein by
reference for all purposes hereof.
Liberty was the winning bidder for the Prospect, and needs only to complete
negotiation of an access and royalty arrangement with the relevant Aboriginal
native titleholders, who have certain historic rights on the Prospect land, to
be offered title to the Prospect. Registrant previously received an assignment
from Keith D. Spickelmier of a legal document (as amended and restated, the
"Liberty Agreement") entered into by Keith D. Spickelmier and Liberty whereby
Liberty granted to Mr. Spickelmier an exclusive right to negotiate an option to
acquire the Prospect (the "Option"). The Agreement reflects the results of
negotiations between Registrant and Liberty, and the Agreement supersedes the
Liberty Agreement.
The Agreement provides that the Option's exercise price for the Prospect is
a deemed total of US$4.05 million payable as follows:
* Cash in the amount of US$800,000 - Regarding the preceding
amount US$350,000 has already been paid to Liberty, US$200,000 must
be paid to Liberty within 20 business days after the date of
the Agreement, and the remaining US$250,000 must be paid to
Liberty after Registrant's acquisition of the Prospect.
* Two promissory notes with an aggregate principal amount of
US$750,000, one in the amount of US$500,00 becoming due six
months after Registrant's acquisition of the Prospect, and the
other in the amount of US$250,00 becoming due nine months after
Registrant's acquisition of the Prospect
* Twelve million shares of Registrant's common stock, of which Liberty
has agreed not to sell more than 10% in any three-month
period
After any exercise of the Option, Liberty would retain a 7.0% royalty interest.
In addition to the preceding, in consideration of the assignment of rights
to the Liberty Agreement, if and when Registrant acquires the Prospect,
Registrant will be obligated to remit to Mr. Spickelmier US$100,000 and a
convertible promissory note for US$55,000 convertible at a rate of US$0.001 per
share into 55.0 million shares at any time after Registrant has increased its
authorized common shares to at least 125.0 million or has undertaken a reverse
stock split in which at least two or more shares are combined into one share,
with the conversion rate being adjusted accordingly. Registrant is already
obligated to remit to Mr. Spickelmier US$50,000 in cash and 20.0 million shares
of Registrant's common shares.
If the Australian Minister of Resources Development (the "Minister") does
not grant the petroleum exploration license allowing the exploration and
drilling rights related to the Prospect (the "License") within a certain period
of time, Registrant will have the option to cancel the transaction, and Liberty
is required to refund all moneys paid to it. In such event, Mr. Spickelmier
will also be required to return to Registrant the 20.0 million shares of
Registrant's common shares to which he is already otherwise entitled.
The License involves a five-year work commitment involving expenditures of
AU$200,000 in the first year after the acquisition, AU$1.25 million in the
second year, and even greater amounts in subsequent years. Registrant's
inability to honor this work commitment could result in the reversion of the
License to Liberty pursuant to the terms of the Agreement.
In addition to the matters described above, the Agreement features various
other agreements, representations, warranties and indemnities that Registrant
believes are customary and are commercially reasonable.
Registrant believes that the following events must occur before it can
acquire the License:
* Liberty must complete the negotiation of an access and royalty
arrangement with the relevant Aboriginal native titleholders, who
have certain historic rights on the Prospect land in order that
the License may be issued.
* Liberty must receive and accept an offer from the Minister of grant
of the License.
* The assignment of the License must then be properly registered
with the Minister so that the License is then re-titled in the
name of Registrant.
Registrant has no assurance that the preceding events will occur. Consequently,
neither Registrant nor anyone else has any assurance that Registrant will be
able to consummate the acquisition of the License.
Registrant believes that it now has (or will at the appropriate time in the
future have) sufficient funds to acquire the License. Nevertheless, it will
need to raise additional funds to satisfy the deferred payments to Liberty
incurred in connection with the acquisition of the License, Registrant's
obligations under a work commitment with respect to the License and other
amounts required to explore and develop the Prospect, and other working capital
needs. Registrant has no assurance that it will be able to raise funds to
satisfy the preceding amounts.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
The information included in Item 1.01 of this Report is also incorporated
by reference into this Item 2.01 of this Report.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
10.1 Option to Purchase and Sale and Purchase Agreement dated January
31, 2012 by and between Liberty Petroleum Corporation and
Registrant
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SANTOS RESOURCE CORP.
(Registrant)
Date: February 2, 2012 By: /s/Keith J. McKenzie
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Keith J. McKenzie,
Chief Executive Officer
