Mineral Hill Industries Ltd. Executed Definitive Agreement for the Acquisition of the “REIT Company“

VANCOUVER, Feb. 3, 2020 - Mineral Hill Industries Ltd. ("MHI" or "Company"), trading on the TSX Venture Exchange ("TSXV") under the trading Symbol "MHI", on the Deutsche Boerse, Frankfurt under the trading Symbol "N8Z1 wishes to announce that following to its binding LOI announced on October 9, 2019 (the "LOI"), the Company has executed the Definitive Acquisition Agreement ("DA-Agr"), dated January 28, 2020, with Southern Colorado Real Estate Ventures Holdings LLC ("SCRH"). SCRH is a privately held "REIT" company incorporated under the laws of the state of Florida, USA, and registered under the ID Number L190001794455. SCRH leases its real estate tracts and properties which it assembled over the past six years and leased to RV-parks, agriculture cultivation centers and Cannabis dispensaries in Florida and Colorado.

After several meetings between MHI's and SCRH's (the "Parties") management in Florida, Colorado and Vancouver and in compliance with the "Change" and "Delay" Provision within the LOI, the Parties agreed to include 44 RV development sites and additional 48 building lots with "Rate of Growth Ordinance" ("ROGO") licenses to accommodate single family, mobile homes, or modular houses to the SCRH's assets ("REIT-Assets") for the acquisition which were not included under the acquisition proposal pursuant to the LOI. These added, very essential REIT Assets, increased the overall deemed average value of the REIT Assets from C$24,467,766, as quoted within the LOI, to C$50,012,385 for the year 2020 and C$61,628,949 and C$79,437,925 for the years 2021, and 2022 respectively. The above evaluations were provided by an independent third party. An upcoming news release will include audited financial information of SCRH which is currently not available.

Under the terms of the DA-Agr ("Transaction"), the Parties agreed: firstly, that SCRH will arrange the initial private placement funding ("PP1") of up to C$2,500,000 at a price of C$1.00 per share to be closed in three tranches on or before January 31, 2020 whereby a "Minimum Amount" of C$600,000 for tranche-1("PP1-1") has been over-subscribed by C$873,685 but the Parties agreed to an extension for the closing of PP1 to February 14, 2020. The Minimum Amount will be dedicated for immediate legal cost, approval fees and general working capital; and secondly, not to redeem any outstanding mortgages as implied in the LOI but instead, SCRH committed to raise additional funds for improvements of existing assets, additional acquisitions, and general working capital through non-brokered private placement financings via the second private placement ("PP2") in the amount of C$7,919,700 for the issuance of 3,959,850 MHI-Shares at a deemed price of C$ 2.00 per share, via the third private placement ("PP3") in the amount of C$7,919,700 for 2,639,900 MHI Shares at a deemed price of C$3.00 per share, and via the fourth private placement ("PP4") in the amount of C$6,599,750 for 1,649,938 MHI-Shares at a deemed price of C$ 4.00 per share.

The Parties agreed to establish the evaluation of the REIT-Assets for the year 2020 of C$ 50,012,385 as the value ("Deemed-Value") for the issuance of 86,825,271 common shares of MHI (the "Acquisition-Shares") and staged cash-payments of US$ 5,000,000 derived from the proceed of the four proposed private placements and in accordance to the budget prepared for the filing statement Form 3D2 as total consideration for the acquisition. The Acquisition-Shares will be issued at a deemed price of C$ 0.50 per Acquisition-Share to the beneficiary sole shareholder of SCRH (the "1500 Joseph D. Cleghorn Jr. Family Trust"), subsequent and subject to the approval of the transaction by the TSX Venture Exchange ("TSXV"). All beneficiaries of SCRH including its directors and officers are Arm's Lengths parties to the Company as defined under the TSXV Policy 1.1.

Under the conditions of the Transaction and the above commitments, the total insider-control of the Resulting Issuer, following the closing of PP2, is expected to be 79.41% and the public float will equal to 20.59% and after closing of PP3 these percentages will be 77.58% and 22.42% respectively.

With the exception of the immediate working capital of proceeds raised through PP1, all proceeds derived from the private placement financings will remain in the segregated funding account and released in accordance to the obligatory budget and pro-forma submitted to the TSXV as part of the to be filed Filing Statement.

In order to recognize the higher value of the REIT-Assets for the third year of operations after the effective date of the Transaction, MHI agreed to issue to SCHH's beneficial shareholder convertible preferred shares ("Pref-A3 Shares"). The Pref-A3 Shares will be issued subsequently to the final or conditional approval of the Transaction by the TSXV at a Pref-A3 Share price of C$4.00 per share. The Pref-A3 Shares are non-voting, non-interest bearing and convertible at a ratio of 1:1 (one Pref-A3 Share for one Common share), after the REIT-Assets value of C$79,437,925 has been confirmed as it had not been fully recognized under the terms for the Acquisition Consideration.

The number of Pref-A3 Shares to be issued will be determined by the difference of the year 2020 deemed REIT-Assets value in C$50,012,385 and the deemed value of year 2022 of C$79,437,925 for the third year of operation, divided by the deemed Pref-A3 Share price of C$4.00 which would amount to 7,356,365 to be issued resulting from the conversion of the Pref-A3 Shares.

The Transaction is considered to be a Reversed Takeover ("RTO") and a change of the Company's business. The Resulting Issuer will apply for listing as a "Real Estate" or "Real Estate Investment" issuer and intends to change its name to MHI REIT CORPORATION. There is no guarantee that the TSXV will grant a waiver for the requirement of a sponsorship.

To match the new challenges as a REIT corporation, the Company invited at its last AGM, in December, 2019, Mr. Lawrence Taube, Esq., to serve as a member of the Company's Board of Directors ("BoD") and Mr. Taube excepted his nomination and was elected to the BoD.

Lawrence Taube holds a Juris Doctor (J.D. '83) degree from the University of Tennessee and is a member of the Bar in both Florida and California. Since moving to Florida in 1984, he has focused on all aspects of real estate development, reorganization, business relations, corporate governance, compliance, regulatory matters for major business entities including but not limited to national banking organizations with assets valued in the billions of dollars and real estate/construction entities with assets valued in the hundreds of millions of dollars. The Company expects to benefit from Mr. Taube's expertise in the area of making significant corporate decisions and in corporate governance.

As there are additional expected changes to the BoD, in order to meet the contests of skill as a future REIT corporation, the Company has also received the consents from Mr. Sal Pace and James Woodend to serve on the Resulting Issuer's BoD.

Mr. Sal Pace (born December 14, 1976) has been working regularly with the United States Congress and on the US state-by-state legalization campaigns in respect to specific agricultural products and understands the emerging markets.

Mr. Pace attended the Fort Lewis College in Durango, CO, where he majored in political science. He received his MA in American Political Theory at Louisiana State University and taught American government at Pueblo Community College and CSU-Pueblo.

Sal Pace is the former House Democratic Leader in the Colorado State House. He represented House District 46, which included Pueblo County from 2009 to 2013 and served for six years as County Commissioner from Pueblo County, Colorado. He is credited with writing much of the USA's first cannabis regulations while serving in the State House and chose voluntarily not to seek re-election prior to his final term expiring in January 2019.

Mr. Pace is perhaps one of the most recognized public leaders for crafting the US's largest cannabis market in Colorado. During his time in the Colorado General Assembly, he played a leading role in developing Colorado's medical marijuana model, earning him recognition as the "face of regulation" from local news media.

In Colorado, Governor Polis appointed Mr. Pace to the Institute of Cannabis Research Governing Board, which oversees Colorado's cannabis research. Mr. Pace has been featured in Fortune Magazine, The Financial Times of London, and the New York Times among hundreds of other media outlets. He also created the Pueblo County Scholarship Fund, which uses marijuana tax revenues to offer a college scholarship to every high school graduate in Pueblo County. He also helped found the Institute of Cannabis Research (ICR) at Colorado State University-Pueblo and establish a national coalition of local elected officials, Leaders for Reform, to support the Federal cannabis reform.

Outside of cannabis, Sal Pace has been well known in the Colorado political circles. He was chosen by Governor elect Jared Polis to serve as a co-chair of his Transition Committee and has been a delegate to the Democratic National Convention. He has been a vocal advocate for passenger rail in Colorado and chaired the Southwest Chief Passenger Rail Commission, which is credited with raising $71 million to save the Chicago-Los Angeles Route. In 2016 Pace received the highest national recognition from Amtrak, the President's Safety and Service Award.

During his time at the statehouse, he was elected as the Colorado House minority leader and served as a Pueblo County Commissioner from 2013 to 2019.

When Mr. Pace consented to join the Company's board of directors he stated and expressed the following view in reference to leasing certain REIT assets to cannabis operators:

" I'm excited to join the board. I think that the Company's concept is a brilliant idea. I have an acute understanding of the future progression of emerging markets. MHI REIT's board will have significant experience in real estate development, and specifically on necessities for leasing to cannabis operators. Personally, I plan to play a key role helping with strategic decisions regarding emerging markets."

Mr. Woody Woodend is an accomplished entrepreneur with over 30 years' experience in sales and marketing. In his early twenties, he began his career in investment banking and then started a multi-state advertising company that he sold after seven years to assist with the opening and development of several start-up companies. During this time, he served in an advisory capacity and built and developed strong sales teams in many different industries.

Before relocating to Colorado, Mr. Woodend opened and ran an automobile dealership in Florida. While under his leadership, this independent company was the area leader in sales and revenue.

As Mr. Woodend has an extensive knowledge of cannabis operations, he will, as a director of MHI REIT CORPORATION, actively serve and consult in leasing the Company's agricultural property-assets to cannabis and/or hemp operators.

SCRH acknowledged and agreed that the Consideration-Shares and the converted Pref-A3 Shares are and will always be voting shares of the Resulting Issuer but, with the possible exception of the converted Pref-A3 Shares, will be subject to an escrow agreement, as a requirement of the TSXV and will also be subject to all applicable securities laws and regulations in the USA and acknowledges further, that as a consequence of the RTO approval, the fact of the future controlling shareholders of the Company will be US citizens and more than 50% of the Resulting Issuers assets will be located in the US, the Resulting Issuer will therefore be classified as a US domestic issuer for U.S. securities law purposes with certain restrictive legends in accordance to U.S. securities laws. The Company will register with the US Securities Exchange Commission ("SEC") and will become Sarbanes Oxley compliant.

"Completion of the Transaction is subject to a number of conditions, including but not limited to, the acceptance by the TSXV and, if applicable, the disinterested shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval and the acceptance of the Transaction by the TSXV are obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Mineral Hill Industries Ltd.'s shares are highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this news release."

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.

The securities which may be offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to U.S. persons without registration or applicable exemption from the registration requirement of such Act. This release does not constitute an offer for sale of such securities in the United States of America.

THE COMPANY SEEKS SAFE HARBOR

SOURCE Mineral Hill Industries Ltd.



Contact

For further information contact the Company or: Dieter Peter, Director & CEO; Phone: (604) 617-6794