News Press Releases

Letho Provides Additional Information on Proposed Business Combination Transaction

V.LET.H | July 10, 2018

Vancouver, British Columbia (FSCwire) - LETHO RESOURCES CORP. (TSX-V: LET)

Further to its May 10, 2018 press release, Letho Resources Corp. (the “Company”) is pleased to provide additional information relating to its proposed business combination with Anio Oil & Gas Sh.a. (“Anio”), a private company registered in Albania. Anio owns and operates the Ballsh-Hekal oilfield in Albania. If completed, the business combination would result in the reverse takeover of the Company by Anio.

Memorandum of Understanding

The proposed business combination is currently the subject of a memorandum of understanding between the Company and Anio dated May 8, 2018 (the “Agreement”). If the business combination is completed, it is expected that the current shareholders of Anio will own approximately 65% of the outstanding common shares of the Company. Upon the completion of the business combination, the board of directors of the resulting issuer is expected to be comprised of six directors, with Anio having rights to nominate at least four out of the six director nominees. The business combination will constitute an Arm’s Length Transaction under TSX Venture Exchange rules.

Capital Structure of the Company

The Company has an authorized share capital consisting of an unlimited number of common shares, of which 7,538,361 shares are issued and outstanding, and an unlimited number of preferred shares, of which none are outstanding. There are 623,000 options outstanding, each with an exercise price of $0.085. The shares and those options are the only issued and outstanding securities of the Company.

Description of Assets

The Ballsh-Hekal field is located 30 kilometres southeast of the city of Fier in south central Albania. Ballsh-Hekal was discovered in 1966 and produces oil from fractured carbonates of Cretaceous-Paleocene age. The oil contains sulphur. The field is developed with an average well spacing of approximately 4 hectares/well (10 acres/well).

The oil produced from Ballsh-Hekal is moderate heavy oil (12 ^o -16 ^o API) with about 120-240cp viscosity. The oil is characterized as asphaltic aromatic. As the field has been in production since 1967, off take agreements are in place with oil sold into the local market.

Proposed Financings and Loan to Anio

In its May 16, 2018 press release, the Company announced a private placement of up to C$2.5 million at a price per share of C$0.25, with the net proceeds from the private placement being used to fund the Company’s obligations under the Agreement, including a loan to Anio, as well as for costs to be incurred in connection with the proposed business combination and general working capital.

However, in order to proceed with such a private placement and loan to Anio, the Company requires exemptive relief from the TSX Venture Exchange in regards to sections 5.3 (bridge financing rules) and 6.2 (loans to reverse takeover targets) in TSX Venture Exchange Policy 5.2 (Change of Business and Reverse Takeovers).

Subject to certain conditions, including obtaining the written consent of the current holders of a majority of the Company’s outstanding shares, the TSX Venture Exchange will permit the Company to raise up to C$1.5 million and will permit the Company to loan up to C$500,000 to Anio with the proceeds from such financing. Anio will use the loan proceeds to fund operations at the Ballsh-Hekal oil field until the business combination can be completed.

The loan to Anio will bear no interest and is repayable on March 30, 2019, or earlier if Anio terminates the business combination prior to that date. The loan will be secured by a security charge over Anio’s crude oil production from the Ballsh-Hekal oil field. and may be repaid at any time in cash or in kind in the form of crude oil equivalent produced by the Ballsh-Hekal oil field.

It is a condition to completion of the business combination that the Company complete an additional private placement financing, at terms to be determined, for gross proceeds of at least US$20 million. The proceeds of this additional financing are to be used by the resulting issuer to fund and improve operations over longer time frame and to fund further exploration and development and general working capital.

Conditions to Closing and Shareholder Approval

The business combination will be subject to a number of closing conditions, including the execution of definitive agreements with representations, warranties, conditions and covenants typical for transactions of this nature, and funding conditions referred to under “Proposed Financings and Loan to Anio” above.

The proposed business combination is subject to the shareholder approval requirements of the TSX Venture Exchange, unless a waiver or exemption from this requirement can be obtained. The Company intends to apply for a waiver of the shareholder approval requirement on the following basis: (a) the proposed business combination is not a related party transaction and no other circumstances exist which may compromise the independence of the Company or other interested parties (in particular, directors and senior officers of the Company) with respect to the proposed business combination; (b) the Company believes it is without active operations, (c) the Company is not and does not expect to be subject to a cease trade order and does not otherwise expect to be suspended from trading on completion of the proposed business combination; and (d) shareholder approval of any aspect of the proposed business combination is not required under applicable corporate laws and is not required under applicable securities laws. The Company’s exemption application to the TSX Venture Exchange will fully disclose all non-arm’s length parties to the Company and all non-arm’s length parties to the proposed business combination. However, there is no assurance that a waiver from the shareholder approval requirement can or will be obtained.

Proposed Officers, Directors and Principals of the Resulting Issuer

Jason Leikam, President, Chief Executive Officer and Director – Mr. Leikam’s focus has been in a corporate development and executive administrative capacity with development and exploration companies. Mr. Leikam is currently the President and Chief Executive of the Company and since 2013 has served as a director of Metgas Industries Ltd., a private natural gas technology company. He also serves as President and Director of Quantus Resources, a private mineral exploration company. From 2007 to 2011, he was manager of Corporate Development for Silvermex Resources Ltd., which was subsequently acquired by First Majestic Silver Corp. in 2012, and Canabo Medical Inc. (formerly Auracle Resources Ltd.) from 2011 to 2016, a company that was operating a Canadian, physician-led clinic network for medical cannabis.

Dimitris Soudas, M.A., Director and Chairman of the Board – Mr. Soudas has performed at the highest levels of the federal government, the private sector and not for profit organizations. Mr. Soudas joined the communication team for the Prime Minister of Canada in 2006 and served as chief spokesperson and Director of Communications for the Prime Minister of Canada from 2010 to 2011. Beginning in October 2011, Mr. Soudas served as Executive Director of Communications for the Canadian Olympic Committee. In December 2013 Mr. Soudas was appointed as Executive Director of the Conservative Party of Canada, an organization with more than 100 employees. In 2014, he entered the private sector, becoming the Senior Advisor to the President of Cavalia and the Managing Partner of Stampede Group. In his current roles at Cavalia and Stampede Group, Mr. Soudas’s expertise in the areas of management, business development, government and international relations has allowed him to develop successful strategic partnerships for clients in Canada, the United States, China, Europe the Middle East and India. Mr. Soudas currently chairs the board of directors of Merry Montreal and is an advisory board member of Montreal’s International Triathlon.

The resulting issuer’s remaining directors and officers will be determined by the closing date of the business combination. Upon completion of the business combination, no shareholders are expected to hold more than 10% of the shares of the resulting issuer.

Sponsorship

The proposed business combination is subject to the sponsorship requirements of the TSX Venture Exchange, unless a waiver or exemption from this requirement can be obtained. The Company intends to apply for a waiver of the sponsorship requirement, however there is no assurance that a waiver from this requirement can or will be obtained.

Trading Halt and Cautionary Statement

Trading of the Company’s shares remains halted on the TSX Venture Exchange and it is expected that the trading halt will continue until submissions to the TSX Venture Exchange for the business combination transaction with Anio have been completed to the satisfaction of the TSX Venture Exchange or until it determines otherwise in its discretion.

Completion of the business combination transaction with Anio is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance and if applicable, disinterested shareholder approval. Where applicable, the business combination transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the business combination transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the proposed business combination transaction, any information released or received with respect to the business combination transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Company, once resumed, should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed business combination and has neither approved nor disapproved the contents of this news release.

To learn more about us, please visit our website at: www.lethoresources.com

ON BEHALF OF THE BOARD OF DIRECTORS OF LETHO RESOURCES CORP.

Jason Leikam,

President & CEO

For more information, please contact:

Jason Leikam (778) 858-8085

Website: www.lethoresources.com

Forward-Looking Statements

Information set forth in this news release contains forward-looking statements or forward-looking information that are based on assumptions as of the date of this news release. Such statements include the terms of the proposed private placement (including proposed use of proceeds) and the terms of the proposed business combination with Anio. These statements reflect management’s current estimates, beliefs, intentions and expectations and are not guarantees of future performance. Such statements are based upon certain assumptions which Letho’s management believes to be reasonable, including assumptions relating to the availability of funds to complete the private placement, the nature of Anio’s assets, the expected conditions to closing and Anio’s ability to repay the loan from Letho. Letho cautions that all forward-looking statements are inherently uncertain and that actual performance may be affected by a number of material factors, many of which are beyond Letho’s control. Such factors include, among other things: risks and uncertainties relating to Letho’s ability to complete the proposed private placement satisfying the conditions to closing of the business combination transaction, including the completion of satisfactory due diligence, and the risk that Anio will not be able to repay the loan from Letho. Accordingly, actual and future events, conditions and results may differ materially from the estimates, beliefs, intentions and expectations expressed or implied in the forward-looking information. Except as required under applicable securities legislation, Letho undertakes no obligation to publicly update or revise forward-looking information.

NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

To view the original release, please click here

Source: Letho Resources Corp. (TSX Venture:LET)

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