Mr. Jag Bal reports

UMBRAL ENTERS INTO DEFINITIVE AGREEMENT TO ACQUIRE ADDITIONAL 25% INTEREST IN LATE STAGE ACMPR APPLICANT PHYEINMED AND PROVIDES CORPORATE UPDATE

Umbral Energy Corp. has entered into a share purchase agreement dated effective June 21, 2017, among Umbral, its wholly owned subsidiary (1005477 B.C. Ltd.), Estek Ventures Corp. (the vendor) and Debra Senger. Umbral and the vendor currently each own 50 per cent of the issued and outstanding common shares of PhyeinMed Inc., a late-stage Health Canada access to cannabis for medical purposes regulations (ACMPR) applicant for the purpose of growing, selling and distributing medical cannabis. Pursuant to the terms of the share purchase agreement, Umbral has agreed to acquire 50 per cent of the vendor's holdings in PhyeinMed, representing 25 per cent of PhyeinMed's issued and outstanding share capital, such that, on closing of the acquisition, the resulting shareholdings in PhyeinMed will be 75 per cent for Umbral and 25 per cent for the vendor.

Jag Bal, president and chief executive officer of Umbral, stated: "This definitive agreement is the completion of yet another milestone for Umbral as it continues to build tangible value for shareholders. Our meaningful forward progress, as well as recent changes announced by Health Canada for the marijuana industry, make us extremely excited about our future with PhyeinMed and assisting them in becoming a licensed producer in Canada in the very near future."

In consideration for the acquisition, the company has agreed to the following terms and conditions:

• The company will pay a total of $120,000 ($50,000 of which has been paid, $50,000 of which will be paid on closing and $20,000 of which will be paid upon completion by the company of equity financing(s) that have raised gross proceeds of at least $1.5-million).
• The company will issue seven million common shares in the capital of the company at closing. Such shares will be subject to a four-month hold period under applicable securities laws and will be subject to a voluntary escrow period, pursuant to which 10 per cent of the shares will be released on closing and an additional 15 per cent of the shares will be released every six months thereafter.
• The company will issue an additional four million shares upon final award of an ACMPR production licence.
• The company will grant two million stock options to Ms. Senger to acquire up to two million shares at an exercise price no higher than nine cents per share.
• The company will award 2.4 million restricted stock units to Ms. Senger and an additional 1.6 million restricted stock units to eligible recipients.
• The company will commit up to an additional $3-million to finance PhyeinMed's efforts in the medical marijuana business.

Completion of the acquisition is subject to a number of conditions, including, but not limited to, regulatory approval, including acceptance by the Canadian Securities Exchange.

Debra Senger, PhyeinMed's chief executive officer and owner of Estek Ventures, stated: "This transaction creates greater alignment between Umbral and Estek as we combine our efforts within PhyeinMed towards becoming a licensed producer of cannabis in Canada. The entire PhyeinMed team and I are very encouraged by the recent progress being made by Health Canada to streamline the licensing process to meet the expected high future demand."

Umbral business update

The company, through its partner PhyeinMed, has applied to become a licensed producer under the ACMRP. The licensing process involves a strict and thorough review. Effective May 25, 2017, Health Canada abridged and amended the application process for prospective licensed producers. There are many stages to the application process for becoming a licensed producer of cannabis for medical purposes as described as follows (for further information, please visit Health Canada's website):

1. Intake and initial screening;
2. Detailed review and initiation of security clearance process;
3. Issuance of licence to produce;
4. Introductory inspection (as cultivation begins);
5. Presale inspection;
6. Issuance of licence to sell.

The company has successfully completed the security clearance process and is now in the detailed review stage. An applicant may be sent back to a stage previously cleared if new information affecting the application is received by Health Canada. Also, an application can be refused at any stage of the process.

At this time, the company is being permitted to complete the acquisition and to build out a grow facility, and, upon completion, it is expected to receive permission from Health Canada to cultivate initial crops. Once the company has completed a property acquisition for such facility and received further clarity from Health Canada, it intends to undertake a change-of-business transaction pursuant to CSE policies.

In addition, Umbral also plans to conduct a 2017 work program on its 100-per-cent-owned Letourneur gold project in Quebec. Umbral is also in discussions with potential joint venture partners to further develop and explore the Letourneur gold project. The company expects to allocate up to $1-million for expenditures on the property.

As such, the company currently remains a resource issuer and plans to continue its principal business of mineral exploration until it can gain better certainty surrounding the Health Canada licensing process. As there can be no guarantee that such milestones will be achieved and significant risks still exist in the application approval process, until such time, the company will simultaneously pursue both medical marijuana and mineral exploration businesses.

We seek Safe Harbor.