"An investment in knowledge pays the best interest."

ENTERS INTO A $14,000,000 PARTNERSHIP FOR THE DEVELOPMENT OF GALT

 

Junex Inc. (JNX.V) has signed a partnership agreement with Ressources Quebec Inc., acting as mandatary for the government of Quebec, and Gestion Bernard Lemaire Inc., which will lead to investments estimated at $14-million for the Galt oil and gas project on the Gaspe Peninsula.

Under this new partnership, Ressources Quebec will invest $8.4-million, representing approximately 60 per cent of the anticipated expenditures for the $14-million exploration campaign. In return, Ressources Quebec will acquire from Junex an undivided interest of 17.13 per cent in the joint properties comprising the Galt oil project. Junex will retain an interest of 52.87 per cent in the Galt oil project and will invest 10 per cent of the anticipated expenditures for the exploration campaign ($1.4-million). Gestion Bernard Lemaire will maintain its 30-per-cent interest in the Galt oil project.

Junex will remain the operator of the Galt oil project and will act in this capacity in the context of the exploration campaign that will commence in the coming weeks with the drilling of the Galt No. 6 horizontal well. The drilling of the wells in the context of this partnership will be carried out by Foragaz, a division of Junex.

In the context of the acquisition of interest, Junex issued warrants to Ressources Quebec, enabling Ressources Quebec to subscribe for 9,545,455 common shares of Junex at a price of 53 cents until Aug. 4, 2020. Concurrently with the issuance, the warrants issued to Ressources Quebec on July 21, 2015, enabling Ressources Quebec to subscribe, in whole or in part, for up to 2,777,778 common shares of Junex were cancelled.

The warrants contain a restrictive covenant pursuant to which Ressources Quebec will be prohibited from exercising the warrants without the prior approval of disinterested shareholders if the acquisition of shares (i) results in the holder controlling more than 19.99 per cent of the issued and outstanding voting shares on a non-diluted basis or (ii) represents a total number of common shares greater than 7,964,722 shares.

As Ressources Quebec is a related party to Junex within the meaning of Regulation 61-101 respecting protection of minority securityholders in special transactions (Multilateral Instrument 61-101 -- protection of minority securityholders in special transactions), the transaction constitutes a related party transaction within the meaning of Regulation 61-101. The transaction is exempt from the formal valuation and minority approval requirements of Regulation 61-101, as neither the fair market value of the transaction nor the consideration for the transaction exceed 25 per cent of the market capitalization of Junex.

The filing of a material change report less than 21 days prior to the closing date of the transaction is reasonable in the circumstances, as the closing of the transaction does not require shareholder approval, and Junex, Ressources Quebec and Gestion Bernard Lemaire are prepared to proceed with the closing of the transaction prior to the expiry of the 21-day period.

"We are pleased with this new partnership which will allow us to take a crucial step towards developing an initial oil and natural gas deposit in Quebec," said the president and chief executive officer of Junex, Jean-Yves Lavoie, PEng.

The research permit for the Galt oil project covered by this partnership agreement covers a total area of 6,736 hectares.

Oil and gas potential of Galt

An independent evaluation performed May 31, 2015, by Netherland, Sewell & Associates Inc. (NSAI) established its best estimate of the total oil initially in place (OIIP) at 557 million barrels in the Forillon and Indian Point geological formations on the Galt property. This figure of 557 million barrels includes discovered OIIP volumes of 81 million barrels and undiscovered OIIP volumes of 476 million barrels in the combined Forillon and Indian Point formations.

In the same evaluation, NSAI established its best estimate of the total recoverable oil resource volume on the Galt property at 23,000 barrels of proved plus probable reserves, 8.1 million barrels of recoverable unrisked contingent oil resources and 71.4 million barrels of recoverable unrisked prospective oil resources.

To fully understand the details of the independent evaluation performed by NSAI and the terminology used in this study, the reader is strongly encouraged to refer to Junex's Aug. 31, 2015, press release entitled "Junex provides more detail on the resource evaluation of its Galt oil property."

With respect to the discovered resources, the commercial viability of the exploitation of any part of the resources is uncertain. For undiscovered resources, there is no certainty that any part of the resource will be discovered. In the event of discovery, there is no certainty that the exploitation of any part of the resource will be commercially viable.

About Junex Inc.

Junex is a junior oil and gas exploration company that holds exploration permits on more than 2.1 million acres of land in the Appalachian basin in the province of Quebec, including the Galt oil property on the Gaspe Peninsula in eastern Quebec and landholdings in the St. Lawrence Lowlands between Montreal and Quebec City.