Dr. Richard Spencer reports

AURANIA RESOURCES ANNOUNCES $6.35 MILLION RIGHTS OFFERING

Aurania Resources Ltd. will undertake a rights offering to raise up to $6.35-million.

The company is offering rights to purchase common shares to eligible shareholders of record, at the close of business on the record date of Feb. 4, 2019, on the basis of one right for each common share held.

Basic subscription:

• For every 14 rights held, eligible shareholders can subscribe for one common share of the company upon payment of the subscription price of $2.70 per common share.
• The subscription price for each common share has been priced at a discount of approximately 15 per cent to the closing share price on Jan. 28, 2019, as per regulatory requirements.
• The rights offering will be conducted in Canada and will be available to Canadian-resident shareholders and to shareholders outside of Canada who are eligible under certain exemptions (see details herein).
• The rights will trade on the TSX Venture Exchange under the symbol ARU.RT commencing on Feb. 1, 2019. The rights will expire at 5 p.m. Toronto time on March 6, 2019, and will become void and of no value.
• Eligible shareholders who fully exercise their rights will be entitled to subscribe for additional common shares, if available, as a result of unexercised rights prior to the expiry time, subject to certain limitations set out in the company's rights offering notice and rights offering circular (see details herein on subscription for additional shares).
• The shares purchased through the rights offering will be free trading (and therefore not subject to the four-month hold that normally applies to shares issued through a private placement).
• The company intends to use the net proceeds of the rights offering to finance exploration expenses, including scout drilling, concessions fees to maintain the Lost Cities-Cutucu project in Ecuador in good standing, and general and administrative expenses.

Details of the rights offering will be set out in the notice and circular, which will be available under the company's profile at SEDAR and on the company's website.

Eligible holders

The notice, accompanying rights certificate and form of subscription will automatically be mailed to each registered shareholder in Canada, and shareholders who are resident in Canada who own their shares through an intermediary, such as a bank, trust company, securities dealer or broker (in Canada), will receive materials and instructions from their intermediary. The company encourages shareholders to review these documents carefully.

Eligible holders who wish to exercise their rights must forward the rights certificate, together with the applicable funds, to the rights agent, TSX Trust Company, located at 301, 100 Adelaide St. West, Toronto, Ont., M5H 4H1, on or before the expiry time.

Ineligible holders

Shareholders who are resident in a jurisdiction outside of Canada may be able to participate in the rights offering under certain exemptions. The company will not issue or forward rights certificates to ineligible holders; however, a letter will be sent to them, which will:

• Describe the conditions that must be met and the procedures that must be followed for an ineligible holder to participate in the rights offering;
• Advise them that their rights will be held by TSX Trust Company, which will, prior to the expiry time, attempt to sell any unexercised rights of ineligible holders on such dates and at such prices as it determines in its sole discretion.

Ineligible holders who wish to participate in the rights offering and are unsure of whether they meet the required exemptions are encouraged to contact the rights agent or the company directly.

Subscription for additional shares

There are currently 32,915,316 common shares of the company outstanding. If all of the rights issued under the rights offering are validly exercised, a total of 2,351,094 common shares will be issued under the rights offering with gross proceeds of approximately $6.35-million.

Eligible holders who fully exercise their rights will be entitled to subscribe for additional common shares, if available, as a result of unexercised rights prior to the expiry time, subject to certain limitations set out in the company's circular.

Standby commitment

In connection with the rights offering, the company has entered into a standby purchase agreement with Dr. Keith Barron, the chairman and chief executive officer of the company, in an amount of $4-million.

Related-party transaction

In connection with the standby commitment, Dr. Barron will acquire up to 1,481,482 common shares. The acquisition of securities pursuant to the rights offering by Dr. Barron is considered a related-party transaction pursuant to Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions). The company is relying on an exemption from the formal valuation requirements of MI 61-101 available on the basis of the securities of the company not being listed on specified markets, including the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the Nasdaq or certain overseas stock exchanges. The company is also relying on the exemption from minority shareholder approval requirements under MI 61-101 as the fair market value of the participation in the rights offering and standby commitment by Dr. Barron does not exceed 25 per cent of the market capitalization of the company.

Conversion of convertible debenture

The company also announces the issuance of 877,192 common shares from treasury in connection with the repayment of a $2.0-million (U.S.) convertible debenture issued by the company to Dr. Barron on May 29, 2018. As dictated by the terms of the debenture, the unpaid principal amount of $2.0-million (U.S.) was converted into common shares at the conversion price of $3 (Canadian) per common share, fixed at the March 20, 2018, Bank of Canada exchange rate of 76 U.S. cents to $1 (Canadian) such that the maximum number of common shares to be issued upon the exercise of the conversion right shall be 877,192 common shares.

Early warning report

After giving effect to the conversion, Dr. Barron will own 17,125,065 common shares, representing 52.0 per cent of the common shares on a non-diluted basis and 52.6 per cent on a partially diluted basis. The common shares issued to Dr. Barron under the conversion represent an acquisition of less than 2 per cent of the issued and outstanding shares of the class; however, Dr. Barron's ownership percentage of the issued and outstanding common shares since the last early warning report filed on May 2, 2017, has decreased by 11.8 per cent on a non-diluted basis and 13.0 per cent on a partially diluted basis, as a result of dilution caused by common share issuances.

The common shares are held by Dr. Barron for investment purposes, and, depending on market and other conditions, Dr. Barron may, from time to time in the future, increase or decrease his respective ownership, control or direction over securities of the company through market transactions, private agreements or otherwise. As the number of common shares owned or controlled by Dr. Barron since the last early warning report has decreased by more than 2 per cent of the outstanding shares of the class, in satisfaction of the requirements of the National Instrument 62-104 (Take-Over Bids And Issuer Bids) and National Instrument 62-103 (the Early Warning System and Related Take-Over Bid and Insider Reporting Issues), an early warning report for Dr. Barron will be filed under the company's profile at SEDAR.

Extension of promissory note

The company is currently indebted to Dr. Barron for $580,500, pursuant to a 2017 promissory note. Concurrent with the above-described rights offering, the company has negotiated a further extension of the promissory note with Dr. Barron, to defer the maturity date from May 29, 2019, to May 29, 2020, whereupon the principal amount and any accrued interest will be payable to Dr. Barron. All other terms of the promissory note shall remain in full force and effect.

Dr. Barron is an insider of the company, and, as such, the extension of the promissory note with Dr. Barron is considered a related-party transaction pursuant to MI 61-101. The company is relying on the exemption from minority shareholder approval requirements set out in MI 61-101 as the fair market value of the total indebtedness does not exceed 25 per cent of the market capitalization of the company, as determined in accordance with MI 61-101.

Update on scout drilling program

Final preparations for the commencement of scout drilling at Crunchy Hill are being made, and the company expects to start drilling imminently.

About Aurania Resources Ltd.

Aurania is a junior mineral exploration company engaged in the identification, evaluation, acquisition and exploration of mineral property interests, with a focus on precious metals and copper. Its flagship asset, the Lost Cities-Cutucu project, is located in the Jurassic metallogenic belt in the eastern foothills of the Andes mountain range of southeastern Ecuador.

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