REG - Touchstone Explrtn. - US$12.5M CONVERTIBLE DEBENTURE ISSUANCE

Touchstone ExplorationAnnouncement

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RNS Number : 2218V  Touchstone Exploration Inc.  13 August 2025

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (596/2014/EU) ("MAR") AS IT FORMS PART OF UK
DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED
("UK MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, SUCH INFORMATION WILL
NO LONGER CONSTITUTE INSIDE INFORMATION.

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
BREACH OF THE RELEVANT SECURITIES LAWS OF SUCH JURISDICTION.

 

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF
CONSTITUTE AN OFFER TO SELL OR ISSUE, OR A SOLICITATION OF AN OFFER TO BUY,
SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY SECURITIES IN THE COMPANY.

 

US$12.5M CONVERTIBLE DEBENTURE ISSUANCE

 

CALGARY, ALBERTA (August 13, 2025) - Touchstone Exploration Inc. (the
"Company" or "Touchstone") announces that it has closed a private placement of
a secured convertible debenture and warrants (the "Offering"), with Canadian
private investor and existing shareholder, JJR Wood Holdings Inc. (the
"Holder"), for gross proceeds of US$12,500,000. The Offering reflects the
Company's ongoing commitment to advancing its strategic development
initiatives.

 

Paul R. Baay, President and Chief Executive Officer, commented:

 

"This financing will provide the capital necessary to immediately restart
drilling operations at Cascadura and subsequently bring new production online
at the Cascadura facility. We are pleased to have secured continued support
from both an existing shareholder and our Trinidad-based lender, reflecting
confidence in our strategic direction and the quality of our asset base. This
confidence is further demonstrated by the debenture's principal conversion
price, set at the US dollar equivalent of C$0.30 per common share,
representing a significant premium to the current share price."

 

Offering Terms

·      Offering Size: US$12,500,000 through the issuance of a secured
convertible debenture with an aggregate principal amount of US$12,500,000 (the
"Debenture").

·      Interest Payments (Coupon) and Securities Offered: The interest
rate on the Debenture is 5 percent and the Company also issued 6,250,000
warrants (the "Warrants") to purchase common shares of the Company ("Common
Shares") to the Holder as additional compensation.

·      Maturity: 3-year term.

·      Conversion Price: The Debenture is convertible into Common Shares
at US$0.21813 (the "Conversion Price"), being the US$ equivalent of C$0.30 per
Common Share based on the Bank of Canada exchange rate immediately prior to
the issuance of the Debenture.

·      Warrants: Each Warrant is exercisable at C$0.40 per Common Share
for a period of two years.

·      Closing Date: August 13, 2025, with an effective date for the
Debenture of August 8, 2025. The net proceeds of the Debenture have been
received by the Company.

·      Placement Fee: 5 percent of the principal amount, payable to the
Holder in cash on closing.

·      Conversion Limits: Total Common Shares ultimately issuable in
connection with the Offering (including upon conversion of the Debenture, any
interest payments that may be paid in Common Shares, and the exercise of
Warrants) are capped at 65,248,201, representing 24.99 percent of the
currently outstanding Common Shares.

·      Ownership Restrictions: The Holder may not convert the Debenture
or receive interest in Common Shares if doing so would cause the Holder's
ownership to exceed 19.9 percent of the outstanding Common Shares without
prior Toronto Stock Exchange ("TSX") clearance and shareholder approval.

·      Change of Control: In the event of a change of control, the
Debenture may be redeemed for principal and accrued interest, though the
Holder may convert prior to the closing of such transaction.

·      Listing: Neither the Debenture nor the Warrants will be listed on
any exchange; however, the Common Shares issuable upon conversion or interest
payment of the Debenture and/or exercise of the Warrants will be listed on the
on the TSX and admitted to trading on the AIM market of the London Stock
Exchange ("AIM").

·      Loan Agreement: The Company has received written confirmation
from Republic Bank Limited ("RBL") that the net proceeds of the Debenture
satisfy an equivalent amount of the equity raise requirement under the
Company's Fourth Amended and Restated Loan Agreement (the "Loan Agreement").
Consequently, the Company will need to raise a further US$7.3 million in
equity (net of any selling commissions) before December 31, 2025 to fully meet
its equity obligations under the terms of the Loan Agreement.

Use of Proceeds

 

Net proceeds from the Offering will be used to fund the following development
activities and reduce outstanding accounts payable:

·      immediate commencement of drilling the Cascadura-4ST2 development
well; and

·      complete and tie-in the Cascadura-4ST2 and Cascadura-5 wells.

Further information on the Debenture and the Warrants

 

The Company closed a US$12.5 million private placement consisting of the
Debenture and the Warrants with a Canadian private investor on August 13,
2025. Net proceeds from the Offering are intended to fund the remainder of the
Company's Cascadura 2025 development drilling program and to reduce
outstanding accounts payable.

 

The Debenture has a three-year term and bears interest at a rate of 5 percent
per annum, payable semi-annually. The Debenture is convertible into Common
Shares of the Company at any time prior to maturity at the Conversion Price.
At the Holder's option, interest may be paid in cash or in Common Shares, with
the number of shares determined based on the market price of the Common Shares
and prevailing exchange rate at the time of payment, subject to approval by
the TSX.

 

The Debenture is secured by a perfected security interest over all present and
after-acquired personal property of Touchstone Exploration Inc. This includes
an Alberta law general security agreement and a Barbados law charge over the
shares of the Company's subsidiary, Touchstone Exploration (Barbados) Ltd. The
terms of the Debenture restrict Touchstone Exploration Inc. from granting
liens over its property without the Holder's consent, other than customary
permitted liens.

 

As part of the Offering, the Company issued the 6,250,000 Warrants, each
exercisable to acquire one Common Share at an exercise price of C$0.40 per
share for a period of two years from the date of issuance.

 

The Company has received written confirmation from RBL that the proceeds from
the Offering satisfy an equivalent portion of the equity raise requirement
pursuant to the Loan Agreement. As a result, the Company is required to raise
an additional $7.3 million in net equity proceeds on or before December 31,
2025 to remain in compliance with the terms of the Loan Agreement.

 

The Debenture provide the funds required to recommence the Company's drilling
program, and reduce the amount required to be raised under the Loan Agreement.
The Company expects to satisfy the remainder of the fundraising requirement
under the Loan Agreement by means of a further equity fundraising in 2025.
That fundraising, together with the funds raised by the Debenture, are
expected to satisfy the Company's near-term capital requirements,
notwithstanding the shortfall in funds received under the private placement
announced on May 8, 2025.

 

May 8, 2025 Private Placement

 

On June 30, 2025, Touchstone Exploration Inc. announced that £10,324,500 of
the £15,375,000 gross proceeds had not been received as of the TSX‑approved
closing deadline of June 27, 2025. As a result, the Company closed on
£5,050,500 in gross proceeds and issued 24,636,585 Common Shares.

 

The Company has not received any further proceeds from the May 8, 2025,
private placement to date. Accordingly, the Company believes there is a high
level of uncertainty as to whether it will receive the outstanding balance of
proceeds of £10,324,500 and has therefore completed the Offering to partially
secure its near-term capital requirements.

 

The Company has reserved all rights in connection with the May 8, 2025 private
placement and will assess its position, including any losses incurred as a
result of defaulted placing commitments, following the completion of its 2025
financing activities.

 

Touchstone Exploration Inc.

 

Touchstone Exploration Inc. is a Calgary, Alberta based company engaged in the
business of acquiring interests in petroleum and natural gas rights and the
exploration, development, production and sale of petroleum and natural gas.
Touchstone is currently active in onshore properties located in the Republic
of Trinidad and Tobago. The Company's Common Shares are traded on the Toronto
Stock Exchange and the AIM market of the London Stock Exchange under the
symbol "TXP".

 

For further information about Touchstone, please visit
www.touchstoneexploration.com
(https://url.avanan.click/v2/___http:/www.touchstoneexploration.com/___.YXAxZTpzaG9yZWNhcDphOm86NzY3MDI3ZGJhNjJkMTBmN2M5YjgzOTJiZGY5NzNkZDg6NjphOTg1OjlmZDcwMWJhZDA2YzEwMDg1MjJhMGQzMzZjNWZjZTVlMzYyMDBhZTlkZDUzNDBlNjQ5OTc0OWEzOWVjOTNmYTI6cDpUOk4)
or contact:

 

Touchstone Exploration Inc.

Paul Baay, President and Chief Executive
Officer                       Tel: +1 (403) 750-4405

Scott Budau, Chief Financial Officer

 

Shore Capital (Nominated Advisor and Joint Broker)

Daniel Bush / Toby Gibbs / Tom
Knibbs
Tel: +44 (0) 20 7408 4090

 

Canaccord Genuity (Joint Broker)

Adam James / Charlie
Hammond
Tel: +44 (0) 20 7523 8000

 

FTI Consulting (Financial PR)

Nick Hennis / Ben
Brewerton
                        Tel: +44 (0) 20 3727 1000

Email: touchstone@fticonsulting.com (mailto:touchstone@fticonsulting.com)

 

Advisories

 

Currency

 

For reference purposes in this announcement, one Canadian dollar ("C$") has
been translated into one United States dollar ("$" or "US$") at a rate of 1.00
to 1.3753.

 

Forward-Looking Statements

 

The information provided in this announcement contains certain forward-looking
statements and information (collectively, "forward-looking statements") within
the meaning of applicable securities laws. Such forward-looking statements
include, without limitation, intentions, forecasts, estimates, expectations
and objectives that are subject to assumptions, risks and uncertainties, many
of which are beyond the control of the Company. Forward-looking statements are
statements that are not historical facts and are generally, but not always,
identified by words such as "expect", "believe", "estimate", "potential",
"anticipate", "forecast", "pursue", "aim", "intends", and similar expressions,
or are events or conditions that "will", "would", "may", "could" or "should"
occur or be achieved. The forward-looking statements contained in this
announcement speak only as of the date hereof and are expressly qualified by
this cautionary statement.

 

In particular, this announcement includes, without limitation, forward-looking
statements regarding: the intended use of proceeds of the Offering; expected
timing and execution of drilling and development activities; anticipated or
possible conversion, interest payments in Common Shares, and/or exercise of
the Debenture and the Warrants, as applicable; satisfaction of conditions
under the Loan Agreement; and Touchstone's current and future financial
position, including the Company's liquidity and the sufficiency of resources
to fund future capital expenditures. The Company's actual decisions,
activities, results, performance, or achievement could differ materially from
those expressed in, or implied by, such forward-looking statements and
accordingly, no assurances can be given that any of the events anticipated by
the forward-looking statements will transpire or occur or, if any of them do,
what benefits Touchstone will derive from them.

 

Although the Company believes that the expectations and assumptions on which
the forward-looking statements are based are reasonable, undue reliance should
not be placed on the forward-looking statements because the Company can give
no assurance that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very nature they
involve inherent risks and uncertainties. Actual results could differ
materially from those currently anticipated due to a number of factors and
risks. Certain of these risks are set out in more detail in the Company's 2024
Annual Information Form dated March 19, 2025 which is available online under
the Company's profile on SEDAR+ (www.sedarplus.ca
(https://url.avanan.click/v2/___http:/www.sedarplus.ca/___.YXAxZTpzaG9yZWNhcDphOm86YmQ5MDlmZDBkODY2OWU4NTAwYzQwMDAzYjI0MjU0MmM6Njo4MGY2OjdmNTMwNmYyOWQ4ODllYTgyNzllMzYwMWZhODNmNDc1N2I0NzEyMzNjODZlNmI0MDI3NDBlYjBkNGMxMTQ3NmI6cDpGOk4)
) and on the Company's website (www.touchstoneexploration.com
(https://url.avanan.click/v2/___http:/www.touchstoneexploration.com/___.YXAxZTpzaG9yZWNhcDphOm86YmQ5MDlmZDBkODY2OWU4NTAwYzQwMDAzYjI0MjU0MmM6Njo0YjI4OmNjYzljOTBhYWFhMDQ5OTBiMjhkYTIzYzY5YTI0MzdkOWY2ZjViMjYyMGYzOWE0NzQyM2RjMzFhZTdiNmY4OGM6cDpGOk4)
). The forward-looking statements contained in this announcement are made as
of the date hereof, and except as may be required by applicable securities
laws, the Company assumes no obligation or intent to update publicly or revise
any forward-looking statements made herein or otherwise, whether as a result
of new information, future events or otherwise.

 

Important Notice

 

No prospectus or admission document has been or will be filed, published or
made available in connection with the matters described in this announcement.
This announcement is for information purposes only and does not constitute or
form part of any offer or invitation to sell or issue, or any solicitation of
an offer to purchase or subscribe for, any securities of the Company in any
jurisdiction, including the United Kingdom, Canada, the United States,
Australia, Japan, the Republic of South Africa or any other jurisdiction where
such offer or sale would be unlawful.

 

The securities referred to in this announcement, including the Debenture and
the Warrants, are being offered by way of private placement and will not be
offered to the public in the United Kingdom, Canada or any other jurisdiction.
These securities have not been and will not be registered under the United
States Securities Act of 1933, as amended (the "U.S. Securities Act"), or
under the securities laws of any state or other jurisdiction of the United
States and may not be offered, sold, pledged or transferred in the United
States unless pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the U.S. Securities Act and applicable
state securities laws.

 

In Canada, the securities will not be qualified for sale to the public under a
prospectus and have been offered only to the Holder in reliance on exemptions
from the prospectus requirements of applicable Canadian securities laws. No
securities commission or similar authority in Canada has reviewed or in any
way passed upon the merits of the securities offered, nor has any such
authority reviewed this announcement. Any representation to the contrary is an
offence. The Company is relying on an exemption from the requirement to
provide a prospectus under the Securities Act (Alberta), and as a consequence,
certain protections, rights and remedies provided by that legislation,
including statutory rights of rescission or damages, will not be available to
investors.

 

The Debenture and Warrants are new securities for which there is no
established trading market. No application has been or will be made to list
the Debenture or Warrants on any exchange. However, the Company will take all
necessary steps to ensure that the Common Shares issuable upon conversion of
the Debenture or upon exercise of the Warrants are listed on both the TSX and
admitted to trading on AIM, subject to the rules and policies of each
exchange.

 

The distribution of this announcement and the offering of securities may be
restricted by law in certain jurisdictions. Persons into whose possession this
announcement comes are required to inform themselves about and observe any
such restrictions. Any failure to comply with these restrictions may
constitute a violation of the securities laws of any such jurisdiction.

 

No reliance may or should be placed for any purpose on the information
contained in this announcement or its accuracy or completeness. This
announcement does not purport to be all-inclusive or to contain all the
information that prospective investors may require. The contents of this
announcement have not been approved by any securities regulatory authority.
This announcement does not constitute a recommendation concerning any
securities referred to herein.

 

For the purposes of UK MAR and Article 2 of the binding technical standards
published by the Financial Conduct Authority in relation to MAR as regards
Commission Implementing Regulation (EU) 2016/1055, the person responsible for
the release of this announcement is Paul Baay (President and Chief Executive
Officer).

 

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