Mr. Dana Archibald reports

ATHABASCA MINERALS INC. ENTERS INTO AGREEMENT TO BE ACQUIRED BY JMAC ENERGY SERVICES LLC AND ENTERS INTO AN AMENDED LOAN AGREEMENT

Athabasca Minerals Inc. has entered into a definitive arrangement agreement with JMAC Energy Services LLC (the purchaser) pursuant to which the purchaser has agreed to acquire all of the issued and outstanding common shares of Athabasca, other than Athabasca shares already owned or controlled by the purchaser, or persons or entities related to the purchaser, for cash consideration of 14.5 cents per Athabasca share. The proposed transaction is to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta). Based on the closing price of the Athabasca shares on the TSX Venture Exchange on Sept. 20, 2023, the last trading day prior to the announcement of the transaction, the purchase price represents a 45-per-cent premium to the closing price of Athabasca shares and a 45-per-cent premium over the volume-weighted average trading price of the Athabasca shares on the TSX-V for the last 20 trading days.

"We are pleased to announce this transaction with JMAC. The special committee has diligently considered all potential offers, and options, for the corporation and we believe that this transaction provides the most advantageous outcome for the securityholders," said Dana Archibald, chief executive officer of the corporation.

Strategic rationale

On March 28, 2023, Athabasca announced that its board of directors, together with the support of management, initiated a process to evaluate potential strategic alternatives to maximize shareholder value. As part of the process, the board considered a full range of strategic alternatives, which included financing alternatives, merger, amalgamation, plan of arrangement, reorganization, other business combinations, sale of assets or other transactions. Accordingly, the board established a special committee of independent members of the board to explore opportunities to enhance shareholder value.

The corporation engaged Canaccord Genuity Corp. as the corporation's financial adviser to, among other things, assist the corporation in its review of potential strategic transactions. During the next several months, the corporation, with the assistance of Canaccord, negotiated with a number of financial and strategic parties that might have an interest in participating in the process, with the corporation receiving a number of preliminary, non-binding indications of interest from a number of potential parties. In June, 2023, the special committee met with Canaccord to receive an update on the negotiations with the potential parties. At that meeting, the special committee determined that it was in the best interests of the corporation and its shareholders to engage in exclusive negotiations with JMAC.

The corporation and JMAC, together with their respective legal and financial advisers, continued to engage in negotiations regarding the terms and conditions of JMAC's proposal and the definitive agreements necessary to consummate a transaction if agreed to, and JMAC continued its due diligence of the corporation. The special committee met on several occasions to receive updates on the status of negotiations and on other matters relating to the process and the proposed transaction, and provided its advice and direction.

The special committee engaged Evans & Evans Inc. in respect of the transaction to provide an independent verbal fairness opinion that as at the date of the arrangement agreement, the consideration to be received by Athabasca shareholders pursuant to the transaction is fair, from a financial point of view, to Athabasca shareholders. The purchase price is all cash and not subject to any financing conditions, which provides Athabasca shareholders with an immediate opportunity to realize full liquidity and certainty of value in cash for their investment in the corporation. As such, the board determined that the transaction is in the best interests of the corporation and recommends that the securityholders (as defined below) vote in favour of the transaction.

The arrangement agreement and approvals

Under the transaction, the purchaser will acquire all of the issued and outstanding Athabasca shares, other than Athabasca shares already owned or controlled by the purchaser, or persons or entities related to the purchaser, in exchange for the payment to Athabasca shareholders of the purchase price for each Athabasca share held. Athabasca will seek approval of the transaction by its shareholders and holders of options (together, the securityholders) at a special meeting expected to be held on Nov. 3, 2023.

In addition, as further described in the plan of arrangement:

1. Each outstanding stock option of Athabasca that is in the money will be cancelled in exchange for a cash payment equal to the difference between the exercise price of such in-the-money Athabasca option and the purchase price;
2. Each outstanding stock option of Athabasca that is out of the money will be cancelled in exchange for a cash payment equal to one cent;
3. Each outstanding deferred share unit of Athabasca will be cancelled in exchange for the purchase price.

The purchaser, or persons or entities related to the purchaser, own approximately 19.7 per cent of the Athabasca shares and Jon McCreary is a director of both Athabasca and JMAC. The transaction is subject to approval by securityholders at the meeting, including the approval of at least: (a) two-thirds of the votes cast by the shareholders in person or represented by proxy at the meeting; (b) two-thirds of the votes cast by the securityholders in person or represented by proxy at the meeting, voting together as a single class; and (c) a majority of the votes cast by shareholders in person or represented by proxy at the meeting, after excluding the votes cast by those shareholders whose votes are required to be excluded in accordance with Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions.

The transaction is subject to various closing conditions, including receipt of court approval, the required Athabasca securityholder approval at the meeting and certain regulatory approvals. Upon closing of the transaction, the Athabasca shares will be delisted from the TSX-V.

All of the directors and executive officers of Athabasca, including Mr. McCreary, have entered into support agreements and have agreed to support the transaction and vote an aggregate of approximately 23 per cent of the outstanding Athabasca shares in favour of the transaction, subject to the provisions of such support agreements.

The arrangement agreement includes representations, warranties and covenants typical of a transaction of this nature, including with respect to non-solicitation, a right to match and a fiduciary out. In addition, Athabasca has agreed to pay a termination fee or expense reimbursement fee to the purchaser upon the occurrence of certain events.

Further details with respect to the transaction will be included in the information circular to be mailed to the securityholders in connection with the meeting. The meeting is expected to be held on Nov. 3, 2023, with closing of the transaction to occur soon thereafter upon satisfaction of all conditions precedent. A copy of the arrangement agreement and the information circular will be filed on Athabasca's SEDAR+ profile and will be available for viewing.

Recommendation of the board

Based on the fairness opinion provided by Evans & Evans and the recommendation of the special committee, and after consulting with its financial and legal advisers, among other considerations, the board has unanimously (excluding directors that have abstained in accordance with applicable law): (i) determined that the arrangement and the entry into the arrangement agreement are in the best interests of Athabasca; and (ii) resolved to recommend that the securityholders vote in favour of the transaction.

Loan amending agreement

Athabasca also announced it entered into an amended credit agreement (second amending agreement) for the amendment of the secured bridge loan of $2-million from JMAC, as previously announced and entered into on Feb. 28, 2023, and first amended and announced on June 30, 2023.

The second amending agreement amends the loan to mature on Nov. 30, 2023, the outside date in the arrangement agreement, but may be prepaid in whole or in part at any time with not less than five days prior notice. No bonus securities will be issued in connection with the second amending agreement.

JMAC is a related party to Athabasca, as JMAC is controlled by Mr. McCreary, who is a director of Athabasca, and, as such, the loan is a related party transaction within the meaning of MI 61-101. Athabasca is relying on an exemption from the formal valuation and minority approval provisions of MI 61-101 pursuant to sections 5.5(b) and 5.7(f) thereof, respectively.

We seek Safe Harbor.