Canamax Announces Strategic Business Combination With Powder Mountain Energy Ltd Which Provides Access to $21.5 Million of Surplus Cash

CALGARY, AB--(Marketwired - June 15, 2015) - Not for dissemination in the United States of America or distribution to any United States newswire services

Canamax Energy Ltd. ("Canamax" or the "Company") (TSX VENTURE: CAC) is pleased to announce that it has entered into an arrangement agreement (the "Arrangement Agreement") with Powder Mountain Energy Ltd. ("Powder") to acquire all of the common shares of Powder (the "Powder Combination") for total expected consideration of approximately $27.35 million, payable through the issuance of Canamax common shares having a deemed value of $0.60 per share (the "Canamax Arrangement Shares"). The total consideration being paid is based on an attributed value of $5.85 million for Powder's existing lands, production and reserves and a working capital surplus (substantially all cash) of $21.5 million estimated on the closing date of the Powder Combination. The consideration payable by Canamax, and the number of Canamax Arrangement Shares issuable by Canamax, will be adjusted if Powder's cash and working capital balance either exceeds or is less than $21.5 million at closing. Before any adjustments, Canamax expects to issue approximately 45.583 million Canamax Arrangement Shares pursuant to the Powder Combination. Subject to the receipt of requisite approvals and the satisfaction of certain conditions, all as discussed further below, it is anticipated that the Powder Combination will close on or before July 31, 2015.

Strategic Rationale

Cash proceeds from the closing of the Powder Combination, together with anticipated closing of the recently announced $15.0 million commercially reasonable efforts private placement financing (the "Private Placement"), should allow Canamax to execute on the following:

1. Close the recently announced $24.0 million property acquisition from an intermediate oil and gas company (such acquisition scheduled to close on or before July 31, 2015 and add an estimated 750 boe/d of production) (the "Asset Acquisition");
2. Accelerate the Company's planned drilling program on its core Greater Grimshaw area where Canamax has a 100% working interest in the production, facilities and the majority of the 96 net sections of land in the area. Canamax has identified approximately 190 potential Montney oil drilling locations on these lands;
3. Provide additional capital to pursue further potential strategic corporate and property acquisitions;
4. Eliminate the use of the previously announced $20.0 million standby bridge facility; and
5. Continue to build a strong shareholder base, including the potential addition of key institutional shareholders.

After closing of the Asset Acquisition, the Powder Combination, and the Private Placement financing, Canamax is expecting to have an estimated production rate of approximately 1,900 boe/d (56% oil & NGL - including approximately 150 boe/d of currently shut-in Canamax production) and approximately $3.0 to $4.0 million of cash and working capital with no debt.

Cash and Working Capital of Powder

At March 31, 2015, Powder reported a working capital amount of $22.8 million, which was comprised of cash of $23.1 million less a non-cash working capital deficit of $0.3 million. The initially estimated Powder cash and working capital balance of $21.5 million at the closing date of the Powder Combination is based on the March 31, 2015 balance adjusted for the following items during the interim period: capital expenditures, field operating income, general and administrative expenses, transaction costs associated with the Powder Combination, severance expense, and other income and expenses.

Lands, Production and Reserves of Powder

Powder has a 100% working interest in 5.75 sections in its core Hardy Bakken area in southeast Saskatchewan with current area production of approximately 100 bbl/d of light Bakken oil from two recently drilled horizontal wells. In addition, Powder has a 100% working interest in 42.5 primarily contiguous sections in the Coteau Lake area, also in southeast Saskatchewan. Coteau Lake is prospective for Bakken and Torquay light oil.

After taking into consideration Canamax's existing reserves and the reserves to be acquired pursuant to the Asset Acquisition, the Company has determined that the Powder reserves will not have a significant or material effect on the Company's reserves. Information respecting Powder's reserves can be found in Powder's Statement of Reserves filed under Powder's SEDAR profile at www.sedar.com. Powder's Statement of Reserves was based on a report prepared by GLJ Petroleum Consultants Ltd. ("GLJ"), an independent qualified reserves evaluator, as at September 30, 2014 (the "Powder Report"), which report was prepared in accordance with the standards contained in the COGE Handbook and National Instrument 51-101. The Powder Report used a price forecast schedule prepared by GLJ and effective as at October 1, 2014. This price forecast is different than the January 1, 2015 price forecast schedule used by GLJ in the preparation of the Canamax reserves report as at December 31, 2014 (such reserves report prepared in accordance with the standards contained in the COGE Handbook and National Instrument 51-101).

Additional Information Regarding the Powder Combination

Completion of the Powder Combination is subject to a number of conditions, including but not limited to: (i) the completion of the Asset Acquisition by Canamax; (ii) Canamax raising aggregate gross proceeds of at least $15 million in one or more equity financings at a price of not less than $0.60 per equity security; (iii) Powder delivering at least $20.5 million in cash and working capital as at the closing of the Powder Combination; and (iv) other customary conditions for a transaction of this nature, including court and regulatory approvals (including the TSX Venture Exchange) and the approval of 66 2/3% of the votes cast by Powder shareholders represented in person or by proxy at the meeting of the Powder shareholders to be called to consider the Powder Combination. Under the Arrangement Agreement, the parties have agreed to reciprocal, non-solicitation provisions including a break fee in the amount of $1.3 million in the event either party terminates the agreement in the case of a superior acquisition proposal.

Concurrent with the execution and delivery of the Arrangement Agreement by Canamax and Powder, officers, directors and shareholders (including 32 Degrees Capital) of Powder representing approximately 32% of the issued and outstanding common shares of Powder have entered into voting and support agreements with Canamax to support and vote in favour of the Powder Combination.

Upon completion of the Powder Combination:

• 32 Degrees Capital will be the largest shareholder of Canamax; and
• The Canamax Board of Directors will be comprised of four nominees of Canamax, three nominees of Powder, and one independent nominee jointly appointed by Canamax and Powder.

Financial Advisor

GMP Securities L.P. is acting as the exclusive financial advisor to the board of directors of Canamax and has provided its verbal opinion that, subject to their review of the final form of the documents affecting the Powder Combination, the consideration to be payable by Canamax pursuant to the terms of the Powder Combination is fair, from a financial point of view, to the Canamax shareholders.

A copy of the Arrangement Agreement will be filed on the Company's SEDAR profile and will be available for viewing at www.sedar.com.

About Canamax

Canamax is a Montney oil focused junior oil and gas company with its core assets located in the Greater Grimshaw area of Northwestern Alberta.

Caution Respecting BOE

The term barrels of oil equivalent ("BOE") may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 Bbl and an Mcfe conversion ratio of 1 Bbl:6 Mcf are based on an approximate energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Since the value ratio based on the current price of crude oil compared to natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion based on a 6:1 ratio is misleading as an indication of value.

Forward-Looking and Other Cautionary Statements

Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project", "forecast", "should", "will" or similar words suggesting future outcomes or statements regarding an outlook.

Forward-looking information in this press release may include, but is not limited to, timing for completion of the Powder Combination, Asset Acquisition and the Private Placement, the total amount and composition of the consideration payable by Canamax pursuant to the Arrangement Agreement, the cash and working capital balances of Powder at the closing of the Powder Combination, the timing of the completion of the Powder Combination, how the Asset Acquisition will be funded, expectations with respect to the Powder Combination and the Asset Acquisition, the characteristics and attributes of the assets to be acquired pursuant to the Powder Combination and the Asset Acquisition, the effect of the Powder Combination and the Asset Acquisition on the Company and the benefits to the Company, the acceleration of Canamax's drilling and building plans, drilling locations, ability to exploit the Greater Grimshaw area, future production, decline rates, price forecasts, cash and working capital balances, the pursuit of additional acquisitions, the speed of the Company's growth rate and the building of a strong shareholder base.

The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Canamax, which include, but are not limited to, the timing for completion of the Powder Combination, the Asset Acquisition and the Private Placement financing, receiving all approvals in a timely manner, characteristics of the assets associated with the Powder Combination and the Asset Acquisition, decline rates, and production. Although Canamax management considers these expectations and assumptions to be reasonable based on information currently available to it, undue reliance should not be placed on the forward-looking statements because Canamax can give no assurances that they may prove to be correct. Readers are cautioned that the foregoing list is not exhaustive of all expectations and assumptions which have been used.

Forward-looking statements necessarily involve known and unknown risks and uncertainties, including, without limitation, Canamax's ability to achieve financial and other benefits resulting from the successful completion of the Powder Combination, the Asset Acquisition and the Private Placement financing; the risks associated with oil and gas production; marketing and transportation; loss of markets; volatility of commodity prices; currency and interest rate fluctuations; imprecision of reserve estimates; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; inability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to income tax, environmental laws and regulatory matters. Readers are cautioned that the foregoing list of factors is not exhaustive. In addition, the Powder Combination,the Asset Acquisition and Private Placement financing are subject to certain conditions. Failure to satisfy any of these conditions (or in the case of the Powder Combination the emergence of a superior proposal, or the failure to obtain the approval of the Powder shareholders) may result in the Powder Combination, the Asset Acquisition or the Private Placement financing not being completed. In addition, statements relating to "reserves" are by their nature forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described can be profitably produced in the future. The recovery and reserves estimates provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Please refer to Canamax's Annual Information Form ("AIF") dated April 8, 2015 for additional risk factors relating to Canamax. The AIF is available for viewing under the Company's profile on www.sedar.com.

The forward looking statements contained in this news release are made as of the date of this news release, and Canamax does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by securities law.

Financial outlook information contained in this press release about the Company's prospective cash flows and financial position are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. Financial outlook information contained in this press release was made as of the date of this press release and should not be used for purposes other than for which it was disclosed herein.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States or to United States Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

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.

For further information contact:

Brad Gabel
President & CEO
(587) 349-5186

Chris Martin, CA
Vice President, Finance & CFO
(587) 349-5186

Website - www.canamaxenergy.ca