Portola Resources Announces Purchase and Exchange Agreement with Portola Funding I Limited Partnership

TORONTO, ONTARIO--(Marketwired - Oct. 15, 2014) -

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Portola Resources Inc. ("Portola") (TSX VENTURE:PZ) is pleased to announce that it has entered into an arm's length Purchase and Exchange Agreement dated October 10, 2014 ("PEA") with Portola Funding I LP ("Portola Funding LP").

Portola Funding LP has entered into an arm's length partnership agreement with Di-Corp Sand Transloading LP ("DST") for which Portola Funding LP will receive an annual distribution of $675,000. After January 1, 2016, the preferred distribution will be adjusted annually based on the percentage change in net revenue from the previous fiscal year of DST, subject to a maximum change of 4%. DST currently operates a frac sand transloading facility in Grand Prairie, Alberta and has begun construction of a second frac sand transloading facility in Rocky Mountain House, Alberta. Based in Edmonton, Alberta, DST is an affiliate of Diversity Technologies Corporation ("Di-Corp"), a private Edmonton based leading distributor of specialty chemicals, parts and accessories serving the energy, mining, and drilling industries. Di-Corp has been operating since 1960.

Under the terms of the PEA, Portola has agreed to purchase all of the issued and outstanding limited partnership units in Portola Funding LP (the "Units") and exchange all of the issued and outstanding Unit purchase warrants in Portola Funding LP (the "Warrants"), for warrants of Portola having substantially the same terms and economic value as the Warrants. Industrial Alliance acted as the agent for Portola Funding LP in connection with the completion of the offering and sale of Units.

The purchase of the Units and exchange of the Warrants shall be completed upon receipt of final TSX-V acceptance of a change of business announced by Portola on November 26, 2013, obtaining all requisite shareholder and other approvals and the completion of a private placement of common shares to fund the transactions set forth in the PEA. The price of securities issued in the private placement will be the subject matter of a separate announcement by Portola and will be subject to acceptance by the TSX-V. The obligation of Portola to complete the transactions set forth in the PEA is subject to TSX-V acceptance being received within six months following the date of the PEA, provided that the parties may, by mutual agreement, extend the deadline for receipt of TSX-V acceptance by a further six months.

Furthermore, Portola intends to apply to the TSX-V for an exemption from sponsorship requirements; there is no assurance that such exemption will be granted.

The purchase price payable by Portola for the Units will be approximately $5.7 million in the aggregate. Unitholders will have the option to receive the purchase price in any combination of cash or common shares of Portola. Any common shares so issued will be valued at a 7% discount to the offering price of the then private placement conducted by Portola.

About Portola Resources Inc.

Portola Resources Inc. (TSX VENTURE:PZ) is a Tier 2 Mining Issuer and has announced its intention to change it business to an investment issuer, subject to TSXV policy requirements and all requisite shareholder and other approvals. Portola intends to provide royalty capital to profitable private companies with a proven history of substantial and stable cash flows. Portola intends to payout a substantial portion of its free cash flow to its shareholders with the intention to create yield-rich common shares that will provide investors with significant, secure and growing dividends.

Royalty capital is an emerging form of mezzanine capital that pays preferred returns to investors while allowing business owners to maintain 100% equity ownership of their companies

READER ADVISORY

Completion of the transaction is subject to a number of conditions, including but not limited to, TSX-V acceptance, and, disinterested shareholder approval. The transaction cannot proceed until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the information circular or filing statement to be prepared by Portola in connection with the proposed change of business (the "transaction"), any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Portola should be considered highly speculative.

The TSX-V has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Forward-Looking Statements

Some of the statements contained herein may constitute forward-looking statements. These statements relate to future events or financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those expressed or implied by Portola. Actual events or results may differ materially. We disclaim any intention, and assume no obligation, to update these forward-looking statements.