Touchstone Exploration funding concerns alleviated on relatively favourable terms
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 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
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.
Source : lse.co.uk
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