Touchstone Exploration Inc. (LON:TXP, TSX: TXP) has announced that it has conditionally raised £6.32 million (approximately US$8.44 million) by way of a private placement of 57,454,545 new common shares in the Company with no par value to certain new and existing investors at a price of 11 pence (approximately C$0.206) per Common Share (the “Placing Price”).
The Company is proposing to raise up to an additional £0.68 million before expenses (approximately US$0.91 million) by way of a retail offer to its existing shareholders via the Bookbuild Platform of up to 6,181,818 new Common Shares at the Placing Price (together with the Common Shares issuable under the Placing, the “Offered Shares”). A separate announcement will be made regarding the Retail Offer and its terms. For the avoidance of doubt, the Placing is separate from, and does not form part of, the Retail Offer.
The Company intends to use the net proceeds of the Placing, together with any funds raised under the Retail Offer, to continue its revised 2025 capital program and to satisfy the remaining equity raising requirement under the Company’s Fourth Amended and Restated Loan Agreement with Republic Bank Limited (the “Loan Agreement”).
Further Details of the Placing
Pursuant to the Placing, a new investor, Purebond Limited, and certain existing investors have agreed to subscribe for 57,454,545 new Common Shares at the Placing Price, to raise gross proceeds of £6.32 million (approximately US$8.44 million). The Placing Price represents a 2.2 percent discount to 11.25 pence, which was the closing price of the Common Shares on the AIM market (“AIM”) of the London Stock Exchange on October 23, 2025.
Purebond Limited is a UK registered entity controlled and managed by the Kansagra family. A condition of Purebond’s participation in the Placing is that it receives the right to appoint one nominated non-executive director to the Company’s Board of Directors (the “Board”) while its interest in the Company’s total issued share capital remains above 15 percent. Accordingly, the Company has entered into an investor rights agreement with Purebond Limited which confers the Board appointment right. Subject to completion of standard regulatory due diligence, Purebond Limited has indicated that it intends to nominate Bhupendra Kansagra, a director of Purebond Limited, as its Board nominee. A further announcement will be made in this respect in due course.
Use of Proceeds
The net proceeds from the Placing and the Retail Offer are expected to be used to fund the Company’s revised 2025 capital program, as outlined below. The planned expenditures include drilling one development well on the Company’s Central block and capital investments related to the Cascadura natural gas facility compression project, which is scheduled for completion in the second quarter of 2026.
Paul R. Baay, President and Chief Executive Officer, commented:
“This financing fully satisfies our outstanding obligations under our Loan Agreement, positioning us to advance our 2025 capital investment program focused on high-return projects, including drilling on the recently acquired Central block and the installation of the Cascadura compressor.
We are grateful for the continued support of our existing investors and are pleased to welcome Purebond as a significant new shareholder in Touchstone. This strategic investment strengthens our financial position and adds valuable expertise to our Board through the appointment of Mr. Kansagra, a UK-based director with extensive experience in the resource sector and capital markets.”
Admission of the Offered Shares
Application has been made for the Offered Shares to be admitted to trading on the Toronto Stock Exchange (“TSX”) and AIM (“Admission”). Subject to the receipt of required approvals from the TSX and AIM, the Offered Shares are expected to be issued and admitted to trading at or before 8.00 a.m. (London time) on October 30, 2025.
The Placing is conditional on, among other things, Admission becoming effective (including final approval for the listing of the Offered Shares on the TSX) and the placing agreement entered into between the Company and Shore Capital in connection with the Placing not being terminated in accordance with its terms. The Common Shares to be issued pursuant to the Placing will, when issued, represent approximately 18 percent of the total share capital of the Company on Admission (before the issue of any Common Shares pursuant to the Retail Offer). Shore Capital acted as broker in connection with the Placing.
The Offered Shares will, when issued, rank pari passu in all respects with the Company’s existing issued Common Shares. All Offered Shares being issued by the Company pursuant to the Placing and the Retail Offer will be freely transferable; however, any of these Offered Shares that are resold to residents of Canada (or any person otherwise subject to the securities laws of any jurisdiction of Canada) will be subject to applicable Canadian securities laws, which may include restrictions on resale, whether through a Canadian exchange or otherwise.
Update on May 8, 2025 Private Placement
On June 30, 2025, Touchstone Exploration Inc. announced that £10,324,500 of the £15,375,000 gross proceeds had not been received as of the TSX‑approved closing deadline of June 27, 2025. As a result, the Company closed on £5,050,500 in gross proceeds and issued 24,636,585 Common Shares.
The Company has not received any further proceeds from the May 8, 2025 private placement to date. Accordingly, the Company believes it is unlikely that it will receive the outstanding balance of proceeds of £10,324,500 and has therefore completed the Placing to secure its near-term capital requirements.
The Company has reserved all rights in connection with the May 8, 2025 private placement and, following the completion of the Placing, it has determined that it will not be pursuing litigation at this time.
Updated Guidance
On August 14, 2025, the Company announced its revised 2025 operational and financial guidance. Following the incorporation of the Central block assets and the development activities at Cascadura reported on September 29, 2025, Touchstone provides the following updates to the Revised Guidance.
· Average daily production: Primarily as a result of the Cascadura-5 well expected to be brought onstream in November 2025 and initial production from the Cascadura-4ST2X well now anticipated in 2026, the Company expects 2025 daily average production of 4,700 to 5,300 boe/d. This represents a decrease of approximately 600 boe/d (11 percent) compared to the 5,600 boe/d midpoint previously estimated in the Revised Guidance.
· Funds flow from operations: Updated guidance forecasts funds flow from operations of approximately $6 million, compared to $11 million in the Revised Guidance. The change in estimated Cascadura development well online dates noted above primarily resulted in the $5 million (45 percent) decrease from the prior estimate.
· Capital expenditures: Based on the anticipated reduction in funds flow from operations, the Company has elected to defer the drilling of two WD-8 crude oil development wells. This results in a $3 million decrease in capital spending, partially offset by a $1 million increase in Cascadura-4ST2X costs, for total estimated 2025 capital expenditures of $26 million, representing a $2 million reduction from the $28 million contemplated in the Revised Guidance.
· Net debt: Reflecting the anticipated decrease in funds flow from operations and the revised capital program, Touchstone expects to exit 2025 with net debt of approximately $65 million, representing an increase of $1 million (2 percent) from the $64 million disclosed in the Revised Guidance.
For further details regarding the Company’s Revised Guidance and the related advisories (which are incorporated by reference herein), please refer to the Company’s news release dated August 14, 2025 titled “Touchstone Exploration Announces Second Quarter 2025 Results“, available on the Company’s profile on www.sedarplus.ca and on its website at www.touchstoneexploration.com.
