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MG Capital Corporation and DLP Resources Inc. Enter into Letter of Intent for Qualifying Transaction

Newsfile Corp.

Calgary, Alberta--(Newsfile Corp. - July 29, 2019) - MG Capital Corporation (TSXV: MGX.P) ("MG" or the "Corporation") is pleased to announce that it has entered into a letter of intent (the "LOI") with DLP Resources Inc. ("DLP"), a privately held corporation incorporated under the laws of the Province of British Columbia (together referred to as the "Parties"), which outlines the general terms and conditions pursuant to which MG and DLP have agreed to complete a transaction that will constitute the Qualifying Transaction of MG (the "Transaction"), as such term is defined in the policies of the TSX Venture Exchange (the "Exchange").

The LOI was negotiated at arm's length and is effective as of July 23, 2019. Pursuant to the terms and conditions of the LOI, MG and DLP will negotiate and enter into a definitive agreement (the "Definitive Agreement") incorporating the principal terms of the Transaction as described in this press release. The precise structure of the Transaction will be mutually determined with regard to relevant financial, tax and securities law considerations in Canada, the United States and overseas, as applicable, and the final terms and structure of the Transaction will be reflected in the Definitive Agreement. There is no assurance that a Definitive Agreement will be successfully negotiated or entered into.

All sales, exchanges, and issuances of any shares, options, warrants, and securities in connection to the Transaction will be subject to regulatory approval including, but not limited to, the approval of the Exchange and, as applicable, may be subject to the prior approval of the shareholders of either or both of MG and/or DLP.

Summary of the Transaction

Under the terms of the LOI, it is currently proposed that all of the outstanding common shares of DLP ("DLP Shares") will be exchanged for the issue of 32 million common shares of MG ("MG Shares"), whereby each holder of DLP Shares will receive one (1) MG Share for each DLP Share held (the "Share Exchange Ratio"). It is expected that the 32 million MG Shares shall be issued at a deemed price of $0.10 per share. MG is expected to issue economically equivalent replacement options and warrants to the holders of DLP options and DLP warrants in exchange for all outstanding DLP options and DLP warrants exercisable for DLP Shares (the "Replacement Securities"). The rate of exchange of any Replacement Securities shall be equal to the Share Exchange Ratio.

The LOI further contemplates that MG shall terminate 540,000 MG Options held by its current directors and officers, and that certain founders of MG shall sell 1,000,000 MG Shares to certain shareholders of DLP at a price of $0.07 per MG Share.

The Transaction will result in MG, as the listed issuer resulting from the Transaction (the "Resulting Issuer"), owning 100% of the securities of DLP and any of DLP's subsidiaries and affiliates (if applicable) becoming directly or indirectly wholly-owned subsidiaries of MG.

Private Placement

The Transaction is subject to the completion of brokered financings (i) to raise a minimum of $507,000 through the sale of DLP Shares issued on a flow-through basis at a price of $0.13 per DLP Share, and (ii) to raise a minimum of $250,000 through the sale of units at a price of $0.10 per unit comprised of one DLP Share and ½ of a warrant exercisable for DLP Shares (together referred to as the "Concurrent Brokered Financings").

In connection with the Concurrent Brokered Financings, DLP is expected to deliver to certain brokers an aggregate cash commission equal to 7.5% of the combined gross proceeds raised under the Concurrent Brokered Financings. As additional consideration to brokers in connection with the Concurrent Brokered Financings, DLP is expected to issue to brokers such number of non-transferable broker warrants as is equal to 7.5% of the gross proceeds raised in respect of the Concurrent Brokered Financings. Such broker warrants to be exercisable into DLP Shares for a period of two years following the closing of the Concurrent Brokered Financings.

There is no assurance that the Concurrent Brokered Financings will be completed. All sales, exchanges, and issuances of any units, shares, warrants, and securities in connection to the Concurrent Brokered Financings and the Transaction will be subject to regulatory approval including, but not limited to, the approval of the TSXV and, as applicable, may be subject to the prior approval of the shareholders of either or both of MG and/or DLP.

It is expected that the broker shall be entitled to receive a finder's fee in connection with its role in connecting the parties in contemplation of the Transaction. The finder's fee is expected to be satisfied through delivery to the finder of a cash payment of $145,000 or 1,450,000 DLP Shares at a price of $0.10 per DLP Share.

Board of Directors

It is the intention of the Parties to establish and maintain a board of directors (the "Board") of the Resulting Issuer that has a mix of appropriate skill sets and is compliant with all regulatory and corporate governance requirements.

Upon completion of the Transaction, it is presently intended that the Board of the Resulting Issuer be Jim Stypula (Chief Executive Officer), Rick Zimmer (Non-Executive Director) and Bill Bennett (Non-Executive Director).

About MG Capital Corporation

MG Capital Corporation is a capital pool company. The Corporation's principal business activity is to identify and evaluate opportunities for acquisition of assets or business. The Corporation is headquartered in Banff, Alberta.

About DLP Resources Inc.

DLP Resources Inc. is a natural resource company. DLP's principal business activity is in the ownership and management of mining assets in British Columbia, Canada. DLP is headquartered in Cranbrook, British Columbia.

DLP owns a 100% interest in three resource-heavy properties in British Columbia with potential opportunity for commercial development; fieldwork conducted at DLP's Red Burn Creek property yielded sediment samples with high levels of copper, cobalt, and lead. DLP proposes to conduct further exploration and development of the Red Burn Creek property through potential heavy mineral stream sampling, ground prospecting, and geological sampling. DLP also owns a 100% interest in two properties east of Creston, British Columbia known as the Aldridge 1 and 2 properties, which contain potential ore deposits. DLP proposes to conduct geophysical surveys on its properties to identify potential drill targets.

Contact Information

MG Capital Corporation
Peter McKeown
President, Chief Executive Officer, Chief Financial Officer, and Corporate Secretary
1-403-689-4052

Additional Information

In accordance with Exchange policy, the Corporation's shares are currently halted from trading and will remain so until such time as the Exchange determines, which, depending on the policies of the Exchange, may not occur until the completion of the Transaction.

If and when the Definitive Agreement is executed, the Corporation will issue a subsequent press release in accordance with the policies of the Exchange containing the details of the Definitive Agreement and additional terms of the Transaction, including information relating to sponsorship, summary financial information, and to the extent not contained in this press release, additional information with respect to the Concurrent Brokered Financings and insiders (if any) of the Resulting Issuer upon completion of the Transaction.

Completion of the Transaction is subject to a number of conditions including but not limited to, the closing of Concurrent Brokered Financings, Exchange acceptance and if required by Exchange policies, majority of the minority 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 management information circular or 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 a capital pool company should be considered highly speculative.

A further press release will be prepared and disseminated regarding the Transaction and related transactions, in due course, in compliance with the policies of the Exchange as information becomes available.

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

Cautionary Statements

Although the Corporation believes, in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Corporation can give no assurance that they will prove to be correct. When used in this press release, the words "estimate", "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. The forward-looking statements and information in this press release include information relating to the business plans of MG and DLP, the Transaction (including Exchange approval, potential shareholder approval, and the closing of the Transaction), the board of directors and management of the Resulting Issuer upon completion of the Transaction and the Concurrent Brokered Financings. Such statements and information reflect the current view of MG and/or DLP, respectively. Risks and uncertainties 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 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: (i) there is no assurance that MG and DLP will obtain all requisite approvals for the Transaction, including the approval of their respective shareholders (as applicable), or the approval of the Exchange for the Transaction (which may be conditional upon amendments to the terms of the Transaction); (ii) there is no assurance the Concurrent Brokered Financings will be completed as contemplated or at all; (iii) following completion of the 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; (iv) new laws or regulations could adversely affect the Resulting Issuer's business and results of operations; and (v) 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 MG's and DLP'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 MG and/or DLP; 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 definitive terms and conditions of the Transaction may be based on the Corporation's due diligence and the receipt of tax, corporate and securities law advice for both the Corporation and DLP. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Corporation, DLP, their securities, or their respective financial or operating results (as applicable).

MG cautions that the foregoing list of material factors is not exhaustive. When relying on MG's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. MG has 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 MG as of the date of this press release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. MG does not undertake to update this information at any particular time except as required in accordance with applicable laws.

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.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, 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 management information circular or 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 a capital pool company should be considered highly speculative.

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

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.

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/46614