Mr. Eugene Chen reports

BLACKSTEEL ENERGY INC. ANNOUNCES LETTER OF INTENT TO ACQUIRE TERIC POWER LTD.

Blacksteel Energy Inc. has entered into a letter of intent dated June 26, 2015, to acquire TERIC Power Ltd. The proposed transaction is considered to be a reverse takeover under the policies of the TSX Venture Exchange. Completion of the proposed transaction will be subject to customary closing conditions, including regulatory and shareholder approval.

The proposed transaction

Blacksteel is acquiring all of the issued and outstanding shares of TERIC for an aggregate purchase price of $11,008,876.80. The purchase price shall be satisfied through the issuance of 73,392,512 common shares of Blacksteel at a deemed price of 15 cents per share.

The acquisition of TERIC is an arm's-length transaction. TERIC is an Alberta incorporated company, and its principal shareholders are Kevin Gilbank, Craig Barnes, Tom Chapman, Brian Hunter and Harrie Vredenburg. The management team and board of directors hold over 90 per cent of the shares issued, with the remaining amount held by working shareholders.

Trading in the common shares of the corporation may remain halted pending review of the proposed transaction by the TSX-V. There can be no assurance that trading in common shares will resume prior to completion of the proposed transaction.

Offering of units and convertible debentures

In conjunction with the proposed transaction, Blacksteel is proposing to complete a non-brokered private placement of units and convertible debentures for gross proceeds of up to $3.5-million. Each unit consists of one common share and one-half of one common share purchase warrant at a price of 15 cents per unit. Each whole warrant shall be exercisable for one common share at a price of 25 cents for a period of 18 months following the closing of the offering. The convertible debentures will be issued in denominations of $1,000 and have a term of four years from issuance, with an interest rate of 8.5 per cent per annum, payable in cash on a semi-annual basis, with the first payment due on June 30, 2016. Each convertible debenture is convertible, at the holder's option, into common shares at any time prior to the earlier of the business day immediately preceding the maturity date and the business day immediately preceding any date fixed for redemption by the corporation at a conversion price of 25 cents per common share. The conversion price shall be subject to standard anti-dilution adjustments. Prior to the maturity date, and after at least two years from the issuance of the convertible debentures, the corporation may: (a) redeem the convertible debentures through payment of the outstanding principal, and any accrued and unpaid interest; and/or (b) force the conversion of the convertible debentures if the 20-day volume-weighted average trading price of the common shares is no less than 40 cents.

The offering shall consist of a maximum of $1.8-million of convertible debentures, subject to increase at the discretion of the corporation. Proceeds of the offering will be used for development of the resulting issuer's portfolio of energy projects, working capital and general corporate purposes.

It is contemplated that Blacksteel may pay a fee to finders equal to 8.0 per cent of the gross proceeds of the offering and issue the number of finders' warrants to acquire common shares equal to 8.0 per cent of the gross proceeds from the offering divided by 15 cents. The finders' warrants shall have an exercise price of 15 cents per finder's warrant and have an expiry of 12 months from the date of the closing of the offering.

TERIC financial information

TERIC is a private Canadian company focused on the development and ownership of distributed clean energy projects.

The most recent unaudited management-prepared financial information for TERIC is set out in an attached table.

         DEC. 31, 2014, YEAR-END

Current assets              $   767,260
Fixed assets                $   830,963
Total assets                $ 1,598,223
Current liabilities         $ 1,369,384
Long-term liabilities               Nil
Total liabilities           $ 1,369,384
Revenue                     $ 2,095,703
Expenses                    $ 2,366,863
Net income (loss)           $  (271,160)

Resulting issuer

Blacksteel currently has 30,084,785 common shares outstanding. Upon completion of the proposed transaction, it is expected that the resulting entity will have 103,477,297 common shares issued and outstanding, not including any common shares that may be issued upon completion of the offering. The resulting issuer will be considered an industrial issuer under the policies of the TSX-V.

The directors and officers of the resulting issuer are expected to be as follows.

Kevin Gilbank -- president, chief executive officer and director

Mr. Gilbank is a co-founder of TERIC, and has been the president and chief executive officer since December, 2013. Mr. Gilbank has over 15 years of oil and gas experience, with a specialization in operations, infrastructure project management and execution team leadership.

Mr. Gilbank has a master of applied science (mechanical engineering) from the University of Ottawa, a bachelor of mechanical engineering degree (honours) from the University of Dundee and a mechanical engineering technology diploma from Durham College.

Craig Barnes -- vice-president of development, chief financial officer and director

Mr. Barnes is a co-founder of TERIC, and has held the positions of vice-president, development, and chief financial officer since December, 2013. Mr. Barnes has extensive commercial, project management and execution team leadership experience in the oil and gas mid-stream sector.

Mr. Barnes holds a bachelor of commerce degree from the University of Cape Town and a project management professional designation from the Project Management Institute.

Tom Chapman -- vice-president, engineering

Mr. Chapman is a co-founder of TERIC and has been vice-president, engineering, since December, 2013. Mr. Chapman is an electrical engineer with over 30 years of Canadian and international experience in the oil and gas, pulp and paper, and power generation industries. Mr. Chapman has built his reputation on his extensive technical knowledge and understanding of the AESO (Alberta Electric System Operator) regulatory requirements, and transmission and distribution infrastructure, and his experience in operating distributed generation projects.

Mr. Chapman has a bachelor of electrical engineering and an electrical engineering technologist designation from Lakehead University.

Brian Hunter -- director

Mr. Hunter is an independent businessman, active in a variety of industries. He is the founder, president and a director of Windy Field Ltd., a consulting company with investments and operations in land, cattle, farming and energy properties in Alberta. Mr. Hunter was a founder, director, vice-president and chief operating officer of Bashaw Oil Ltd., a private oil and gas company, from March, 2009, to September, 2014, and was also a founder, director and vice-president of Montane Resources Ltd. and Brigus Resources Ltd., both private companies involved in natural gas exploration and production in Alberta.

Mr. Hunter studied engineering at the University of Calgary, and is a member of the Association of Professional Engineers and Geoscientists of Alberta, and the Society of Petroleum Engineers.

Dr. Harrie Vredenburg -- director

Dr. Vredenburg is professor of strategy at the University of Calgary's Haskayne School of Business, and holds the Suncor Energy chair in strategy and sustainability. Dr. Vredenburg also holds an appointment as an international research fellow at Oxford University's Said Business School and is the academic director of the Haskayne global energy executive master of business administration program.

Besides serving as an adviser to corporations and governments, Dr. Vredenburg is a non-executive member of the board of directors of Touchstone Exploration Inc., a Toronto Stock Exchange-listed technology-focused oil company with operations in Canada, and Trinidad and Tobago, and of Kainji Resources, a private Nigeria-focused oil company. Previously he served for eight years on the board of directors of Petrobank Energy and Resources Ltd., a TSX-listed mid-cap technology-focused oil and gas company with operations in Canada, Colombia, Peru and Brazil.

Dr. Vredenburg holds a PhD in strategic management from the University of Western Ontario, an MBA in international business and finance from McMaster University, and a bachelor of arts (honours) in history from the University of Toronto. He holds the ICD.D designation as a certified corporate director from the Institute of Corporate Directors.

Harry R. Munro, QC -- corporate secretary

Mr. Munro is a lawyer with 33 years of extensive experience in corporate commercial, private enterprise and real estate law. He has held various board positions, including the chair of the Aberdeen Hospital Foundation and the chair of the board of governors for Kings-Edgehill Private School. Mr. Munro also served as an outside director of the Sobeys Inc. pension plan. He continues to sit on the board of Kings-Edgehill School and the Aberdeen Health Foundation, and is also a trustee of a private family charitable foundation.

Mr. Munro holds a bachelor of business administration from St. Francis Xavier University and a law degree from the University of Western Ontario. He is a member of the Canadian Bar Association.

Upon completion of the proposed transaction, it is expected that the resulting issuer will grant stock options to directors and officers to acquire up to 10,477,297 common shares. Each grant of options will be for a 10-year term, and the options will be exercisable at a price of 15 cents per share. Furthermore, additional stock options may be granted to directors, officers, employees and consultants, subject to the number of common shares issued under the offering.

Sponsorship of the proposed transaction

It is contemplated that pursuant to the policies of the TSX-V, unless Blacksteel is able to obtain an exemption or waiver, it will be required to engage a TSX-V member or participatory organization to act as sponsor in connection with the proposed transaction.

Significant conditions to completion of the proposed transaction

Completion of the proposed transaction is subject to a number of conditions, including but not limited to: (a) entering into a formal agreement; (b) completion of due diligence; (c) TSX-V acceptance; and (d) common shareholder approval.

The proposed transaction cannot close until the required shareholder approvals are obtained. There can be no assurance that the proposed transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the proposed transaction, any information released or received with respect to the proposed transaction may not be accurate or complete, and should not be relied upon. Trading in the securities of Blacksteel Energy Inc. should be considered highly speculative.

We seek Safe Harbor.