Sun Metals Announces $4 million Bought Deal Private Placement

Press Release

Vancouver, BC – October 7, 2019 – Sun Metals Corp. (TSX-V: SUNM) (the “Company” or “Sun Metals”) is pleased to announce that it has entered into an agreement with Sprott Capital Partners LP to act as lead underwriter (the “Lead Underwriter”), on its own behalf and, if applicable, on behalf of a syndicate of underwriters (collectively with the Lead Underwriter, the “Underwriters”), pursuant to which the Underwriters have agreed to purchase for their own account or arrange for substituted purchasers to purchase on a bought-deal private placement basis C$4,050,210 of securities of the Company (the “Offering”).

The Offering will consist of a combination of (i) 12,000,000 (C$3,000,000) common shares of the Company issued on a flow-through basis (the “FT Shares”) at a price of $0.25 per FT Share, and (ii) 3,334,000 (C$1,050,210) common shares of the Company issued on flow-through basis, which may be gifted or sold by the initial subscriber (the “Premium FT Shares”) at a price of $0.315 per Premium FT Share. The FT Shares and Premium FT Shares shall be collectively referred to as the “Offered Securities”.

In addition, the Company has granted the Underwriters an option to increase the size of Offering by up to an additional $1,000,000, exercisable at any time up to three business days prior to closing of the Offering, on the same terms and conditions under the Offering (the “Underwriters’ Option”).

In connection with the Offering, the Underwriters will be entitled to a cash fee in an amount equal to 6% of the gross proceeds of the Offering, excluding any Offered Securities purchased by subscribers included on a permitted “President’s List”. A cash commission of 1% will be payable with respect to any participation in the Offering by President’s List subscribers. The same commission shall be paid to the Underwriters in connection with any Offered Securities sold pursuant to the exercise of the Underwriters’ Option.

An amount equal to the gross proceeds from the issuance of the Offered Securities will be used for Canadian exploration expenses that will qualify as “flow-through mining expenditures”, as defined in subsection 127(9) of the Income Tax Act (Canada) and as “BC flow-through mining expenditures”, as defined in the Income Tax Act (B.C.) (the “Qualifying Expenditures”), which will be renounced with an effective date no later than December 31, 2019 to the initial purchasers of the Offered Securities (other than the Underwriters) in an aggregate amount not less than the gross proceeds raised from the issue of the Offered Securities, and, if the Qualifying Expenditures are reduced by the Canada Revenue Agency, the Corporation will indemnify each initial purchaser (other than the Underwriters) for any additional taxes payable by such subscriber as a result of the Corporation’s failure to renounce the Qualifying Expenditures as agreed.

The securities to be issued under the Offering will be subject to a hold period of four months and one day from the date of issue in accordance with applicable Canadian securities laws. The Offering is subject to approval of the TSX Venture Exchange.

The Offering is currently expected to close on or about October 30, 2019 or such other date or dates as the Company and the Lead Underwriter may agree (the “Closing Date”).

For more information, please contact Susie Bell, Investor Relations for Sun Metals at sbell@sunmetals.ca, 604-697-4953, or Steve Robertson, President and CEO of Sun Metals, at srobertson@sunmetals.ca, 604-697-4952.

On behalf of the Board of Directors,

SUN METALS CORP.

Steve Robertson
Chief Executive Officer

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