Elkwater Announces New Credit Facility and Proposed Non-Brokered Private Placement Financing

CALGARY, ALBERTA–(Marketwired – Jan. 28, 2014) – ELKWATER RESOURCES LTD. (the “Corporation”) (TSX VENTURE:ELW) announces that it intends to enter into a new $4.1 million credit facility (the “Facility”) with a Canadian chartered bank. Under the terms of the Facility, the Corporation will also raise an additional $1.5 million of financing through a combination of equity and/or subordinated debt.

The Corporation intends to undertake a non-brokered private placement equity financing in each of the provinces of Canada other than Québec (the “Private Placement”) by issuing up to 5,000,000 common shares (the “Shares”) at a price of $0.05 per Share for proceeds of up to $250,000. Directors and officers of the Corporation have agreed, subject to certain conditions, to subscribe for up to approximately $100,000 (or 40%) of the Private Placement. No fees are payable in connection with such subscriptions. There is no minimum number of Shares that must be subscribed for under the terms of the Private Placement for the Private Placement to close.

The Corporation also intends to undertake a non-brokered private placement debt financing in each of the provinces of Canada other than Quebec (the “Debenture Financing”) by issuing up to an aggregate principal amount of $1,500,000 of non-convertible, secured, subordinated debentures (“Debentures”) bearing interest at a rate of 2% plus prime and having a term of 2 years. Directors and officers of the Corporation have agreed, subject to certain conditions, to subscribe for up to approximately $800,000 (or 53.33%) of the Debenture Financing. No fees are payable in connection with such subscriptions. There is no minimum number of Debentures that must be subscribed for under the terms of the Debenture Financing for the Debenture Financing to close.

Part the proceeds from the three financings will be used to complete a $625,000 acquisition of oil and gas assets producing approximately 50 boepd (70% gas) and located in the Lomond and Pembina areas of Alberta. The remainder of the proceeds will be used for general working capital purposes and to repay existing indebtedness of the Corporation.

Closings of the proposed Private Placement and the Debenture Financing are anticipated to occur on or about January 30, 2014 and will be conditional upon, among other things, the receipt of all necessary regulatory approvals (including from the TSX Venture Exchange). The Shares issued pursuant to this Private Placement and the Debentures issued pursuant to the Debenture Financing will be subject to a four month statutory hold period.

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