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Karsten Announces Option Agreement for Qualifying Transaction

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 07/28/14 -- Karsten Energy Corp. (TSX VENTURE: KAY.P) ("Karsten") is pleased to announce that it has entered into an Option Agreement dated July 28, 2014 (the "Option Agreement") with Metallis Resources Inc. (TSXV: MTS) ("Metallis").

Under the terms of the Option Agreement, Karsten will, upon receipt of acceptance by the TSX Venture Exchange (the "Exchange"), have the option (the "Option") to acquire from Metallis an undivided 100% interest in and to 34 claims known as the Mackenzie Mountains Iron-Copper Property (the "Mackenzie Property") located in the Mackenzie Mining District, Northwest Territories, Canada.

The Option Agreement is subject to the satisfaction of a number of conditions precedent on or before October 31, 2014, which conditions precedent include receipt by Karsten of a satisfactory NI43-101 report respecting the Mackenzie Property, completion of a financing for gross proceeds of not less than $300,000 and receipt of notice of acceptance from the Exchange of the Option Agreement and the financing.

Karsten is a Capital Pool Company and the grant of the Option to Karsten is intended to constitute the Company's qualifying transaction (the "Qualifying Transaction") under Policy 2.4 of the Exchange. The Company intends to be listed on the Exchange as a Tier 2 mining issuer following completion of the Qualifying Transaction.

The grant of the Option is an arm's length transaction and Karsten does not expect shareholder approval to be required in accordance with Exchange policies.

Mackenzie Property

The Mackenzie Property is an early stage iron-copper property. The property comprises 34 mineral claims that collectively cover 21,000 hectares of Crown land in the Northwest Territories of Canada. The property, which is 100% owned by Metallis, is situated 190 kilometers west of the town of Norman Wells on the Mackenzie River.

Technical information with respect to the Mackenzie Property will be included in Karsten's Filing Statement.

Option Terms

Upon and subject to receipt of Exchange acceptance of the Option Agreement, Karsten will have the right, but not the obligation, to acquire a 100% interest in the Mackenzie

Property by:

a.  paying a total of approximately $300,000 to Metallis on or before the
    dates specified below:
    i.  $25,000 upon execution of the Option Agreement, which payment has
        been made;
    i.  a further $21,455.55 for the cost of extensions on several claims
        expiring in 2014 on the date the Exchange gives notice of acceptance
        of the Qualifying Transaction (the "Acceptance Date"); and
    i.  a further $250,000 on or before the fifth anniversary of the
        Acceptance Date;
b.  incurring a total of $200,000 in expenditures on the Mackenzie Property
    on or before the fifth anniversary of the Acceptance Date;
c.  issuing 250,000 common shares to Metallis on or before the fifth
    anniversary of the Acceptance Date; and
d.  paying the annual assessment fees due to the Government of the Northwest
    Territories, or incurring eligible exploration expenses, in respect of
    the Mackenzie Property in order to keep the property concessions in good

Metallis will retain a 2% net smelter returns royalty on the Property (the "Royalty Interest"). Under the terms of the Option Agreement, Karsten may elect to purchase all or a part of the Royalty Interest for a purchase price of $500,000 for each one-half of one percent of the Royalty Interest up to an aggregate purchase price of $2,000,000.

Private Placement

Karsten intends to carry out a non-brokered private placement for gross proceeds of not less than $300,000 (the "Private Placement") in order to satisfy the terms of the Option Agreement.

The proceeds from the Private Placement will be used to finance the recommended Phase 1 work program on the Mackenzie Property and for general working capital.

All securities issued pursuant to the Private Placement will be subject to a four month hold period from the date of issue and may be subject to escrow in accordance with the policies of the Exchange.

Management of Resulting Issuer

The current directors of Karsten will remain as directors and David Dupre will be appointed as a director of Karsten following completion of the Qualifying Transaction.

Upon completion of its Qualifying Transaction, the following people will be directors and officers of the Resulting Issuer.

Murray Oliver - President, C.E.O, Director

Murray Oliver has a B.A. in economics and over 19 years of experience as a consultant providing corporate finance, restructuring and shareholder communication services to both private and public companies. Mr. Oliver has worked with the Pemcorp Group of Companies since 1995 and has served as Vice President of Business Development since 2000. He is currently the director of corporate communications for Dynasty Metals & Mining Inc. (TSX: DMM), and a director of Terrace Energy Corp. (TSXV: TZR), and Prospero Silver Corp. (TSXV: PSL).

William McCartney- Director

William McCartney received a Bachelor of Arts from Simon Fraser University in 1978 and has been a member of the Institute of Chartered Accountants of British Columbia since 1980. Since 1990, Mr. McCartney has been the President of Pemcorp Management Inc., a private company which provides corporate finance and administrative management services to private and public companies. He is a former founding partner of Davidson & Company LLP, Chartered Accountants (1984-1990). He is currently a member of the local (policy) advisory committee to the TSX Venture Exchange and a director of Mercer International Inc. (TSX: MRI) and Terrace Energy Corp. (TSXV: TZR).

Kay Jessel - Director

Since 2006, Mr. Jessel has been the President of Eurxchange Consulting Ltd., a private company that provides finance and management services. Mr. Jessel has extensive experience with mergers and acquisitions in the natural resource sector. Mr. Jessel holds a degree in Economics from Hamburg University.

Paul Visosky - Director

Mr. Visosky is a Vancouver based solicitor with over 30 years of public and private sector experience. He was a member of the B.C. Securities Commission's Securities Law Advisory Committee for 7 years and is currently a member of the local (policy) advisory committee to the TSX Venture Exchange. Mr. Visosky has served as a director and officer of a number of companies listed on the TSX Venture Exchange.

David Dupre - Director

David DuPre is a professional geologist with over 45 years of experience in mineral and petroleum exploration, major project management and corporate administration of public companies. Mr. DuPre has worked and collaborated with both major and junior mining companies in projects spanning North and South America, Europe, Africa and Asia. Mr. DuPre brings a disciplined scientific approach to mineral exploration using his excellent managerial skills. He has planned and supervised many projects in Mackenzie Mountains and Arctic Islands. While President of Firesteel Resources Inc., he acquired the ROK Property (adjacent to the Red-Chris Mine) and the Copper Creek property in the very active Sheslay Camp. He was intimately involved in the discovery of the Eskay Creek mine as project manager while at Keewatin Engineering - a major Mining Consultancy that he co-founded.

Jennie Choboter CA - Chief Financial Officer and Corporate Secretary

Ms. Choboter is a Chartered Accountant with over 30 years of extensive international experience in financial management and general corporate governance. She obtained her Bachelor of Commerce degree from the University of Calgary in 1976. Ms. Choboter has been providing accounting consulting services since March 1998. She has held a number of senior financial management positions in a wide variety of industries including natural resources, technology, pulp and paper and insurance.


Sponsorship of a Qualifying Transaction of a Capital Pool Company is required by the Exchange unless exempt in accordance with Exchange policies. Karsten intends to apply for an exemption from sponsorship requirements; however, there is no assurance that it will be able to obtain this exemption.

Trading Halt

In accordance with Exchange policies, the Company's common shares are currently halted from trading and will remain so unless the documentation required by the Exchange for the proposed Qualifying Transaction is provided to the Exchange, and may remain halted until completion of the proposed Qualifying Transaction.

About the Company

Karsten is designated as a Capital Pool Company by the Exchange. It has not commenced commercial operations and has no assets other than cash. The only business of the company is the identification and evaluation of assets or businesses with a view to completing a "Qualifying Transaction" in accordance with Exchange Policy 2.4 - Capital Pool Companies.

Further details concerning the Mackenzie Property, the Option Agreement and the Private Placement will be disclosed in a filing statement to be prepared by Karsten and filed on SEDAR.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is 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 a capital pool company should be considered highly speculative.

The TSX Venture Exchange 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 the 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.

This news release includes certain forward-looking statements and forward-looking information (together, "forward-looking statements"). All statements other than statements of historical fact included in this release, including, without limitation, statements regarding completion of the grant of the Option, the Private Placement and other future plans and objectives of the Company. There can be no assurance that such statements will prove to be accurate and actual results and future events may vary from those anticipated in such statements. Important risk factors that could cause actual results to differ materially from the Company's plans or expectations include risks related to Exchange acceptance of the transactions described above, regulatory changes, other risks normally associated with private placements and Qualifying Transactions, and risks associated with mineral exploration, including the risk that actual results of exploration will be different from those expected by management. The forward-looking statements in this news release were developed based on the expectations of management, including that Exchange acceptance for the proposed transactions will be provided and the other risks described above will not materialize. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as otherwise required by applicable securities legislation.

Karsten Energy Corp.
Murray Oliver
President and Chief Executive Officer

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