Bluestone Resources closes private placement

Friday, April 21, 2017


(This is an abridged version of the press release. For the full version click here)

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Bluestone Resources Inc. (TSX VENTURE:BSR) ("Bluestone" or the "Company") is pleased to announce the closing of its previously announced private placement financing of an aggregate of 53,333,333 subscription receipts of the Company ("Subscription Receipts") at a price of $1.50 per Subscription Receipt for aggregate gross proceeds of C$80 million (the "Offering"). The Offering was led by Cormark Securities Inc. ("Cormark") on behalf of a syndicate of agents (the "Agents"). The Company is also pleased to announce that it has entered into a definitive agreement with Goldcorp Inc. and its affiliates in respect of the previously announced acquisition of the Cerro Blanco Project and the Mita Geothermal Project. All references to currency herein are to Canadian dollars unless otherwise specified.

Subscription Receipt Financing

Lorito Holdings S.à.r.l. ("Lorito") and Zebra Holdings and Investments S.à.r.l. ("Zebra"), two companies controlled by a trust settled by the late Adolf H. Lundin acquired an aggregate of 19,867,000 Subscription Receipts. Assuming the closing of the Acquisition (as defined below) and the automatic conversion of the Subscription Receipts into Shares (defined below), at the Qualification Time (defined below), Lorito will hold 6,367,000 Shares and Zebra will hold 13,500,000 Shares, representing approximately 10.1% and 21.3%, respectively, of the then issued and outstanding Shares of Bluestone, or approximately 31.4% in aggregate.

The Subscription Receipts were issued pursuant to a subscription receipt agreement dated April 20, 2017 (the "Subscription Receipt Agreement") among the Company, Cormark and Computershare Trust Company of Canada, as subscription receipt agent. Pursuant to the Subscription Receipt Agreement, the gross proceeds from the Offering (less all of the Agents' expenses) have been placed in escrow pending delivery of a notice that the escrow release conditions set out in the Subscription Receipt Agreement (the "Escrow Release Conditions") have been met. The Escrow Release Conditions include, among others, the completion or waiver of all conditions precedent to the completion of the transactions contemplated by the Transaction Agreement (as defined below), the receipt of all regulatory approvals, and other customary conditions.

Upon the satisfaction of the Escrow Release Conditions, the escrowed funds (less the cash commission payable to the Agents) will be released to Bluestone. The Company intends to use the escrowed funds to fund the purchase price for the Acquisition (defined below), the development of the Cerro Blanco Project, and for general corporate purposes. If either (i) the Escrow Release Conditions are not satisfied by 5:00 p.m. (Vancouver time) on August 21, 2017, or (ii) Bluestone advises Cormark or announces to the public that it does not intend to satisfy any of the Escrow Release Conditions, then at the earlier of such time (the "Termination Time"), the Subscription Receipts will be deemed to be cancelled and holders of Subscription Receipts will receive a cash amount equal to the offering price of the Subscription Receipts. Any shortfall of such amount will be funded by the Company.

Each Subscription Receipt will automatically convert into one post-consolidation (on a 5 to 1 basis - see below) common share of the Company (each, a "Share"), without any further payment or action on the part of the holder thereof, provided that the Escrow Release Conditions have been satisfied, at the time (the "Qualification Time") that is the earlier of (i) 4:59 p.m. (Vancouver time) on August 21, 2017; and (ii) 12:01 a.m. (Vancouver time) on the third business day after the issuance of a final passport decision document evidencing a receipt on behalf of each of the securities regulatory authorities in each of the provinces of Canada in which Subscription Receipts have been sold (the "Qualifying Provinces"), pursuant to Multilateral Instrument 11-102 - Passport System (the "Final Receipt") for a final prospectus (the "Prospectus") qualifying the issuance of the Shares underlying the Subscription Receipts.

Pursuant to the terms of an agency agreement dated April 20, 2017 among the Company and each of the Agents, the Agents are entitled to a cash commission equal to 6% of the gross proceeds of the Offering, which is reduced to 3% on subscriptions received in respect of certain investors on the President's List.

All securities issued in the Offering are subject to a Canadian securities law resale restriction period expiring August 21, 2017. The Company has agreed to use its reasonable commercial efforts to file a prospectus qualifying the Shares to be issued upon the automatic conversion of the Subscription Receipts in each of the Qualifying Provinces by July 4, 2017. If a Final Receipt for the Prospectus is not issued by such date, each Subscription Receipt will automatically entitle the holder thereof to acquire 1.1 Shares without further payment or action on the part of the holder.

The Offering is subject to the final approval of the TSX Venture Exchange (the "TSXV"). The issuance of Shares upon conversion of the Subscription Receipts, to subscribers who will own 10% or more of the outstanding Shares, is subject to compliance with the TSXV's rules and requirements regarding 10% shareholders. In the event that these rules and requirements are not met, the TSXV will not allow the Company to issue Shares in excess of 10% of the outstanding shares to such subscribers. In such event, subscriptions by these shareholders will either be reduced to below 10%, withdrawn entirely, or re-allocated in whole or in part to meet the TSXV's requirements.

Definitive Agreement to Acquire Cerro Blanco Project and Mita Geothermal Project

Further to the Company's press release dated January 11, 2017, the Company is pleased to announce that it has entered into a definitive agreement with Goldcorp and its affiliates (the "Transaction Agreement") to acquire (the "Acquisition") 100% of the Cerro Blanco gold project located in Guatemala (the "Cerro Blanco Project"), which is owned by Goldcorp's indirect wholly-owned subsidiary Entre Mares de Guatemala S.A. ("Entre Mares"), and the Mita Geothermal project located in Guatemala (the "Mita Geothermal Project"), which is owned by Goldcorp's indirect wholly-owned subsidiary, Geotermia Oriental de Guatemala S.A. ("Geotermia").