Mr. Michael Sweatman of Eureka reports

EUREKA ANNOUNCES OPTION EARN-IN WITH CANARC ON THE FG PROPERTY AND PRIVATE PLACEMENT

Eureka Resources Inc. has entered into an option agreement dated Aug. 24, 2016, with Canarc Resource Corp. which provides Canarc the ability to earn up to a 75-per-cent interest in the company's FG property. The agreement is subject to the approval of the TSX Venture Exchange.

Michael Sweatman, chief executive officer of Eureka, stated: "We are extremely happy to have attracted a group with the financial resources and technical expertise of Canarc. Brad Cooke, chairman of Canarc, and his team are industry leaders with a long track record of success. Canarc will advance the FG property, bringing value to Eureka without further dilution of the company."

Upon receipt of the approval of the TSX Venture Exchange, Canarc will issue Eureka 250,000 common shares in the capital of Canarc, and purchase 750,000 units of Eureka under the offering (as defined below).

In order to earn an initial 51-per-cent interest in the property, Canarc is required to:

1. Incur aggregate exploration expenditures of $1.5-million on the property, of which:
   1. At least $500,000 is to be incurred in 2017;
   2. At least $500,000 is to be incurred in 2018;
   3. The balance of the $1.5-million is to be incurred in 2019.
2. Make cash payments and issue Canarc shares to Eureka as shown in the associated table.

  
Payment date                           Cash payment amount      Number of Canarc shares

                       50% of the British Columbia mineral
                        exploration tax credit received by
First anniversary                            Canarc (METC)                      250,000
Second anniversary                         50% of the METC                      250,000
Third anniversary                          50% of the METC                      250,000
 

In order for Canarc to earn an additional 24-per-cent interest in the property (total -- 75 per cent), Canarc is required to:

1. Incur exploration expenditures of $1.5-million on the property between the third anniversary and the fifth anniversary of the date of grant of the option;
2. Make cash payments and issue Canarc shares to Eureka as shown in the associated table.

Payment date                                          Cash payment amount      Number of Canarc shares

Fourth anniversary    the greater of: (i) $75,000 or (ii) 50% of the METC                      750,000
Fifth anniversary     the greater of: (i) $75,000 or (ii) 50% of the METC                      750,000
            

Upon exercise of the option by Canarc, the parties will form a joint venture. During the option period and joint venture, Canarc will be operator.

Private placement offering

The company also announces that it plans to raise up to $420,000 by offering three million units of the company at a price of 14 cents per unit. Each unit will consist of one common share of Eureka and one warrant, each warrant entitles the holder to acquire an additional half common share at 20 cents per share for two years from the closing of the offering. All warrants issued under the offering will be subject to an acceleration clause.

The proceeds of the offering will be used for working capital and for exploration on the company's Gemini property, The exploration program is estimated to cost $500,000 (U.S.). Eureka is required to contribute 50 per cent of these costs ($250,000 (U.S.)) to maintain its 50-per-cent interest.

All securities issued under the offering will be subject to a four-month hold period, during which time the securities may not be traded. The offering is subject regulatory approval, including the approval of the TSX Venture Exchange.

How to participate in the offering

To participate in the offering, interested investors must complete the applicable subscription agreement and return the completed subscription agreement along with a certified cheque or bank draft for the total purchase price payable to Eureka Resources, at Suite 1100 1111 Melville St., Vancouver, B.C., V6E 3V6. A subscription agreement may be obtained by contacting the company directly at 604-449-2273 or by e-mailing. Participation is subject to available space and is at the discretion of the company. Interested investors are encouraged to return completed subscription agreements promptly using commercial couriers or priority post. For additional information, please contact the company directly at 604-449-2273.

FG project

Eureka has held the FG property (formerly called Frasergold) since 1982. To date, over $15.0-million of exploratory work has been completed by the company, Asarco, Amoco and Hawthorne Gold Corp. The historical exploration has established a measured and indicated (376,000-ounce) gold resource at an average grade of 0.776 gram per tonne gold, using a cut-off grade of 0.5 g/t, and an inferred gold resource (634,900 ounces) at an average grade of 0.718 g/t gold, using a cut-off grade of 0.5 g/t. Mineralization has been outlined over a strike length of three kilometres, and has the potential for additional mineralization that could extend along an interpreted strike length of over 10 kilometres. Details of the gold resource can be found in "NI 43-101 technical report, Frasergold exploration project, Cariboo mining division, dated July 27, 2015," available on SEDAR or at the company's website.

Gemini lithium project

Eureka owns a 50-per-cent participating interest in the Gemini lithium brine project, located in the western Lida Valley, located in Esmeralda county in south-central Nevada, approximately 40 kilometres (26 miles) from North America's only producing lithium mine at Silver Peak. The Lida Valley is a flat, desert basin hosting two interpreted subbasins and with a similar geological setting to the Clayton Valley. Gemini currently consists of 247 placer claims totalling 4,940 acres (2,000 hectares).

John R. Kerr, PEng, is the company's designated qualified person for this news release within the meaning of NI 43-101 and has reviewed and approved the technical information described in this news release.

We seek Safe Harbor.