Hemlo Mining Corp. — M&A Activity 2022

Feb 2, 2022

FILERA HOLDINGS LIMITED

registration No. HE 410344, Arch. Makariou III, 155, PROTEAS HOUSE, 5th floor, 3026, Limassol,

Cyprus (the "Buyer")

Cub Energy Inc. Suite 3300, 205 5th Avenue SW, Calgary, AB, Canada T2P 2V7

Gastek LLC 1000 Fourth Street. Suite 875. San Rafael, CA 94901 USA

03 September 2021

Re: Acquisition of 35% of KUBGAS Holdings Limited

Dear Sirs,

MRABIJ-/00299129-1

We are writing to you to set out the principal terms and conditions on which we, FILERA HOLDINGS LIMITED (the "Buyer"), are prepared to purchase, directly or indirectly, 35% of the shares in Kubgas Holdings Limited (the "Transaction"). For purposes of this letter ("Letter Agreement"), Buyer and Cub/Gastek may be referred to as "Parties", "Seller" means Gastek and "Company" means Kubgas Holdings Limited ("KHL"). "Kub-Gas" means KUB-GAS LLC, a 100%-owned subsidiary of the Company, incorporated and existing under the laws of Ukraine. "Cub" means CUB ENERGY INC., a public company incorporated and existing under the Canada Business Corporations Act, with company number 1235805-1, whose registered office is at 4500, 855 2nd Street S.W. Calgary, Alberta. Canada T2P 4K7, and its principal office at Suite 3300, 205 5th Avenue SW, Calgary, AB, Canada T2P 2V7. "Gastek" means Gastek LLC, a company incorporated and existing under the laws of the State of California, USA, with company number 200512610125, having its registered office at 1000 Fourth Street, Suite 875, San Rafael CA, 94901.

This Letter Agreement is intended to be legally binding on the Parties, recognizing that it is not exhaustive, and completion of the Transaction remains subject to reaching mutually acceptable terms and signing a final and binding share purchase agreement in respect of the Transaction.

1. STRUCTURE OF THE TRANSACTION

$1.1$ The Buyer proposes to structure the Transaction as an acquisition of Gastek's 35% interest in the share capital of KHL (the "Shares") from Gastek.

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• $1.2$ The Buyer will buy the legal and beneficial interest in the Shares, free from all encumbrances and adverse rights of any description and together with all rights accruing to the Shares at the Completion Date.
• The Parties acknowledge certain indebtedness of Cub Group entities to Kub-Gas, $1.3$ specifically, accounts payable to Kub-Gas by Cub Group entities in the amount as at the Completion Date ("Accounts Payable") and financial assistance provided by Kub-Gas to Cub Group entities in the total amount, which should be specified in the SPA (the "Financial Assistance"), with the Accounts Payable and the Financial Assistance together constituting the "Cub Debt". The Buyer proposes to buy the Shares from the Seller on a Cub Debt-free basis. Cub Group shall propose a solution for settlement of the Cub Debt to Buyer in a mutually amicable manner on or before the Completion Date. The Buyer shall procure that the Company and/or Buyer will take required steps for Cub Debt settlement, in case the Parties agree a Cub Debt settlement scenario.
• $1.4$ Seller will have no obligation to make any capital investment to the Company, including but not limited to the Company's drilling activity, with effect from signing of the Letter Agreement.
• 1.5 The Buyer and the Seller shall ensure continuation of ongoing monthly gas sales from Kub-Gas to Cub Group entities through the Completion Date.

$2.$ PURCHASE PRICE

• $2.1$ The base price for the Shares shall be US$ 2,600,000 (the "Base Price") payable to the Seller in full and in cash on the Completion Date. "Completion Date" means the date on which the completion of the sale and purchase of the Shares in accordance with the terms and conditions of this Letter Agreement occurs.
• $2.2$ The Parties may determine in the SPA that one of the proposed solutions for Cub Debt settlement is an increase of the Base Price for the full amount of the Cub Debt or a partial amount (the "Increased Price"), but in this case the Increased Price shall be decreased for the amount of taxes and applicable charges required to be paid by Ukrainian legislation.

$3.$ CONDITIONS

• $3.1$ Completion of the Transaction will be conditional on the following matters:
  • $(a)$ the Parties agreeing and executing a fully-termed definitive share purchase agreement (the "SPA") a first draft of which will be prepared by the Buver's solicitors, but incorporating all the terms of the Transaction stated herein and other terms negotiated between the Parties in good faith;
  • $(b)$ the Seller's warranties in the SPA being true and accurate on the Completion Date in all material respects and the Seller and the Buyer not otherwise being in material breach of their respective obligations under the SPA:
  • $(c)$ the Transaction was approved by the TSX Venture Exchange in accordance with applicable regulations.

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$\overline{4}$ . TIMETABLE

$4.1$ The Buyer intends to proceed as quickly as possible with the proposed Transaction. The Buyer and the Seller shall negotiate an SPA in good faith with a view that completion of the purchase of the Shares shall take place on the Completion Date after satisfaction of conditions noted above, but no later than November 15, 2021.

5. EXCLUSIVITY

• $5.1$ In consideration of the Buyer undertaking and incurring fees and expenses and other costs in connection with this Letter Agreement and the Transaction, Cub grants the Buyer a period of exclusivity on and from the date of this Letter Agreement to and including 31 December 2021 (the "Exclusivity Period") for the Buyer and the Seller to agree the terms of the SPA.
• $5.2$ Immediately on signing this Letter Agreement, Cub shall terminate, or procure the termination of, any discussions or negotiations between Cub or Gastek (or any of their respective directors, officers, agents, employees, advisers or other representatives) and anyone other than the Buyer and its affiliates (or any of their officers, agents, employees, advisers or other representatives) (a "third party") relating to the disposal (whether by way of sale, offer, transfer or otherwise) of all or part of the Shares or any interest in the Shares (a "Sale").
• 5.3 During the Exclusivity Period, Cub undertakes that it shall not and shall procure that Gastek shall not, directly or indirectly,
  • $(a)$ induce, solicit, procure or otherwise encourage a Sale to or from a third party; $\alpha$
  • $(b)$ induce, solicit, initiate, enter into, restart, or otherwise participate in any negotiations with a third party regarding a Sale; or
  • $(c)$ seek, encourage or respond to any approach that may lead to any negotiations with a third party regarding a Sale; or
  • $(d)$ enter into any heads of terms, agreement, arrangement or understanding (whether or not legally binding) relating to a Sale to a third party; or
  • $(e)$ subject to Article 7 of this Letter Agreement, supply or otherwise disclose any information about the Shares, the Company or its subsidiaries to a third party that wishes, or may wish, to enter into negotiations regarding a Sale (unless the information is publicly available).
• 5.4 Cub shall procure that its directors, officers, employees, agents, advisers and other representatives, and each member of the Cub Group and their respective directors, officers, employees, agents, advisers and other representatives, comply with the undertakings in this paragraph 5 as if they were Cub.

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• 5.5 Cub shall notify the Buyer in writing immediately if, during the Exclusivity Period, it or any member of the Cub Group receives an indication from any third party that such third party may wish to have discussions with a view to a possible Sale.
• 5.6 For the purposes of this Letter Agreement "Cub Group" means Cub, any company of which it is a Subsidiary (its holding company) and any other Subsidiaries of any such holding company and "Subsidiary" means in relation to a holding company, wherever incorporated, any other company in which the holding company (or a person acting on its behalf) directly or indirectly holds or controls either (a) a majority of the voting rights exercisable at general meetings of the company; or (b) the right to appoint or remove directors having a majority of the voting rights exercisable at meetings of the board of directors of the company.
• 5.7 The Seller acknowledges that the Buyer will incur significant costs, fees and expenses by relying on this paragraph 5 and, if the Seller is in breach of its obligations under this paragraph 5, the Seller shall (without prejudice to any other remedies the Buyer may have) indemnify and keep indemnified the Buyer for an amount equal to all the reasonable liabilities, costs, fees, disbursements, damages, losses and expenses which have been incurred by the Buyer in connection with the proposed purchase of the Shares.
• 5.8 All key personnel shall remain employed with the Company, and the Company and the Seller shall, subject to the provisions of the SPA, refrain from influencing and/or affecting any of the Key Personnel (as will be defined in the SPA) to leave the Company with the exception of representatives of Cub and/or Gastek.

COSTS 6.

6.1 Save as set out in paragraph 5.7, each Party shall be responsible for and shall pay their own costs in connection with the proposed purchase of the Shares, whether or not it proceeds (including (without limitation) the preparation and negotiation of this Letter Agreement, the SPA and any documents contemplated by them).

$7.$ CONFIDENTIALITY

• 7.1 The proposed purchase is of the utmost confidentiality. Accordingly, neither the Seller, the Company, the Buyer nor their respective directors, officers, employees or professional advisers shall make any disclosure regarding the conduct or status of the negotiations regarding this proposal unless it has first obtained the written consent of the others save as required by law or by the rules of any recognised stock exchange applicable to Cub.
• $7.2$ In particular, this Clause 7 shall not apply to any announcement that is required by the TSX Venture Exchange. The Buyer recognizes that Cub is required to make the announcement. Cub shall promptly notify the Buyer and use reasonable endeavours to agree on the content of such announcement before it is made.

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GOVERNING LAW AND JURISDICTION 8.

• The Buyer and the Seller agree and acknowledge that this Letter Agreement is 8.1 intended to be legally binding.
• This Letter Agreement and all disputes and claims arising out of or in connection with 8.2 it or its formation (including non-contractual claims and disputes), shall be governed by, and construed in accordance with, English law, excluding choice of law provisions.
• Each party irrevocably agrees to submit to the non-exclusive jurisdiction of the 8.3 English courts as regards the settlement of any dispute, claim or matter arising out of or in connection with this Letter Agreement or its subject matter or formation (including non-contractual disputes and claims).
• No one other than a party to this Letter Agreement shall have any right to enforce any 8.4 of the terms in this Letter Agreement.

TERMINATION; SURVIVAL; EXECUTION 9.

• This Letter Agreement may be terminated at any time prior to the Completion Date by 9.1 the mutual written consent by the Parties.
• If this Letter Agreement terminates in accordance with clause 9.1, clauses 6, 7 and 8 9.2 shall survive and continue to have effect notwithstanding termination of this Letter Agreement.
• This Letter Agreement may be executed in counterparts, each of which shall be 9.3 deemed an original, but all of which together shall constitute one agreement. Delivery and exchange of counterparts bearing original signatures by electronic transmission and email in "portable document format" (PDF) shall have the same effect as physical delivery of the paper document bearing the original signature.

Please sign and return a copy of this Letter Agreement as soon as possible to confirm your agreement to the above.

Yours faithfull

for and on behalf of FILERA HOLDINGS LIMITED

We confirm our agreement to this binding Letter Agreement.

rug

Date: 03 Saptember 2021

Director for and on behalf of Cub Energy Inc.

.. Director,

Date: 03 September 2021

Director for and on behalf of Gastek LLC

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