KAPA Capital Inc. to Announces Qualifying Transaction to Acquire Quantus Resources Corp.

2475 Queens Avenue West Vancouver, BC V7V 2Y9

Quantus Resources Corp.

Registered Office:

Suite 1400 – 1125 Howe Street Vancouver, BC V6Z 2K8

KAPA Capital Inc. to Announces Qualifying Transaction to Acquire Quantus Resources Corp.

May 6, 2020: KAPA Capital Inc. (TSX-V: KAPA.P) (“KCI”) and Quantus Resources Corp. (“Quantus”) are pleased to announce that they have entered into a binding letter of intent (the "LOI") dated May 4, 2020 pursuant to which it is contemplated that KCI will acquire all of the outstanding common shares of Quantus by way of a plan of arrangement (the “Arrangement”). The Arrangement is expected to constitute KCI’s Qualifying Transaction under the Capital Pool Companies policy (the “CPC Policy”) of the TSX Venture Exchange (the “Exchange”). KCI, after completion of the Qualifying Transaction, is referred to in this news release as the “Resulting Issuer”; the Arrangement and related transaction described herein are collectively referred to herein as the “Qualifying Transaction”.

Quantus holds an option to earn a 100% interest, subject to certain royalties, in the Blackhawk Property, a natural resource exploration and development project targeting gold and other metals and minerals located near the Lucerne Valley in San Bernardino County, California. Under the Arrangement, Quantus shall make a final payment of 750,000 common shares completing all option payment obligations and in doing so, earn a 100% interest in the Blackhawk Property subject to certain royalties upon production. Further information about Quantus, including financial information, will be provided in a subsequent news release. Prior to and/or concurrent with the completion of the Qualifying Transaction, Quantus intends to complete a private placement for gross proceeds of up to $2,800,000 (the “Quantus Financing”) on terms to be determined.

Upon completion of the Quantus Financing and the Arrangement, it is anticipated that up to approximately 44,000,000 common shares of KCI will be issued to former Quantus shareholders to acquire Quantus. In addition, up to 4,500,000 common shares of KCI shall be issued or issuable pursuant to the settlement of debt of Quantus.

Upon completion of the Qualifying Transaction, the parties anticipate that the Resulting Issuer will be listed as a Tier 2 Resource Issuer on the Exchange. The Qualifying Transaction is arm’s length and is therefore not a Non- Arm’s Length Qualifying Transaction under the CPC Policy. Accordingly, the CPC Policy does not require KCI to obtain shareholder approval of the Qualifying Transaction.

Summary Terms of the LOI

Under the terms of the LOI, the Arrangement will be effected under the Business Corporations Act (British Columbia). KCI will acquire 100% of the outstanding common shares of Quantus by issuing to each shareholder of Quantus one (1) common share in the capital of KCI in exchange for one (1) Quantus common share held by such shareholder. All convertible securities of Quantus shall be converted into convertible securities of KCI without modification to the exercise price or term. Following the closing of this purchase, KCI will own 100% of Quantus’ outstanding common shares.

Other proposed transactions under the Arrangement shall include: (i) the payment of 750,000 common shares to the optionors of the Blackhawk Property constituting the final payment to acquire a 100% interest in the Blackhawk Property subject to certain royalties; (ii) the Quantus Financing; and (iii) $450,000 of debt shall be converted into common shares of KCI or other securities convertible into KCI common shares, which may be exercised for no further consideration.

KCI and Quantus and will work together to finalize the definitive agreement in furtherance of the LOI as soon as reasonably possible.

On closing of the Qualifying Transaction, the Resulting Issuer is expected to have approximately 49,750,001 common shares outstanding (undiluted) and 71,632,241 to 78,632,241 common shares outstanding (fully diluted).

Certain of the Resulting Issuer shares issued to the principals of Quantus who will become management of the Resulting Issuer, will be subject to escrow in accordance with Exchange policies.

Closing Conditions

The closing of the Arrangement will be subject to completion of several conditions, including:

• completion of due diligence satisfactory to each party;
• approval by the shareholders of Quantus at a general meeting of shareholders; and
• receipt of all necessary approvals to the Arrangement, including from the Exchange, and the approval of the Supreme Court of British Columbia after a hearing upon the fairness of the Arrangement.

No assurance can be given at this time that the proposed Arrangement will be completed, that the conditions to closing will be satisfied or that the terms of the Arrangement will not change materially from those described in this news release. Trading of the Company’s shares will remain halted until completion of the Qualifying Transaction or until satisfactory documentation is filed with the Exchange. Any updates regarding the resumption of trading will be made by way of a subsequent news release.

Sponsorship

KCI intends to apply to the Exchange for a waiver of the Exchange’s sponsorship requirements. There is no assurance that this waiver will be granted.

Management and Board of Directors

Upon completion of the Qualifying Transaction, it is expected that certain members of the KCI board will resign and the board of directors of the Resulting Issuer will be reconstituted with nominees put forth by Quantus. Biographies for the board of directors of the Resulting Issuer will be provided in a subsequent news release.

Appointment of Special Committee

The board of directors of Quantus has appointed a special committee independent of KCI to review, negotiate and recommend for approval (if appropriate) the proposed Arrangement. The Quantus special committee is comprised of David K. Paxton, George Nicholson and Alexander Tsakumis.

On Behalf of Quantus’ Board On Behalf of KCI’s Board

“David K. Paxton” “Charalambos Katevatis”

David K. Paxton Charalambos Katevatis CEO and Director President, CEO and Director

For further information contact Charalambos Katevatis at 604 836-6667 or email: [email protected] Statements in this press release regarding KCI which are not historical facts are “forward-looking statements” that involve risks and uncertainties, such as the completion of the proposed Qualifying Transaction. Such information can generally be identified by the use of forwarding-looking wording such as “may”, “expect”, “estimate”, “anticipate”, “intend”, “believe” and “continue” or the negative thereof or similar variations. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties such as the risk that the closing may not occur for any reason. Forwarding-looking statements in this news release include the statements that: (i) the parties anticipate that the Resulting Issuer will be listed as a Tier 2 Resource Issuer and (ii) list out the terms of the Quantus Financing.

Actual results in each case could differ materially from those currently anticipated in such statements due to factors such as: (i) the decision to not close the Qualifying Transaction for any reason, including adverse due diligence results and Exchange refusal of the Qualifying Transaction; (ii) adverse market conditions; and (iii) the need for additional financing. Except as required by law, KCI does not intend to update any changes to such statements.

Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Qualifying Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Qualifying 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 Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered 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 press release.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.