Grounded Lithium Corp. — Capital/Financing Update 2022

Jun 29, 2022

VAR RESOURCES CORP.

Trading symbol: TSX-V – VAR

VAR Resources Corp. Provides Update on Reverse Takeover Transaction with Grounded Lithium Corp.

Vancouver, British Columbia – June 28, 2022 – VAR Resources Corp. (the “ Company ”) is pleased to announce that the Company has received conditional approval from the TSX Venture Exchange (“ TSXV ”) with respect to its previously announced reverse takeover transaction (the “ Transaction ”) with Grounded Lithium Corp. (“ Grounded ”), a private arm’s length company incorporated under the Business Corporations Act (Alberta) (“ ABCA ”), pursuant to the terms of an amalgamation agreement dated February 10, 2022 (the “ Amalgamation Agreement ”) among the Company, Grounded and VAR Resources (Newco) Corp., a wholly-owned subsidiary of Company (“ NewCo ”).

The Transaction will be completed by way of “three-cornered” amalgamation whereby NewCo and Grounded will amalgamate under the provisions of the ABCA to form a new entity (“ AmalCo ”), and AmalCo will be a wholly-owned subsidiary of the Company. The combined company (thereafter, the “ Resulting Issuer ”) that will result from the completion of the Transaction (the “ Closing ”) will be renamed “Grounded Lithium Corp.” or such other name as agreed to by the Company and Grounded. Subject to the final approval of the TSXV, the common shares of the Resulting Issuer (each, a “ Resulting Issuer Share ”) will trade on the TSXV under the symbol “GRD” and the business of the Resulting Issuer will be the business of Grounded. It is expected that the Resulting Issuer will be listed on the TSXV as a Tier 2 mineral exploration issuer.

In connection with the Transaction, the Company will be filing a management information circular (the “ Information Circular ”) prepared in accordance with the policies of the TSXV on TSXV Form 3D1 – I nformation Required in an Information Circular for a Reverse Take-Over or Change of Business . Once finalized, the Information Circular will be filed on the Company’s profile on SEDAR and provide more specifics on meeting date of the annual general and special meeting of shareholders of the Company to approve, among other things, the Transaction. The Information Circular will also provide more fulsome and detailed information with respect to the Company, Grounded and the Transaction as a whole.

Grounded Lithium Corp.

Grounded is a private lithium brine exploration and development company incorporated pursuant to the laws of Alberta. Grounded holds mineral leases over 249 net sections of land in Saskatchewan, prospective for lithium opportunities.

Grounded was incorporated in October 2020 with the intent to participate in the energy transition shift, specifically targeting lithium resource development in Western Canada. To date, Grounded has been successful in acquiring land holdings both through government land sales in addition to contractual arrangements with certain freehold landowners. In total, Grounded has 64,416 net hectares of land holdings. Grounded has not generated sales to date and does not anticipate commercial production of its lithium resources for several years. Grounded is well capitalized in conjunction with the Grounded Financing (as defined below) to execute on early stages of its business plan and remains debt-free.

The following list sets forth selected management prepared historical financial information of Grounded for the three month period ended March 31, 2022 and selected balance sheet data as of such date (unaudited):

• Assets: $3,403,003

• Liabilities: $203,638

• Revenues: $nil

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• Net profits (losses): $(590,451)

General Terms of the Transaction

Amalgamation

The Transaction will be effected by way of a three-cornered amalgamation, without court approval, under the ABCA, pursuant to which, following the acquisition of all the issued and outstanding securities of Grounded, NewCo and Grounded will amalgamate (the “ Amalgamation ”) to form AmalCo, and AmalCo will be a wholly-owned subsidiary of the Company. At the time of Closing:

• each of the common shares in the capital of Grounded (each, a “ Grounded Share ”) will be cancelled and, in consideration for such Grounded Shares, each Grounded shareholder (collectively, the “ Grounded Shareholders ”) will receive one (1) common share in the capital of the Company (each, a “ Share ”) at a deemed price of $0.18 per Share for each one (1) Grounded Share held by such Grounded Shareholder;

• all of the holders of share purchase warrants of Grounded (each, a “ Grounded Warrant ”) outstanding immediately prior to the Amalgamation shall receive, in exchange for their Grounded Warrants, an equal number of Share purchase warrants of the Company (each, a “ VAR Replacement Warrant ”), each on the same terms and conditions as such Grounded Warrants;

• the holder of share purchase warrants of Grounded issued in connection with the Grounded Financing (each, a “ Grounded Finder Warrant ”) outstanding immediately prior to the Amalgamation shall receive, in exchange for the Grounded Finder Warrants, an equal number of Share purchase warrants of the Company (each, a “ VAR Finder Replacement Warrant ”), each on the same terms and conditions as such Grounded Finder Warrants; and

• each of the stock options of Grounded (each, a “ Grounded Option ”) outstanding immediately prior to the Amalgamation shall receive, in exchange for their Grounded Options, an equal number of stock options of the Company (each, a “ VAR Replacement Option ”), each on the same terms and conditions as such Grounded Options.

In connection with the Transaction, the Company shall seek the approval of its shareholders (collectively, the “ VAR Shareholders ”) for the continuance of the Company out of the Province of British Columbia and the provisions of the Business Corporations Act (British Columbia) and in to the Province of Alberta under the provisions of the ABCA (the “ Continuation ”). Immediately following the Closing, AmalCo will, subsequent to the Continuation, be wound up into the Company and the assets of AmalCo will be transferred to the Company by operation of law and the Company shall continue under the name “Grounded Lithium Corp.”

The Transaction is an Arm’s Length Transaction. In connection with the announcement of the Transaction, trading in the Shares were halted and are expected to remain halted until the Closing.

Grounded Financing

In connection with the Transaction, Grounded has completed two tranches of a private placement of up to $5,710,000 (the “ Grounded Financing ”). Collectively, Grounded has issued an aggregate of 21,722,221 Grounded Shares for gross proceeds of $3,909,999.78 under the Grounded Financing. As a condition to the Closing, Grounded will close a final tranche of the Grounded Financing in an amount equal to $1,800,000 (the “ Grounded Investment ”).

The anticipated use of proceeds from the Grounded Financing are to be used by the Resulting Issuer for exploration of its mineral properties and for general working capital purposes.

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For more information on the Grounded Financing, see Grounded’s news releases disseminated by Cision’s Newswire Services on November 30, 2021, December 21, 2021, and February 11, 2022.

Voluntary Escrow

In addition to any resale restrictions applicable to the Shares issued in connection with the Transaction pursuant to the polices of the TSXV or applicable securities laws, 90% of the Shares issued to the Grounded Shareholders in exchange for their Grounded Shares and any Shares issued or to be issued upon the exercise of any VAR Finder Replacement Warrants (collectively, the “ VAR Escrowed Shares ”) shall be subject to a voluntary escrow pursuant to the terms and conditions of the Amalgamation Agreement. Accordingly, the escrow provision requires the VAR Escrowed Shares to be locked up and released in accordance with the following schedule: 20% of the VAR Escrowed Shares on the date that is 6 months from the effective date of the Amalgamation (the “ Effective Date ”); 20% of the VAR Escrowed Shares on the date that is 12 months from the Effective Date; 25% of the VAR Escrowed Shares on the date that is 15 months from the Effective Date; and 25% of the VAR Escrowed Shares on the date that is 18 months from the Effective Date.

Change of Directors and Officers

Upon the completion of the Amalgamation and subject to prior acceptance by the TSXV, it is expected that each of the current directors of the Company will resign and there will be appointed in their place as directors of the Resulting Issuer, Gregg Smith, Greg Phaneuf, John Wright, Mark McMurray and Dave Antony (collectively, the “ Board Reconstitution ”). In addition, each of the current officers of the Company is expected to resign and there will be appointed in their place as officers of the Resulting Issuer, Gregg Smith, the proposed President and CEO, Greg Phaneuf, the proposed VP Finance and CFO, Dale Shipman, the proposed VP Operations, Geoff Speers, the proposed VP Exploration, Wayne Gaskin, the proposed VP GeoSciences & IT, and Brian Bidyk, the proposed Corporate Secretary (collectively, the “ Management Reconstitution ”).

Gregg Smith, Proposed President, CEO and Director

Gregg Smith brings over 35 years of combined technical and managerial experience in the oil and gas industry. Mr Smith served as a COO with both PetroBank and PetroBakken Resources. At Petrobank, he led the Canadian Business unit’s growth from 2,000 BOEPD to over 22,000 BOEPD. In 2009, Mr Smith led the spinout of the business unit from Petrobank to form the new enterprise PetroBakken, which subsequently grew to over 50,000 BOEPD. Production growth evolved from aggressive drilling in resource plays following strategic acquisitions in excess of $4.5 billion. Throughout his career, Mr. Smith was fortunate to work in technical and executive roles across Western Canada, Offshore Louisiana & Texas, and international projects in the Middle East. In 2009, Mr. Smith had the honour of receiving “Saskatchewan Oilman of the Year” for the achievements of the multi-discipline team he led in optimizing drilling and completion techniques in the Bakken play providing a major increase in oil productivity per well. Mr. Smith has served on sport, volunteer as well as corporate boards in multiple roles dominantly within the oil and gas industry.

Greg Phaneuf, Proposed VP Finance, CFO and Director

Greg Phaneuf brings over 30 years of combined experience in finance and leadership disciplines. He was formerly co-founder and CFO of two upstream resource companies (Seven Generations Energy, Toro Oil & Gas), and served as CFO of two technology companies. Mr. Phaneuf has led both domestic and international corporate development divisions for small and large enterprises with operations in North America, China, Latin America and the Middle East (Ivanhoe Energy, Churchill Corporation). He was the Treasurer and part of the deal team for Western Oil Sands’ $7 billion corporate divestiture to Marathon Oil. Over his career, Mr. Phaneuf has led or assisted in financings in excess of $2 billion and was involved in M&A transactions, inclusive of the Western Oil Sands’ divestiture, in excess of $7.5 billion. His areas of

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expertise include corporate finance, M&A, modeling, capital markets, financial reporting and strategic planning.

John Wright, Proposed Director

John Wright has been the Chair of the board of directors of Touchstone Exploration Inc. since 2012, the Chair of the board of directors of Alvopetro Energy Ltd. since 2013 and the President of Analogy Capital Advisors Inc. since March 2017.

From January 2017 to June 2017, Mr. Wright was President, CEO and a director of Ridgeback. Prior thereto, Mr. Wright was President, CEO and a director of Lightstream Resources Ltd. from May 2011 to December 2016. Mr. Wright was the President, CEO and a director of Petrobank Energy and Resources Ltd., Touchstone’s predecessor company, from 2000 to 2012. From June 2006 to December 2010, Mr. Wright was concurrently President, CEO and a director of Petrominerales Ltd. and then the Chair of the board of directors from December 2010 until December 2013. Previously, Mr. Wright served as the President and CEO of Pacalta Resources Ltd. from May 1996 to June 1999; Executive Vice President and Chief Operating Officer of Morgan Hydrocarbons Inc. from December 1993 to April 1996; and Vice President Production of Morgan Hydrocarbons Inc. from 1989 to 1993.

Mr. Wright began his career in the oil and gas industry after he graduated from the University of Alberta in 1981 with a Bachelor of Science degree in petroleum engineering. Mr. Wright is a Professional Engineer and also a Chartered Financial Analyst.

Mr. Wright is a past Chair of the World Petroleum Council-Canada, past Governor of CAPP and founder of Fundación Ñan Paz in Ecuador and of Fundación Vichituni in Colombia.

Mark McMurray, Proposed Director

Mark McMurray has over 35 years in the energy industry holding a variety of technical, executive, and strategic advisory roles. Mr. McMurray was a technical specialist in subsurface reservoir architecture with Imperial Oil and Exxon Production Research Company prior to advising domestic and international clients in production optimization and corporate M&A. In 2003, Mr. McMurray catalyzed the managed buyout of a Calgary transaction advisory firm which was rebranded, built out and merged into the energy investment bank of RBC Capital Markets. While in the transaction advisory space, Mr. McMurray directed an extensive array of strategic asset and corporate situations deploying expertise and building executive relationships across North America. After retiring as Managing Director of RBC Rundle in 2014, Mr. McMurray has engaged as an expert witness, and assumed independent board positions at a number of private businesses that have included Rifleshot Oil Corp, Sproule, and Sitka Exploration. Mr. McMurray has also held volunteer board roles at Calgary Opera, the Petroleum A&D Association, the Canadian Energy Executive Association, and the Southern Alberta Art Gallery.

Dave Antony, Proposed Director

Dave Antony has over 30 years’ experience in assisting companies in structuring transactions, accessing capital, and corporate governance. Mr. Antony has extensive experience as a director and officer of numerous companies in many industries, including the resource industry. Mr. Antony was involved with the TSXV as the Chairman of the Alberta Local Advisory Committee for 7 years and as a Member of the National Advisory Committee for 5 years.

Dale Shipman, Proposed VP Operations

Dale Shipman has over 25 years in operational leadership and senior executive roles, and currently runs his own private consulting service business. Mr. Shipman is skilled in aspects of operations and facilities management, and effective in operational cost and production optimization.

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Geoff Speers, Proposed VP Exploration

Geoff Speers has 15 years of technical experience in exploration, development, drilling and acquisitions in both conventional and unconventional reservoir operations. Mr. Speers has been the technical lead of multiple large scale exploration and development programs for the drilling operations and completion of over 300 wellbores. Mr. Speers has also been the principal geological advisor for numerous acquisition and divestiture initiatives with transactional value exceeding $3 billion.

Wayne Gaskin, Proposed VP GeoSciences & IT

Wayne Gaskin has approximately 30 years of combined technical experience in the oil & gas and mining sectors. Mr. Gaskin is a staff geophysicist with experience generating value for domestic and international oil and gas operators, in particular, by integrating geophysical, geological and engineering information for capital efficiency and business strategy and adapting best practices for evolving technologies.

Brian Bidyk, Proposed Corporate Secretary

Brian Bidyk is a corporate lawyer and Partner in McCarthy Tétrault LLP’s business law and energy groups. Mr. Bidyk’s practice encompasses a variety of corporate and commercial matters, with a specialization in mergers and acquisitions and divestitures in the oil & gas, electricity and renewable power industries. Mr. Bidyk is often called upon to advise major energy and project developers and producers in respect of mergers and acquisitions, divestitures, as well as the development and construction of projects.

Following the Closing, the proposed directors and officers of the Resulting Issuer as a group are expected to beneficially own, directly or indirectly, or exercise control or direction over, an aggregate of 5,864,393 Resulting Issuer Shares (on an undiluted basis), representing 10.31% of the issued and outstanding Resulting Issuer Shares on an undiluted basis, assuming there are 56,872,750 Resulting Issuer Shares outstanding at Closing.

Additional information regarding the nominee directors and officers of the Resulting Issuer will be set out in the Information Circular.

Conditions to the Transaction

The Closing of the Transaction is subject to the satisfaction of various conditions standard for a transaction of this nature, including but not limited to:

• the Company and Grounded, having had the reasonable opportunity to perform searches and other due diligence, and being satisfied with the results of such due diligence;

• the Company and Grounded obtaining all necessary consents, orders and regulatory approvals;

• the absence of any material adverse change in the business, affairs or operations of the Company or Grounded, as applicable;

• all outstanding Share purchase warrants of the Company, (each, a “ VAR Warrant ”) on or before Closing, being 5,755,000 remaining VAR Warrants with an exercise price of $0.14 per VAR Warrant, shall have been exercised;

• the completion of the Grounded Financing, including closing of a final tranche in an amount equal to the Grounded Investment;

• the Company shall have relinquished its exclusive option to acquire a 100% undivided right, title, ownership and beneficial interest in and to the Hook Bay Property;

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• each of the Board Reconstitution and the Management Reconstitution;

• approval of the Continuation by the VAR Shareholders, as required by applicable corporate law; and

• approval of the Transaction by the shareholders of the Company and Grounded, as required by applicable corporate law and the policies of the TSXV, as applicable.

In connection with the Transaction, Grounded has agreed to pay customary advisory fees to an eligible arm’s length third party, including the issuance of 208,333 Grounded Shares at a deemed price of $0.18 per Grounded Share.

It is expected that, immediately prior to the Closing, there will be 38,327,447 Grounded Shares issued and outstanding (assuming completion of the Grounded Financing together with those subscriptions equal to the Grounded Investment) and, accordingly, an aggregate of 38,327,447 Shares are expected to be issued at a deemed price of $0.18 per Share. The Company intends to rely on Section 2.11 of National Instrument 45106 – Prospectus Exemptions for an exemption from the prospectus requirements for the issuance of the Shares to the Grounded Shareholders, the VAR Replacement Warrants to the former Grounded Warrant holders and the grant of the VAR Replacement Options to the former Grounded Option holders.

Assuming the completion of the Transaction and that no convertible securities of the Company or Grounded are exercised prior to Closing other than the remaining 5,755,000 VAR Warrants, a minimum of 56,872,750 Resulting Issuer Shares are expected to be issued and outstanding on the Closing, of which approximately 32.6% Resulting Issuer Shares will be held by the current VAR Shareholders, approximately 11.6% will be held by the former Grounded Shareholders, and 55.8% will be held by the subscribers under the Grounded Financing.

Sponsorship

Sponsorship of a reverse takeover is required by the TSXV unless exempt or waived in accordance with TSXV policies. In connection with the receipt of the conditional approval of the Transaction by the TSXV, the Company has received a waiver from the sponsorship requirement.

Additional Information

All information contained in this news release with respect to the Company and Grounded was supplied, for inclusion herein, by each respective party and each party and its directors and officers have relied on the other party for any information concerning such other party.

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 management information circular or Information Circular 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 the Company should be considered highly speculative.

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

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Contact Information

For further information on Grounded, contact:

Grounded Lithium Corp.

Gregg Smith President & CEO E: gregg.smith@groundedlithium.com

Greg Phaneuf VP Finance & CFO E: greg.phaneuf@groundedlithium.com

For further information on the Company, contact:

VAR Resources Corp.

Ron Schmitz CFO, Corporate Secretary and Director E: ron@asi-accounting.com P: (604) 685-7450

Disclaimer for Forward-Looking Information

Certain statements in this news release are forward-looking statements, which reflect the expectations of management regarding the Company’s completion of the Transaction and related transactions. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future, including but not limited to, the Company completing the Transaction, the completion of the Grounded Financing, statements regarding the prospective lithium opportunities of Grounded’s mineral assets, the anticipated use of proceeds of the Grounded Financing, the conditions to be satisfied for completion of the Transaction, completion of the Continuation, the name and business carried on by the Resulting Issuer, the capitalization of the Resulting Issuer, the Board Reconstitution, the Management Reconstitution, and the reliance on a prospectus exemption for the issuance of the Shares. Such statements are subject to assumptions, risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including risks related to factors beyond the control of the Company. The risks include the following: the requisite corporate and shareholders approvals of the directors and shareholders of the Company or Grounded, as applicable, may not be obtained; Grounded may be unable to close the Grounded Financing in full or in part; the TSXV may not provide final approval for the Transaction; that the parties may be unable to satisfy the closing conditions in accordance with the terms and conditions of the Amalgamation Agreement; and other risks that are customary to transactions of this nature. The novel strain of coronavirus, COVID-19, and ongoing dispute between the sovereign state of Ukraine and Russia also pose risks that are currently indescribable and immeasurable. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. The reader is cautioned not to place undue reliance of any forward-looking statements. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forwardlooking statements contained in this news release are expressly qualified by this cautionary statement. The forwardlooking statements contained in this news release are made as of the date of this news release. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Neither the TSX Venture Exchange 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.

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This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.