RIO2 LIMITED ANNOUNCES CLOSING OF $10 MILLION BOUGHT DEAL PRIVATE PLACEMENT

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.


For Immediate Release

May 31, 2018


Rio2 Limited (“Rio2” or the “Corporation”) (TSX‐V: RIO) is pleased to announce that that it has closed its previously announced offering of 10,000,000 subscription receipts (the "Subscription Receipts") at a price of $1.00 per Subscription Receipt for gross proceeds to Rio2 of $10,000,000 (the “Offering”).


The Offering was completed in connection with the previously announced proposed business combination (the “Transaction”) of Rio2 and Atacama Pacific Gold Corporation (“Atacama”).


On the date of the announcement of the Transaction (May 14th), the share exchange ratios under the Transaction represented consideration value to Atacama shareholders of C$0.95 per Atacama share valuing Atacama at approximately C$93 million on a fully diluted, in‐the‐money basis. This value implied a premium of 58% over the May 11th closing price for Atacama shares of C$0.60 and a 45% premium based on the 20‐day volume weighted average prices of the shares of each of Rio2 and Atacama.


Upon the completion of the Transaction, the resulting issuer will have approximately 102 million shares outstanding (115 million shares fully diluted) after taking into account the conversion of the 10 million Subscription Receipts into 10 million Rio2 shares and the effective 2 for 3 consolidation of the outstanding Rio2 shares and the Atacama shares provided for by the exchange ratio for each, as more particularly described in the following table.




Notes: (1) Assumes that no Rio2 Shares or Atacama shares are issued upon the exercise of stock options, purchase warrants or share awards from May 14, 2018 through to the completion of the Transaction. (2) Gives effect to a 2 for 3 consolidation of the outstanding Rio2 shares and Atacama shares provided for by the exchange ratio for each pursuant to the terms of the Transaction.


The joint management information circular relating to the Transaction is scheduled to be mailed to the respective shareholders by mid‐June. The shareholder meetings will take place on July 16, 2018 and the Transaction is to be completed on July 24, 2018.



Further Details of the Offering


Each Subscription Receipt issued under the Offering will, upon the satisfaction of certain escrow conditions, be automatically converted (for no further consideration and with no further action on the part of the holder thereof) into one common share of Rio2. The Rio2 shares into which the Subscription Receipts are converted will then participate in the Transaction on the same basis as the other common shares of Rio2 and be exchanged for 0.6667 of a common share of the combined company.


The Subscription Receipts were issued pursuant to a subscription receipt agreement (the “Subscription Receipt Agreement”) entered into among the Corporation, the Underwriters and Computershare Trust Company of Canada. Pursuant to the Subscription Receipt Agreement, the gross proceeds from the Offering (less 1/2 of the Underwriters’ cash commission and the Underwriters’ expenses) (the “Escrowed Funds”) are being held in escrow pending satisfaction of the certain release conditions, including: (a) the satisfaction or waiver of each of the conditions precedent to the Transaction, without amendment or waiver in a manner that would be materially adverse to Rio2; and (b) the receipt of all required shareholder, third party (as applicable) and regulatory approvals in connection with the Transaction, including the conditional acceptance by the TSX Venture Exchange (“TSX‐V”) of the listing of the common shares of the combined company on the TSX‐V.


Upon satisfaction of the Escrow Release Conditions, the Escrowed Funds, together with any interest earned thereon, will be released to the Corporation. If the Escrow Release Conditions have not been satisfied by 5:00 p.m. (EST) on August 31, 2018, the Subscription Receipts will be deemed to be cancelled and holders of Subscription Receipts will receive a cash amount equal to the offering price of the Subscription Receipts and any interest that has been earned on the Escrowed Funds.


The net proceeds of the Offering will be used by the Corporation for additional infill drilling of the higher grade areas and studies related to completing a definitive feasibility study for the Cerro Maricunga Gold Project, expenses of the Transaction, as well as for general corporate and working capital purposes.


The Offering is subject to certain conditions including receipt of all regulatory approvals, including the acceptance of the TSX‐V, and satisfaction of all conditions for the completion of the Transaction.


Underwriters and Counsel


Clarus Securities Inc. and Raymond James Ltd. (collectively the “Underwriters”) acted as co‐lead underwriters and co‐bookrunners for the Offering and Kallpa Securities SAB of Lima, Peru acted as a special selling agent in Latin America in connection with the Offering.


DLA Piper (Canada) LLP is the legal advisor of Rio2 in the Offering and McMillan LLP is the legal advisor to the Underwriters in the Offering.


About Rio2


Rio2 is building a multi‐asset, multi‐jurisdiction, precious metals company focused in the Americas. With projects in Peru and Nicaragua, Rio2 will continue pursuing additional strategic acquisitions to compile an attractive portfolio of precious metals assets where it can deploy its operational excellence and responsible mining practices to create value for its shareholders. Rio2 has assembled a highly experienced executive team to generate significant shareholder value, with proven technical skills in the development and operations of mines and capital markets experience. Through its strategy of acquiring precious metals assets at exploration, development, and operating stages, the executive team will grow Rio2 and create long‐term shareholder value through the development of high‐margin, strong free‐cash‐flowing mining operations.


For more information about Rio2, please contact:


Alex Black President and Chief Executive Officer alexb@rio2mining.com Phone: 416.570.3155


Cautionary Statement on Forward‐Looking Information


Certain information set forth in this news release contains “forward‐looking statements”, and “forward‐looking information under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward‐looking statements, which include expectations about the timing and completion of the Transaction, the use of proceeds from the Offering, the satisfaction of the Escrow Release Conditions and management’s expectations with respect to the Offering and the Transaction, and are based on Rio2’s current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward‐looking statements may be identified by the use of conditional or future tenses or by the use of such words such as “will”, “expects”, “may”, “should”, “estimates”, “anticipates”, “believes”, “projects”, “plans”, and similar expressions, including variations thereof and negative forms. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward‐looking statements necessarily involve known and unknown risks and uncertainties, which may cause Rio2’s actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward‐looking statements. These risks and uncertainties include, but are not limited to: risks and uncertainties relating to the completion of the Transaction, and management’s ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward‐looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Rio2 undertakes no obligation to update forward‐looking statements if circumstances or management’s estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward‐looking statements. Rio2 disclaims any intention or obligation to update or revise any forward‐looking statement, whether as a result of new information, future events or otherwise, except to the extent required by securities legislation.


The securities referenced herein have not been and will not be registered under the U.S. Securities Act or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities of Rio2 Limited in the United States or in any jurisdiction in which such offer, sale or solicitation 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 release.

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