Pepcap Resources, Inc. Announces Closing of Qualifying Transaction

CALGARY, ALBERTA--(Marketwired - May 19, 2015) -

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Pepcap Resources, Inc. (formerly Pepcap Ventures Inc.) (TSX VENTURE:WAV.P) (the "Corporation" or "Pepcap"), a "capital pool company", as such term is defined in the policies of the TSX Venture Exchange (the "TSXV" or "Exchange"), is pleased to announce that it has closed the previously announced acquisition of 51% of the total issued and outstanding shares ("AM Shares") of Asia Mining Management B.V. ("Asia Mining") as the "Qualifying Transaction" of the Corporation (as such term is defined in Exchange policies). As a result of the completion of the Qualifying Transaction, the Corporation holds an indirect controlling interest in PT. Krida Darma Andika ("Andika"), a 99.6% owned subsidiary of Asia Mining that owns mining concessions in Sumatra, Indonesia divided into two coal blocks, including three coal concessions that are located in the Napal Putih and Putri Hijau districts of North Bengkulu Regency of Bengkulu Province, Indonesia (the "Properties"). Subject to receiving final Exchange acceptance, the common shares of the Corporation ("Pepcap Shares") are expected to be reinstated for trading on the Exchange on or about May 20, 2015 under the new name "Pepcap Resources, Inc." and under the trading symbol "WAV".

Share Exchange Agreement

Pursuant to the terms of the share exchange agreement among Pepcap, Asia Mining, Andika and the principals of Asia Mining (the "Principals") dated effective March 31, 2015 (the "Share Exchange Agreement"), Pepcap acquired 9,180 AM Shares in consideration for the issue to the Principals of 26,703,600 Pepcap Shares ("Payment Shares") at a deemed price of $0.11 per Pepcap Share for aggregate deemed consideration of $2,937,396.

Each party to the Share Exchange Agreement acknowledged thereunder that due to the stage of development of the Properties, the actual value of the Payment Shares may be more than the deemed value of the 9,180 AM Shares, and as such have assigned adjusted valuations to the Payment Shares in accordance with the terms and conditions of the Share Exchange Agreement as follows:

1. if the National Instrument 43-101 - Standards of Disclosure for Mineral Projects compliant evaluation to be prepared with respect to the Properties (the "Future Technical Report") within three (3) years of the closing date of the Qualifying Transaction exceeds the target aggregate value of the Properties of not less than $5,600,000 ("Target Value") on or immediately prior to the date of the Future Technical Report (the "Valuation Date"), the Corporation will issue to the Principals that amount of Pepcap Shares ("Bonus Shares") issuable at the market price of the Pepcap Shares (or at a discount as permitted under TSXV policies), valued at the time of issuance in accordance with the policies of the TSXV and subject to TSXV approval and compliance with all applicable laws, as a twenty-percent (20%) bonus on the incremental value of the Properties above the Target Value; and
   
   
2. in the event that the Future Technical Report has not been finalized by the Valuation Date, no Bonus Shares will be issued.
   
   

The 1,856,400 warrants ("Past Performance Warrants") to purchase Pepcap Shares issued by the Corporation to certain consultants in consideration for prior services provided to Asia Mining in connection with the Qualifying Transaction have been deemed to be exercised a deemed price of $0.12 per Past Performance Warrant into Pepcap Shares for aggregate deemed consideration of $222,768. The Corporation also issued 1,190,000 Pepcap Shares ("Finder Shares") to a finder in consideration for finders services provided to the Corporation in connection with the Qualifying Transaction at a deemed price of $0.12 per Pepcap Share for aggregate deemed consideration of $142,800.

Upon completion of the Qualifying Transaction, there were 36,811,344 Pepcap Shares issued and outstanding including the Pepcap Shares issued on conversion of the Convertible Debentures (as defined below) issued pursuant to the Non-Brokered Offering (as defined below). An aggregate of 28,560,001 Pepcap Shares including the Payment Shares and the Pepcap Shares issued upon the deemed exercise of the Past Performance Warrants were placed in escrow under a value security escrow agreement pursuant to the policies of the Exchange and will be released in accordance with the terms thereof.

Financings

As a condition to and prior to the closing of the Qualifying Transaction, Pepcap completed a brokered private placement on April 29, 2015 of 6,500 subscription receipts of the Corporation ("Subscription Receipts") for gross proceeds of $650,000 (the "Brokered Offering"). Each Subscription Receipt was automatically exchanged immediately prior to the completion of the Qualifying Transaction (without any further action by the holder of such Subscription Receipt and for no further payment) for one 8% convertible secured debenture ("Convertible Debenture") with a par value of $100 per Convertible Debenture and a 36 month maturity period, convertible at the election of the debenture holder at any time into Pepcap Shares at a conversion price of $0.15 per Pepcap Share, subject to conventional anti-dilution adjustments and to certain escrow release conditions. The proceeds from the Brokered Offering had been held in escrow by Alliance Trust Company and were released to Pepcap in connection with the closing of the Qualifying Transaction.

The Corporation also completed the first tranche of a non-brokered private placement (the "Non-Brokered Offering", and together with the Brokered Offering, the "Financing") of Convertible Debentures on May 14, 2015 for gross proceeds to date of $198,200, resulting in aggregate gross proceeds from the Financing of $848,200. The Convertible Debentures subscribed for under the Non-Brokered Offering were converted into Pepcap Shares prior to closing of the Qualifying Transaction at the election of the subscribers. The Corporation may complete additional tranches of the Non-Brokered Offering following the closing date of the Qualifying Transaction, as may be permitted by the TSXV.

The proceeds from the Financing will be used for an exploration program on the Properties, for general and administrative purposes and for expenses of the Qualifying Transaction. The Convertible Debentures and underlying Pepcap Shares will be subject to a 4 month hold in accordance with applicable securities law.

Resulting Issuer

Following the closing of the Qualifying Transaction, Richard King, Gary Swanson and Victor Dusik resigned as directors of the Corporation and Edward Rochette, Margaret Wee and Dr. Saliba Sassine were appointed as directors of the Corporation. Clark Swanson will remain as President, Chief Executive Officer and a director of Pepcap, Gavin Cooper has been appointed as Chief Financial Officer and Corporate Secretary of Pepcap and Soebali Sudjie has been appointed as Vice President, Business Development of Pepcap. The directors and officers of Pepcap have otherwise not changed upon completion of the Qualifying Transaction.

Options

Immediately after the closing of the Qualifying Transaction, a total of 2,000,000 options to purchase Pepcap Shares were granted to certain directors and officers of the Corporation in accordance with its stock option plan.

Cautionary Statements

This news release contains "forward-looking information" within the meaning of applicable securities laws relating to the Qualifying Transaction, the Financing and associated transactions . Although the Corporation believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Corporation can give no assurance that they will prove to be correct. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those that are currently contemplated by these statements depending on, among other things, the risks of the failure to obtain final acceptance by the Exchange of the Qualifying Transaction, that additional tranches of the Non-Brokered Offering are not completed, that the use of proceeds from the Financing may change as determined by the Corporation, or that any associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Corporation, its securities, or its financial or operating results (as applicable). The statements in this news release are made as of the date of this release.

Neither the TSX Venture Exchange, Inc. nor its Regulation Services Provider (as that term is defined in the polices of the TSX Venture Exchange) has in any way passed upon the merits of the Qualifying Transaction and associated transactions and neither of the foregoing entities has in any way approved or disapproved of the contents of this press release.

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