RHC Capital Corporation
NEX BOARD : RHC.H
TSX VENTURE : RHC.H

July 19, 2017 18:26 ET

RHC Capital Corporation Announces Amalgamation

VAUGHAN, ONTARIO--(Marketwired - July 19, 2017) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO U.S. NEWSWIRE SERVICES.

RHC Capital Corp. ("RHC"), listed on NEX (NEX:RHC.H), is pleased to announce, further to its news releases dated June 21, 2017 and June 7, 2017, that it has received conditional approval from TSX Venture Exchange ("TSX-V") to proceed with the reactivation and amalgamation (collectively "Transaction") with Vela Resources Corp. The particulars of the Transaction are as follows.

The Companies

RHC Capital Corporation
RHC Capital Corporation ("RHC") was incorporated under the laws of the Province of Ontario on August 15, 2008. RHC was previously engaged in the acquisition, exploration, development and production of oil and natural gas reserves in North America. On February 27, 2017, RHC began trading on the NEX board of the TSX-V under the trading symbol "RHC.H". Previously, RHC traded on the TSX-V under the trading symbol "RHC". The address of its registered office is 67 Rebecca Court, Maple, Ontario, L6A 1G2. RHC previously sold all of its property interests and is evaluating suitable assets or businesses to acquire or merge with, with a view to maximizing value for shareholders.

Vela Resources Corp. Vela Resources Corp. ("Vela") is a private company incorporated under the Saskatchewan Business Corporations Act on December 20, 2015. The Company is engaged in the business of acquiring, exploring, and developing helium properties in Saskatchewan. Helium is an irreplaceable and non-renewable commodity used extensively in high-tech industries such as scientific research, manufacturing healthcare and rocketry. Vela currently holds a 100% working interest on 255,360 acres or 399 sections of contiguous and non-contiguous helium leases and permits. Vela has identified multiple locations with historic gas composition analysis associated with Saskatchewan's highest known concentrations of helium. In addition, these locations show the presence of favorable reservoir and seal sequences within the Deadwood and Winnipeg Formations. Furthermore, petrophysical analysis of selected historical wells on Vela land shows gas saturation in the same formations. For these locations, structural analysis of well logs taken in historical wells shows the required structural relief across key land parcels and the definition of potential helium traps. Vela has investigated the methods of processing gases containing helium and the steps required to refine helium to its commercial sales purity.

102025500 Saskatchewan Ltd.
102025500 Saskatchewan Ltd. ("SubCo") was incorporated under The Business Corporations Act (Saskatchewan) on June 15, 2017, solely for the purposes of completing the Transaction. It is a wholly owned subsidiary of RHC.

Transaction
The transaction will proceed as a "three cornered amalgamation." As previously stated in the News Release of June 21, 2017:

(a) each issued and outstanding common share of Vela ("Vela Share(s)") (other than any Vela dissenting shareholders) will be exchanged for approximately 3.5271 common shares of RHC ("RHC Shares"), following which all such Vela Shares shall be cancelled;

(b) each issued and outstanding Vela Share held by a Vela dissenting shareholder will be cancelled and the Vela dissenting shareholder will be entitled to be paid the fair value of such Vela Shares by Amalco in accordance with The Business Corporations Act (Saskatchewan);

(c) each issued and outstanding Subco common share will be exchanged for one Amalco common share following which all such Subco common shares shall be cancelled;

(d) it is anticipated that each outstanding Vela stock option will be exercised at its face value immediately prior to the Amalgamation, and any Vela stock option not exercised prior to the Amalgamation shall be cancelled; and

(e) Amalco will issue to RHC one fully paid and non-assessable Amalco common share for each RHC Share issued. For further details of the transaction structure, please see News Release of June 21, 2017.

Shares Halted
The shares of RHC shall be halted on the NEX board until the transaction is consummated.

Board and management of Amalco
It is proposed that at some time after closing Amalco will operate under the name Royal Helium Corporation, or such other name as may be accepted by the relevant regulatory authorities. There shall be no restrictions on the business that Amalco may carry on or on the powers it may exercise. Amalco shall be authorized to issue an unlimited number of shares without nominal or par value designated as voting, non-cumulative Class A shares. Amalco will be a wholly owned subsidiary of RHC. The management and operation of the business and affairs of Amalco shall be under the control of the board of directors as it is constituted from time to time.

The directors of Amalco shall be:

Name Address
Andrew Davidson Saskatoon SK
Scott Newman Saskatoon SK
Zoran Arandjelovic Vaughan (Toronto) ON
Michael Graham Scarborough ON

Board and management of RHC
The directors of RHC following the Transaction shall be:

Name Address
Andrew Davidson Saskatoon SK
Scott Newman Saskatoon SK
Zoran Arandjelovic Vaughan (Toronto) ON
Nick Orlando Woodbridge ON

Scott Newman will act as the Chief Executive Officer and President of RHC. Michael Graham shall act as Chief Financial Officer and Corporate Secretary of RHC. The Audit Committee of RHC shall be comprised of Scott Newman, Nick Orlando and Andrew Davidson.

Nick Orlando is the CEO of Dayco Canada Corp., a distribution company of a broad range of belts, hose, tensioners and pulleys for automotive, trucking and industrial markets. Prior to that, Mr. Orlando was the Chief Executive Officer and President of Martinrea International Inc. ("Martinrea"). Prior to Martinrea, he worked at Magna International Inc. ("Magna") and its affiliates for seven years, culminating in his appointment as Executive Vice President and Chief Financial Officer of Cosma International Inc., a Magna subsidiary and leader in metal forming technologies. Mr. Orlando is a chartered professional accountant and has extensive public market, board and audit committee experience.

Business Operations
Following the Transaction, Amalco will proceed with the following work program previously prepared by Vela:

Seismic Acquisition
Vela has identified key historical 2D seismic lines and 3D seismic areas that will facilitate project advancement and the delineation of drill targets. These seismic acquisitions, integrated with historical "lead" wells, will help to delineate potential drill target locations and lessen exploration drilling risk.

Petrophysical Log Analysis:
Vela has completed a Phase 1 petrophysical log analysis program that identified distinct reservoir characteristics and gas saturations in historical oil and gas exploration wells. This analysis identified gas saturation in the Deadwood and Winnipeg Formations that have aid in determining potential new exploration drill targets. It must be noted that only a fraction of the available logs has been analyzed and additional work is required to identify additional drill targets.

Exploration Drilling:
Exploration drilling, by way of a new drill from surface or re-entry of an existing wellbore, is the final stage of the proposed helium exploration program. The exploration drill targets would be determined by utilizing the data acquired by seismic and petrophysical log analysis. Once the exploration well has been drilled and completed, Vela will flow test the well to determine the flow rate and perform gas composition analysis to determine the helium concentration. The flow rate and helium concentration data will be the ultimate determining factors for economic development of the project area and the key proponent for establishing helium reserves.

Selected Pro Forma
The following table summarizes selected pro forma consolidated financial information of RHC, assuming the completion of the Transaction:

Assets
Current Assets
Cash and cash equivalents $2,714,513
Accounts receivable $27,370
Prepaid expenses and deposits $5,502
Total current assets $2,747,385
Exploration and evaluation assets $502,404
Total Assets $3,249,789
Liabilities and Shareholders' Deficiency
Current liabilities
Accounts payable and accrued liabilities $37,122
Total Liabilities $37,122
Shareholders' equity $3,212,667
Total liabilities and shareholders' equity $3,249,789

Available Funds and Principal Uses of Funds

The following table sets out information respecting the Amalco/RHC sources of cash and intended uses of such cash at closing. The amounts shown in the table are estimates only and are based on the best information available to RHC and Vela as at the date of this comprehensive press release. The intended uses of such cash may vary based on a number of factors.

Cash outflows
Work program $2,145,000
Professional fees $80,000
Transfer agent $15,000
Marketing $25,000
Consulting fees/Wages $180,000
Insurance $54,000
Accounts payable settlement $37,122
Unallocated working capital $100,000
Total anticipated cash outflows and unallocated working capital $2,636,122

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term that is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

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