GK Resources Provides Update on RTO with Syntholene Energy and Announces Closing of First Tranche of Subscription Receipt Financing

Executive Summary

• GK Resources Ltd. announces the closing of the first tranche of a subscription receipt financing by its special purpose vehicle, FinCo, raising approximately C$1.4 million in gross proceeds.
• The financing is part of an ongoing reverse takeover transaction with Syntholene Energy Corp., with the combined entity expected to close in Q4 2025 and list on the TSX Venture Exchange.
• Net proceeds will fund Syntholene’s engineering, development programs, and the construction of an effects-test facility in Iceland, alongside general working capital.

Key Details

• Financing Structure: Subscription Receipt Financing via FinCo (Syntholene’s special purpose vehicle).
• Gross Proceeds: Approximately C$1,403,304.
• Units Issued: 18,710,724 Subscription Receipts.
• Price Per Unit: $0.075 per Subscription Receipt.
• Lead Agent: Canaccord Genuity Corp.
• Agents: Haywood Securities Inc. and Ventum Financing Corp.
• Use of Proceeds: Advancing Syntholene’s engineering and development programs, specifically progress toward the construction of its effects-test facility in Iceland, and for general working capital.
• Conversion Terms: Each Subscription Receipt converts automatically into one common share of FinCo (pre-consolidation) upon the completion of the Transaction and satisfaction of escrow release conditions.
• Amalgamation and Consolidation: FinCo will amalgamate with a wholly-owned subsidiary of GK. Post-transaction, common shares will consolidate on a 5-for-1 basis, resulting in a deemed value of $0.375 per post-consolidation share.
• Escrow Arrangement: Gross proceeds net of agents' expenses and 50% of agents' commission/fees ("Escrowed Funds") are held in escrow.
• Escrow Release Deadline: December 1, 2025. If conditions are not met, funds are returned to subscribers pro rata, with GK and Syntholene liable for any shortage.
• Agent Compensation:
  • Cash Commission: 6% on Subscription Receipts sold (3% on president's list subscriptions).
  • Broker Warrants: 759,430 warrants issued, representing 6% of Subscription Receipts issued (3% on president's list).
  • Warrant Exercise Price: $0.075 per share.
  • Warrant Term: 24 months following the completion of the Transaction.
• Statutory Hold Period: All securities issued and shares issuable on exercise of Broker Warrants are subject to a hold period until January 19, 2026.
• Future Tranche: FinCo intends to complete a further tranche of the Offering on or before December 1, 2025.

Notable Quotes

• "The Transaction represents an important step in positioning the combined company to pursue the development of Syntholene's clean fuel demonstration facility."
• "GK and Syntholene remain focused on meeting all necessary requirements to advance toward closing of the Transaction which is expected in Q4 2025."