TCI.H 763997 Alberta Ltd

Target Capital Inc. (“TCI”) (NEX: TCI.H) and Grafton Ventures Energy Holdings Corp. (“Grafton”) are pleased to announce that they have entered into a non-binding letter of intent (the “LOI”) to complete a business combination transaction (the “Transaction”) that will result in the reverse take-over of TCI by Grafton. Upon completion of the Transaction, TCI will carry on the oil and gas exploration and production business of Grafton under the name “Westgate Energy Inc.” (the “Resulting Issuer” or “Westgate”). The LOI was negotiated at arm’s length and is dated January 11, 2024.

Contemporaneously, Grafton will complete:

• a brokered private placement (the “Brokered Private Placement”) for minimum aggregate gross proceeds of $5.0 million. The Brokered Private Placement will be led by Eight Capital as the lead agent and bookrunner on behalf of a syndicate of agents including Haywood Securities, ATB Capital Markets, and Canaccord Genuity (collectively, the “Agents”); and
• a non-brokered private placement (the “Non-Brokered Private Placement” and together with the Brokered Private Placement, the “Private Placement”) for minimum gross proceeds of $3.0 million.

Grafton Overview

Grafton was incorporated under the laws of the Province of Alberta and has been operating since March 8, 2021. Grafton is led by Rick Grafton (Executive Director), Dan Brown (Chief Executive Officer), Jordan Kevol (Chief Operating Officer), and Nick Grafton (Chief Financial Officer), and is a Calgary-based private company, engaging in exploration and production of oil and gas in Western Canada. Grafton currently has operations in the Killam and Richdale areas of Eastern Alberta and is focused on oil development within the emerging Mannville Stack fairway of Eastern Alberta and Western Saskatchewan.

Pre-Transaction Grafton Highlights

Proven Leadership Team

• Board and management team brings a multi-decade track record of proven operational success, capital stewardship, and capital markets expertise in the Canadian oil and gas sector
• Management team has particular expertise in identifying low-decline, large oil in place plays and executing successful development programs yielding growth and return on investment
• Strong founder alignment and buy-in with strategy

Pragmatic Approach to Emerging Mannville Stack Fairway

• Targeting Mannville oil assets with high IRR drilling prospects and robust inventories of identified locations
• Highly compatible play for multi-lateral drilling application unlocking compelling economics
  • Stacked, shallow, oil-prone horizons with high porosity and permeability, and large-scale oil in place, resulting in higher deliverability and lower capital costs
  • Proven success of multi-lateral drilling from several operators in the area are indicative of potential value that may be unlocked
• Nimble approach targeting high production per share growth through organic development and strategic M&A opportunities

Differentiated, Growth-Focused Strategy

• Pure-play, growth-focused opportunity, offering cohesive assets in a fairway primed for growth
• Board and management believe the emergence of the Mannville Stack is Canada’s next growth wedge of conventional oil

Select Financial Information for Grafton

The table below sets forth certain selected preliminary unaudited financial information prepared by management for Grafton as at September 30, 2023:

Select Financial Information	Quarter Ended September 30, 2023
Total Assets	$9,905,914
Total Liabilities	$4,993,564
Shareholders’ Equity (Deficit)	$4,912,350
Revenue	$460,281
Net Income (Loss)	($471,621)

Grafton Financing

In connection with the Transaction, Grafton expects to complete:

(a)	the Brokered Private Placement which will involve the issuance of subscription receipts of Grafton at a price of $0.15 per subscription receipt for minimum gross proceeds of $5.0 million which will subsequently be exchanged upon satisfaction of certain conditions related to the Transaction for one unit of Grafton with each unit consisting of one common share (a “Grafton Share”) and one Grafton Share purchase warrant. Each such Grafton Share purchase warrant will entitle the holder to acquire one Grafton Share at an exercise price of $0.20 for a period of two years; and
(b)	the Non-Brokered Private Placement which will involve the issuance units of Grafton at a price of $0.15 per unit with each unit consisting of one Grafton Share and one Grafton Share purchase warrant for minimum gross proceeds of $3.0 million. Each such Grafton Share purchase warrant will entitle the holder to acquire one Grafton Share at an exercise price of $0.15 for a period of five years.

Grafton expects to pay to the Agents involved in the Brokered Private Placement a cash commission equal to 7% of the aggregate gross proceeds of the Brokered Private Placement and Grafton Share purchase warrants (“Broker Warrants”) equal to 7% of the units issued pursuant to the Brokered Private Placement.

The net proceeds from the Private Placement will be used to fund development in the targeted Mannville Stack fairway and complementary acquisition opportunities.

About the Transaction

Under the terms of the LOI, TCI and Grafton will complete the Transaction by way of a three-cornered amalgamation or another similar transaction whereby a subsidiary of TCI (“Subco”) and Grafton will amalgamate, each Grafton Share will be exchanged for 0.3443 common shares of the Resulting Issuer (“Resulting Issuer Shares”), on a post-Consolidation basis (as defined below), at a deemed price of $0.44 per Resulting Issuer Share, and each convertible, exchangeable or exercisable security of Grafton will be exchanged for a convertible, exchangeable or exercisable security of the Resulting Issuer on substantially the same economic terms and conditions as the original convertible, exchangeable or exercisable security of Grafton (or adjusted in accordance with the terms of such securities to reflect the completion of the Transaction).

TCI and Grafton intend to apply to have the Resulting Issuer Shares listed on the TSX Venture Exchange (the “TSXV”) and for the Resulting Issuer to satisfy the criteria for a Tier 2 oil and gas exploration or reserves company. TCI will, prior to the completion of the Transaction, consolidate its common shares (the “TCI Shares”) on a 40-for-1 basis (the “Consolidation”) and change its name to “Westgate Energy Inc.” or such other name as Grafton may determine (the “Name Change”).

Upon the completion of the Transaction, it is anticipated that the Resulting Issuer Shares (post-Consolidation) to be outstanding will be as follows:

Resulting Issuer Shares (non-diluted)
Resulting Issuer Shares held by current holders of Grafton Shares	30,963,684 / 60%
Resulting Issuer Shares issued as a result of the Non-Brokered Private Placement(1)	6,886,701 / 13%
Resulting Issuer Shares issued as a result of the Brokered Private Placement(2)	11,477,836 / 22%
Resulting Issuer Shares held by current holders of TCI Shares	2,667,890 / 5%
Total Resulting Issuer Shares (non-diluted)	51,996,111 / 100%
Resulting Issuer Shares (diluted)
Resulting Issuer Shares held by current holders of Grafton Shares	30,963,684 / 44%
Resulting Issuer Shares issued as a result of the Non-Brokered Private Placement(1)	13,773,402 / 19%
Resulting Issuer Shares issued as a result of the Brokered Private Placement(2)	22,955,671 / 32%
Resulting Issuer Shares held by current holders of TCI Shares(3)	2,667,890 / 4%
Resulting Issuer Shares held by broker(4)	803,449 / 1%
Total Resulting Issuer Shares (diluted)	71,164,096 / 100%

Notes:
(1)	Assumes minimum gross proceeds are raised pursuant to the Non-Brokered Private Placement.
(2)	Assumes minimum gross proceeds are raised pursuant to the Brokered Private Placement.
(3)	No fractional shares will be issued. Any fractional interest in Resulting Issuer Shares that is less than 0.5 resulting from the Consolidation will be rounded down to the nearest whole Resulting Issuer Share and any fractional interest in Resulting Issuer Shares that is 0.5 or greater will be rounded up to the nearest whole Resulting Issuer Share.
(4)	Assumes 7.0% Broker Warrant coverage and that minimum gross proceeds are raised pursuant to the Brokered Private Placement.

Note that all of the foregoing figures in this press release have been calculated based on the following assumptions in connection with the Private Placement: (a) the minimum gross proceeds under the Private Placement are raised; and (b) Broker Warrants equal to 7% of the units issued under Brokered Private Placement are issued. If the terms of the Private Placement differ from the foregoing, the number of Resulting Issuer Shares held by former shareholders of Grafton and TCI will differ.

The completion of the Transaction, expected to occur in March 2024, will be subject to the approval of shareholders of Grafton holding at least 66 2/3% of the outstanding Grafton Shares. On January 31, 2023, at an annual general and special meeting, the shareholders of TCI approved the Name Change and the Consolidation. TCI will not be obtaining shareholder approval for the Transaction in accordance with section 4.1 of Policy 5.2 of the TSXV Corporate Finance Manual as: (i) the Transaction is not a “Related Party Transaction” and does not involve any Non-Arm’s Length Parties, as defined by the TSXV Corporate Finance Manual; (ii) TCI is without active operations and is currently listed on the NEX; and (iii) TCI is not subject to, and, to the best of its knowledge will not be subject to, a cease trade order on completion of the Transaction. The Transaction will be approved by the sole shareholder of Subco by way of a resolution.

Additional details regarding the Transaction will be made available in a filing statement that will be filed with the TSXV and be available on TCI’s profile on SEDAR+ at www.sedarplus.ca.

Completion of the Transaction is conditional on obtaining all necessary regulatory and shareholder approvals in connection with the matters described above and other conditions customary for a transaction of this type, including but not limited to the approval of the TSXV, TCI and Grafton entering into a definitive agreement with respect to the Transaction, the completion of the Private Placement, and the approval of the Transaction by the shareholders of Grafton. Trading of the TCI Shares will remain halted until the Transaction has closed.

Arm’s Length Transaction

The Transaction was negotiated by parties who are dealing at arm’s length with each other and therefore, in accordance with the policies of the TSXV, is an Arm’s Length Transaction, as defined by the TSXV Corporate Finance Manual.

Proposed Management and Board of Directors of the Resulting Issuer

Upon the completion of the Transaction, it is anticipated that the persons identified below will serve as directors and officers of the Resulting Issuer.

Richard Grafton – Executive Director

Over 35 years of industry expertise and a track record of completing $22 billion in energy investment transactions. As Vice Chairman of Canaccord Capital Corporation and Managing Director, Global Head of Energy at Canaccord Adams, he played pivotal roles at leading Canadian financial services firms. Recognized as one of Alberta’s 50 Most Influential People and a recipient of the Energy Council’s Lifetime Achievement award, Rick is not only a seasoned executive but also an active philanthropist supporting children’s education, athletics, and arts.

Kelly Ogle – Director

President of the Canadian Global Affairs Institute and host of Energy Security Cubed podcast, brings a wealth of expertise as a Board Director at Grafton Ventures. A serial entrepreneur, scholar, and published author, Kelly has served on boards of public, private, and not-for-profit organizations. With a Master of Strategic Studies from the University of Calgary and the ICD.D designation from the Institute of Canadian Directors, he adds invaluable insight to the board.

Art Agoli – Director

Founder and Chairman of Dsrupt Inc, and a seasoned figure in the business landscape. With a background that includes key roles at Koch Industries and as Co-founder and Vice President of Bankers Petroleum, Art brings visionary leadership and strategic insight to enhance the board’s capabilities.

Dan Brown – Chief Executive Officer and Director

Over 40 years of Western Canadian executive experience. Previously founded Surge Energy Inc., where he played a pivotal role in establishing Surge as a key player in the energy sector. Former Chairman of the Board of Governors of EPAC, Dan has extensive experience in founding, developing and growing Western Canadian Energy companies.

Nick Grafton – Chief Financial Officer and Corporate Secretary

Nick brings over 17 years of investment, finance, and public markets experience to the team. Previously a Portfolio Manager, managing energy portfolios for a Canadian-based hedge fund and Investment Banker at Canaccord Genuity Corp., where he helped finance and advise small to mid-cap companies. He has also held board positions for a number of Canadian public companies, serving on the audit, governance and compensation committees.

Jordan Kevol – Chief Operations Officer

Jordan has 19 years of experience in the Western Canadian oil and gas sector. Most recently he was the Founder and President/CEO of Blackspur Oil Corp, a private oil and gas company focused on Mannville oil in southern and central Alberta. From May 2021 to July 2023, Jordan was also the Managing Director and CEO of Calima Energy Ltd, an Australian Stock Exchange (ASX) listed entity that purchased Blackspur in April 2021. Prior to Blackspur, he was the Co-Founder and President of Petro Uno Resources, a TSXV-listed oil and gas company focused on Viking oil in Saskatchewan. Jordan is also a director of Source Rock Royalties, a TSXV-listed Canadian oil and gas royalty company, from 2014 to present.

Dale Mennis – Vice President, Corporate Development

Dale has extensive industry experience in management of growth-oriented public oil and natural gas companies. Dale was a founder of Legacy Oil + Gas Inc. which grew from 400 boe/day at inception to over 25,000 boe/day when it was sold to Crescent Point Energy. Dale was also Vice President, Business Development at Daylight Resources Trust and was Vice President, Exploration and Development at Calpine Canada after the successful sale of Encal Energy Ltd to Calpine Canada.

The resignation of the current board of directors and management team of TCI and the appointment of the new management team and the new board of the Resulting Issuer will occur concurrent with the closing of the Transaction.

Westgate Strategy

The pro-forma company, Westgate, will be focused on the emerging Mannville Stack fairway located in East-Central Alberta, and West Central Saskatchewan, where known accumulations of medium and heavy oil are being “unlocked” via the application of modern drilling techniques utilizing multi-lateral horizontal drilling. The application of these modernized multi-lateral drilling techniques have yielded some of the strongest oil economics throughout Western Canada.

Westgate’s management and board have extensive experience leading and building successful energy companies, starting with identifying high-quality assets. Common amongst the collective successes of the leadership group is targeting robust, large oil in place assets and achieving growth through successful drilling and strategic M&A opportunities. This proven blueprint of delivering shareholder value is foundational to the formation of Westgate. Westgate will be uniquely positioned as one of a select few publicly listed, pure-play high-growth junior oil companies, focused on the Mannville Stack fairway.

Preliminary development is underway, as Grafton recently finished drilling its first Sparky 6-leg multi-lateral horizontal well with over 8,000 meters of lateral pay in the Mannville Sparky zone. As of December 21, the well has been brought on production. Drilling costs were in-line with expectations and the well had an expedient spud to on production time of 21 days. Further details regarding initial production rates from this well will be reported in the filing statement that will be filed with the TSXV and be available on TCI’s profile on SEDAR+ at www.sedarplus.ca.

About TCI

TCI is a Calgary, Alberta based entity that was incorporated under the Business Corporations Act (Alberta) on June 8, 1993. The TCI Shares are listed for trading on the NEX board of the TSXV under the symbol TCI.H. TCI does not currently conduct commercial operations.

Sponsorship

Sponsorship of a “New Listing” made in the context of a “Reverse Takeover” is required by the TSXV in accordance with Policy 2.2 of the TSXV Corporate Finance Manual, unless exempt in accordance with applicable TSXV policies or unless the TSXV provides a waiver. TCI intends to apply for an exemption or waiver from sponsorship requirements; however, there is no assurance that TCI will obtain this exemption or waiver.

Advisors

Eight Capital is acting as exclusive financial advisor to Grafton in respect to the Transaction and the Brokered Private Placement.

Torys LLP is acting as legal counsel to Grafton in respect of the Acquisition and the Private Placement and will act as counsel to the Resulting Issuer upon completion of the Transaction.

Stikeman Elliott LLP is acting as legal counsel to TCI in respect to the Transaction.

Dentons Canada LLP is acting as legal counsel to the Agents in respect to the Brokered Private Placement.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable, disinterested shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of TCI should be considered highly speculative.

The TSXV has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this news release.

In this press release, all references to “$” are to Canadian dollars.

This press release does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States or any other jurisdiction.

THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT) UNLESS REGISTERED UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

Notice regarding forward-looking statements:

This press release includes forward-looking statements regarding TCI, Grafton, the Resulting Issuer and their respective businesses, which may include, but is not limited to, statements with respect to entering into a definitive agreement with respect to the Transaction, the proposed directors and officers of the Resulting Issuer, the completion of the Transaction and the Private Placement, the terms on which the Transaction and the Private Placement are intended to be completed, the use of the net proceeds from the Private Placement, the anticipated share capital of the Resulting Issuer, the business strategy of the Resulting Issuer, the characteristics of the Mannville Stack fairway and the unique position of the Resulting Issuer in respect thereof, the ability to obtain regulatory and shareholder approvals and expectations regarding details regarding initial production rates. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “is expected”, “expects”, “scheduled”, “intends”, “contemplates”, “anticipates”, “believes”, “proposes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Such statements are based on the current expectations of the management of each entity. The forward-looking events and circumstances discussed in this release, including completion of the Transaction and the Private Placement, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the companies, including risks regarding the technology industry, failure to obtain regulatory or shareholder approvals, economic factors, the equity markets generally and risks associated with growth and competition. Although TCI and Grafton have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and TCI and Grafton undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than as required by law.

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

For further information concerning Target Capital Inc., please contact:

Theo ZunichEmail: Target@5qir.comContact: 587-893-6724

For further information concerning Grafton Ventures Energy Holdings Corp., please contact:

Nick GraftonEmail: Nick@graftonventures.caContact: 403-619-5392