OUP.H Oriana Resources Corporation (delisted)

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Hut 8 Closes Second Private Placement Offering for Gross Proceeds of $70.0 Million, Including Novel "Crypto-Settlement" Feature

Gross Proceeds to Facilitate Purchase of 35 Additional BlockBox Data Centers from Bitfury, Supplementing the 22 BlockBox Data Centers Previously Acquired

VANCOUVER, Feb. 7, 2018 /CNW/ - Oriana Resources Corporation (TSXV-NEX: OUP.H) ("Oriana" or the "Company"), a capital pool company, and Hut 8 Mining Corp. ("Hut 8"), a private corporation incorporated under the Business Corporations Act (British Columbia) (the "BCBCA"), are pleased to announce today, further to press releases dated December 21, 2017, and January 11, 2018, that they have executed a definitive business combination agreement (the "Definitive Agreement") which, subject to certain conditions and applicable TSX Venture Exchange ("TSXV") approval, will result in the reverse takeover of Oriana by Hut 8 and will constitute Oriana's "Qualifying Transaction", as defined by Policy 2.4 – Capital Pool Companies ("Policy 2.4") of the TSXV (the "Proposed Qualifying Transaction").

Hut 8 is also pleased to announce the closing of its second private placement offering (the "Second Offering") for gross proceeds of $70.0 million. The Second Offering was led by GMP Securities L.P. (the "Agent") and included the sale of 9,000,000 subscription receipts of Hut 8 (the "Subscription Receipts") at a price of $5.00 (the "Subscription Price") plus 5,000,000 common shares of Hut 8 (the "Common Shares") at the Subscription Price to certain strategic investors. The settlement of the Common Shares included a portion of the consideration settled in value of Bitcoin, among the first such "crypto-settlements" of this kind in Canada. The Second Offering follows the successful closing by Hut 8 on December 20, 2017 of an initial private placement offering of Common Shares at a price of $2.50 per Common Share for gross proceeds of $38.0 million (the "First Offering").

Commenting on these matters, Sean Clark, Interim Chief Executive Officer of Hut 8, said: "This Proposed Qualifying Transaction is the kind of deal that, until now, has been largely inaccessible to investors. To date, we have raised a total of $108 million and we continue to field a very high investor appetite for Hut 8. We are well on our way to building one of the largest cryptocurrency mining operations in North America, backed by a board of directors that includes respected industry veterans like Michael Novogratz and Bill Tai."

Definitive Agreement

Pursuant to the Definitive Agreement, on closing of the Proposed Qualifying Transaction ("Closing"), it is expected that:

• Oriana will consolidate all of the then issued and outstanding common shares of Oriana (the "Oriana Common Shares") on the basis of approximately 43 to one (the "Consolidation");
• Hut 8 and 1149835 B.C. Ltd., a wholly-owned subsidiary of Oriana, will be amalgamated under the BCBCA (the "Amalgamation") and continue as one corporation, Hut 8 Holdings Inc. ("Amalco"), and Amalco will become a wholly-owned subsidiary of Oriana;
• Oriana will change its name to "Hut 8 Mining Corp." (on a post-Closing basis, the "Resulting Issuer"); and
• The holders of Common Shares will receive one Oriana Common Share for each Common Share held by them, and the Common Shares will subsequently be cancelled.

The Resulting Issuer's business objective will be to carry on the business of Hut 8 by building a leading listed Blockchain company through the development and ownership of cryptocurrency mining infrastructure and other related Blockchain businesses. The Closing of the Proposed Qualifying Transaction is expected to occur within Q1 2018, and no later than 90 days from the closing of the Second Offering. 

Other features of the Definitive Agreement and the Proposed Qualifying Transaction are described in the previous comprehensive joint press release of Oriana and Hut 8 dated January 11, 2018.

Second Private Placement Offering

(a)   Brokered Portion

Pursuant to the terms of an agency agreement among Hut 8 and the Agent dated February 7, 2018 (the "Agency Agreement"), Hut 8 sold 9,000,000 Subscription Receipts at the Subscription Price for aggregate gross proceeds of $45.0 million, which included 1,000,000 Subscription Receipts sold pursuant to the subscriber's under a President's List.  Such gross proceeds, less 50% of the Agent's fees and the reasonable expenses of the Agent payable by Hut 8 (the "Escrowed Proceeds"), will be held in escrow on behalf of the subscribers by Computershare Trust Company of Canada, as escrow agent for the Subscription Receipts (the "Subscription Receipt Agent"), and invested in an interest bearing account pursuant to a subscription receipt agreement entered into by and among Hut 8, Oriana, the Agent and the Subscription Receipt Agent. The Escrowed Proceeds, together with all interest and other income earned thereon, are referred to herein as the "Escrowed Funds".

The balance of the Agent's fees will be released to the Agent out of the Escrowed Funds and the balance of the Escrowed Funds will be released from escrow to Hut 8 upon the satisfaction of all of the following conditions (collectively, the "Escrow Release Conditions") prior to the Termination Date (as defined below):

The date on which the Escrow Release Conditions are satisfied is referred to as the "Escrow Release Date", which, for greater certainty, shall be no later than 90 days following completion of the Second Offering (the "Termination Date"), except as may be extended in accordance with the terms of the Subscription Receipts.

In the event that the Escrow Release Conditions are not satisfied by the Termination Date, the Escrowed Funds will be returned pro rata to each holder of Subscription Receipts, and the Subscription Receipts will be automatically cancelled, void and of no value or effect.

A total of 510,000 Hut 8 broker warrants ("Hut 8 Broker Warrants") were issued to the Agent in connection with the brokered portion of the Second Offering, each such Hut 8 Broker Warrant exercisable to subscribe for and purchase one Resulting Issuer Common Share at an exercise price of $5.00 for a period of 24 months following the Escrow Release Date.

(b)   Non-Brokered Portion

In a concurrent non-brokered offering, Hut 8 sold 5,000,000 Common Shares at the Subscription Price to certain strategic investors for aggregate gross proceeds of $25.0 million. As previously noted, such amount included approximately USD$10.0 million in value of Bitcoin which was settled through the services of a secure third-party custodian.

A total of 150,000 Hut 8 Broker Warrants were issued to the Agent in connection with the non-brokered portion of the Second Offering.

As a condition to the closing of the Second Offering, lock-up agreements were entered into by: (a) each of the executive officers and directors of Hut 8; and (b) each shareholder of Hut 8 holding 10% or greater of the Common Shares.

The gross proceeds from the Second Offering, being $70.0 million, less applicable deductions, will be used to finance the purchase by Hut 8 of 35 additional BlockBox Data Centers (as defined below) from Bitfury, and to satisfy working capital requirements. Hut 8 previously acquired 22 BlockBox Data Centers, including 10 which have become operational as of the date hereof.

Update Regarding Proposed Qualifying Transaction

The parties and their advisors continue to advance the audited and pro forma financial statements of Hut 8 and Oriana and have prepared and submitted a draft filing statement (the "Filing Statement") in accordance with the policies of the TSXV. Discussions with the TSXV continue in this regard.

It is anticipated that, prior to the Closing of the Proposed Qualifying Transaction, and using the proceeds raised from the First Offering and the Second Offering, Hut 8 will have acquired, or will have executed purchase orders (the "Purchase Orders") in respect of the right to acquire, an aggregate of 57 proprietary BlockBox AC – Air Cooled Mobile Data Centers (the "BlockBox Data Centers") from Bitfury, such BlockBox Data Centers to be stationed on land leased by Hut 8 in Drumheller, Alberta.

Completion of the Proposed Qualifying Transaction is subject to a number of conditions, including acquisition of (or the execution of Purchase Orders for the acquisition of) the 57 BlockBox Data Centers, completion of the Debt Conversion (as described in the January 11, 2018 press release), receipt of applicable regulatory approvals, including the approval of the TSXV for the Proposed Qualifying Transaction, completion of satisfactory due diligence and the execution of related transaction documents.

The shareholders of Hut 8 convened a special meeting on February 2, 2018 to approve the Amalgamation. A total of 73.28% of the issued and outstanding Common Shares were voted in favour of the Amalgamation (with no votes against).

Oriana is expected to convene an annual and special meeting of its shareholders on February 15, 2018 to approve the Consolidation, a new Omnibus Equity Incentive Plan, an updated set of articles (which will include advance notice provisions) and the election, conditional upon and effective as of the completion of the Proposed Qualifying Transaction, of new directors of the Resulting Issuer, which matters are set out in a management information circular of Oriana (the "Oriana Circular") dated January 17, 2018.

A request has been made to the TSXV for a waiver of the sponsorship requirements of Policy 2.2 – Sponsorship and Sponsorship Requirements of the TSXV, but there is no assurance that such waiver will be granted.

About Oriana

Oriana was incorporated under the BCBCA on June 9, 2011. The Company is listed as a capital pool company on the NEX board of the TSXV. The Oriana Common Shares were listed for trading on the TSXV on October 3, 2012 and commenced trading at the opening of trading on October 4, 2012 under the symbol "OUP.P" (and now listed on the NEX board of the TSXV under the trading symbol "OUP.H"). In accordance with Policy 2.4, Oriana's principal business has been to identify and evaluate assets or businesses with a view to consummating a Qualifying Transaction subject to acceptance by the TSXV. Trading in the Oriana Common Shares is currently halted pending completion of the Proposed Qualifying Transaction.

About Hut 8

Hut 8 was incorporated under the BCBCA on November 15, 2017. Hut 8 is a cryptocurrency mining and Blockchain infrastructure company established through an exclusive partnership with the Bitfury Group, the world's leading full-service Blockchain technology company. Hut 8 currently owns BlockBox Data Centers representing 24.2 MW and 165 PH/s that are in operation or construction, with a pipeline of acquisition and development opportunities across North America. Through its partnership with the Bitfury Group, Hut 8 has access to a proprietary mix of hardware, software, and operational know-how to construct, optimize, and manage datacenters in low-cost and attractive jurisdictions. Hut 8 is led by a team of industry experts and intends to provide investors with exposure to Blockchain processing infrastructure and technology along with underlying cryptocurrency rewards and transaction fees.

Forward-Looking Statements:

When used in this press release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. Although Oriana and Hut 8 believe, in light of the experience of their respective officers and directors, current conditions and expected future developments and other factors that have been considered appropriate, that the expectations reflected in the forward-looking statements and information in this press release are reasonable, undue reliance should not be placed on them because the parties can give no assurance that such statements will prove to be correct. The forward-looking statements and information in this press release include information relating to the business plans of Oriana and Hut 8, the Proposed Qualifying Transaction (including the acquisition by Hut 8 of, or the execution of the Purchase Orders for the acquisition of, the BlockBox Data Centers, the Debt Conversion and the Amalgamation). Such statements and information reflect the current view of Oriana and/or Hut 8, respectively. Risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: (a) there is no assurance that Oriana and Hut 8 will obtain all requisite approvals for the Proposed Qualifying Transaction, including the approval of the TSXV for the Proposed Qualifying Transaction (which may be conditional upon amendments to the terms of the Proposed Qualifying Transaction); (b) following completion of the Proposed Qualifying Transaction, the Resulting Issuer may require additional financing from time to time in order to continue its operations and financing may not be available when needed or on terms and conditions acceptable to the Resulting Issuer; (c) new laws or regulations could adversely affect the Resulting Issuer's business and results of operations; and (d) the stock markets have experienced volatility that often has been unrelated to the performance of companies. These fluctuations may adversely affect the price of the Resulting Issuer's securities, regardless of its operating performance. There are a number of important factors that could cause Oriana and Hut 8's actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others: currency fluctuations; limited business history of the parties; disruptions or changes in the credit or security markets; results of operation activities and development of projects; project cost overruns or unanticipated costs and expenses; and general market and industry conditions. The parties undertake no obligation to comment on analyses, expectations or statements made by third parties in respect of their securities or their respective financial or operating results (as applicable).

Oriana and Hut 8 caution that the foregoing list of material factors is not exhaustive. When relying on the parties' forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The parties have assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. The forward-looking information contained in this press release represents the expectations of the parties as of the date of this press release and, accordingly, are subject to change after such date. The parties do not undertake to update this information at any particular time except as required in accordance with applicable laws.

All amounts referred to herein are in Canadian dollars unless otherwise indicated.

There can be no assurance that the Proposed Qualifying Transaction will be completed as proposed or at all.

Investors are cautioned that, except as will be disclosed in the Oriana Circular and the Filing Statement to be prepared in connection with the Proposed Qualifying Transaction, any information released or received with respect to the Proposed Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative. The Filing Statement in respect of the Proposed Qualifying Transaction will be prepared and filed on SEDAR at www.sedar.com in accordance with Policy 2.4 no less than seven business days prior to the Closing of the Proposed Qualifying Transaction. A press release will be issued once the Filing Statement has been filed.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Proposed Qualifying Transaction and has neither approved nor disapproved the contents of this press release.

The Proposed Qualifying Transaction is not a "Non-Arm's Length Qualifying Transaction" within the meaning of Policy 2.4 and, as such, shareholder approval is not required, unless otherwise mandated by the TSXV.

Upon completion of the Proposed Qualifying Transaction, it is expected that the Resulting Issuer will meet the public distribution requirements of a Tier 1 issuer in accordance with TSXV requirements.

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

SOURCE Hut 8 Mining Corp.