Mineral Hill Industries Enters Into a LOI to Acquire Additional Oil Producing Properties in Oklahoma and Integrates an Experienced Operating Team

VANCOUVER, Jan. 14, 2019 - Further to the Company's announcement dated May 28, 2018, Mineral Hill Industries Ltd. ("MHI") or the "Company"), wishes to announce that it has signed a Letter of Intent ("LOI") to acquire additional oil producing assets in Oklahoma from a privately held Oil & Gas Company (the "Target"). The Target's team has acquired and operated its assets over the last 15 years developing a daily production capacity of 120- 150 bblspd.

The completion of this transaction will contribute to the Company's strategic vision not only to geographically increase the footprint of its previous acquisition located in close proximity of Oklahoma's "STACK play" in the Anadarko Basin, one of the best unconventional oil plays in the US, but will also fulfill Mineral Hill's objective to integrate a dedicated professional in-depth management team with over 60 years of combined operational and administrative experience within the Oil & Gas industry.

Two geological "Reserve Reports" were commissioned by the Target in July 2018 and were compiled by two independent petroleum consulting firms; both well established in Texas for over 40 years.  As both "Reserve Reports" were not prepared in accordance with the Canadian OIL & Gas Evaluation ("COGE") Handbook, the LOI terms require that the data and value provided by Target's two reserve reports will be confirmed by a NI51-101 performed by MHI's independent "Qualified Person" (the "NI51-101 Report"). 

The initial development of the assets was funded via bank financing which required the assets to be pledged as collateral. In 2018, the Target's bank merged with a banking group that does not finance Oil & Gas projects. Subsequent to receiving notice from the secured lender, Target filed for protection under the U.S. Chapter 11.

The LOI lays further out the conditions and terms that will be the basis for the subsequent "Definitive Agreement", determination of final consideration to be given for the assets and will serve as a basis to negotiate the final settlement to satisfy the secured lender and outstanding trade obligations for the Chapter 11 release.

Under the terms of the LOI, MHI will first complete the private placement announced on July16, 2018 by selling a minimum amount of 3.0 million securities units at Cdn$0.20 per securities unit ("Unit") for total proceeds of up to Cdn$600,000 ("PP#1"), whereby each Unit will consist of one common share of the

Company and one transferable common share purchase warrant ("Warrant") exercisable within a period of one (1) year from the date of issue, at an exercise price of Cdn$0.30 per Warrant Share. Subsequently MHI will commission a NI51-101 performed by MHI's independent "Qualified Person" (the "NI51-101 Report") to confirm the data and value provided by Target's two independent petroleum consultants. MHI will seek firm funding commitments for PP#2 in the amount between US$6.5 million to US$8.5 million through either corporate micro-bonds or a combination of bank financing and additional equity issuance to satisfy the final settlement of the Bank debt and Target's outstanding trade debt obligations.

The final consideration to Target's shareholders will be satisfied through the issuance of the number of MHI Shares equal to (a) the NI 51-101 valuation discounted by the assumed liabilities portion, divided by (b) the deemed MHI share price of Cdn$1.10 (the "Consideration-Share-Price"), subject to a possible adjustment of the Consideration-Share-Price, whereby the total MHI shares issued are to represent not less than 40% and not more than 50% of the fully diluted post-closing capital stock of MHI. MHI and Target agreed to adjust the Consideration-Share-Price so that the total MHI shares to be issued for Targets Assets are to represent not less than 40% and not more than 50% of the fully diluted post- closing capital stock of MHI.

The effective date of the Transaction will be the fifth (5th) banking day after the Approval of the TSXV and after approval by the Regulatory Authorities in respect to the Chapter 11.

The Parties to the LOI recognize that the MHI shares issued as consideration for Target's assets may be escrowed at the request by the TSXV and may be subject to restrictions on resale relating to hold periods, insider trading and control persons, and that the Escrow Shares shall be deposited in escrow and released subject to certain conditions as set forth in the Escrow Agreement.

The Company seeks Safe Harbor

Neither the 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.

/THE SECURITIES BEING OFFERED HAVE NOT BEEN, NOR WILL BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS WITHOUT REGISTRATION OR APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENT OF SUCH ACT. THIS RELEASE DOES NOT CONSTITUTE AN OFFER FOR SALE OF SUCH SECURITIES IN THE UNITED STATES OF AMERICA./

SOURCE Mineral Hill Industries Ltd.



Contact

Dieter Peter, President & CEO Phone: (604) 617-6794