Royal Helium Signs Term Sheet with Senior Canadian Lenders for $17.5 Million Credit Facility and Announces $5.5 Million Bought Deal Convertible Debenture Private Placement Fully Financing Royal Helium to First Helium Production in Q2 2023

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SASKATOON, SK, Dec. 21, 2022 /CNW/ - Royal Helium Ltd. (TSXV: RHC) (TSXV: RHC.WT) (OTCQB: RHCCF) ("Royal" or the "Company") is pleased to announce that it has signed term sheets with the Business Development Bank of Canada ("BDC") and a Schedule 1 Bank, acting pari passu for a non-revolving credit facility ("Credit Facility") in the amount of C$15,000,000. The loans bears interest at a rate of 3.00% above the bank's Prime Lending Rate ("Prime"). Proceeds of the Credit Facility will be used for development and production facilities currently under construction for the Steveville helium field in Alberta, Canada. The Schedule 1 Bank will also provide a revolving Demand Operating Loan of C$2,500,000 ("Operating Line") for working capital purposes with a floating interest rate of 2.00% per annum above Prime. Royal Helium is also pleased to announce that it has entered into an agreement with Eight Capital for a $5.5 million bought deal private placement of Subscription Receipts Convertible Debenture units (as discussed further below).

Mr. Jeff Sheppard, the Chief Financial Officer of Royal states, "We are pleased to have achieved this major milestone of being fully funded to first production, positioning Royal to deliver helium to our space exploration off-take partner in Q2 2023. Securing debt financing in the traditional bank market through a Canadian Schedule 1 bank and BDC at such favourable rates alongside the bought-deal financing not only enhances returns to shareholders but also validates the quality and economics of our Steveville project. Furthermore, this initial project financing will simplify Royal's access to future production facility construction financing."

The debt facilities, combined, are subject to a one-time C$87,500 fee and an annual fee of C$6,000. Under a floating rate option, loans drawn on the Credit Facility can be repaid at any time without penalty. The facilities will be secured by a general security agreement and is subject to customary loan covenants.

Completion of the Credit Facility and Operating Line is subject to execution of definitive agreements and regulatory approvals and is expected to close in January 2023.

Bought Deal Convertible Debenture Private Placement

Royal Helium is also pleased to announce that it has entered into an agreement with Eight Capital, pursuant to which Eight Capital has agreed to purchase for resale, on a bought deal private placement basis, 5,500 non-transferable subscription receipts ("Subscription Receipts") exchangeable into unsecured convertible debenture units of the Company (the "Debenture Units"), with a maturity date of December 31, 2025 (the "Maturity Date"). Each Debenture Unit shall consist of one 14% unsecured convertible debenture in the principal amount of $1,000 (a "Convertible Debenture") and 3,846 common share purchase warrants (each, a "Warrant"). Each Warrant shall entitle the holder thereof to purchase one common share ("Share") of the Company (a "Warrant Share"), at an exercise price of $0.32 per Warrant Share for a period of 36 months. The Company may elect to accelerate the expiry date of the Warrant in the event the volume-weighted average trading price (the "VWAP") exceeds $0.65 per Share for 20 consecutive trading dates.

The Convertible Debentures will be convertible at the holder's option into Shares at any time prior to the close of business on the earlier of the business day immediately preceding the Maturity Date and the date fixed for redemption of the Convertible Debentures at a conversion price of $0.26 per Share (the "Conversion Price"), representing an approximate 17% premium to the current price of the Shares.

The gross proceeds from the convertible debenture offering shall be held in escrow pending execution of definitive credit agreements in connection with the Credit Facility. The interest on the Convertible Debentures will accrue commencing on the escrow release date at a rate of 14% per annum and shall be payable semi-annually in arrears, beginning on June 30, 2023. At the Company's option, provided no event of default has occurred and is continuing and provided all applicable regulatory approvals have been obtained (including any required approval of any stock exchange on which the Shares are listed), interest may be paid in cash or paid-in-kind through the issuance of freely tradable Shares. The number of Shares to be issued in satisfaction of the Company's interest obligation shall be calculated based on the four day VWAP of the Shares commencing 2 trading days immediately prior to the notice from the Company that it has elected to satisfy its interest obligations in Shares.

The net proceeds of the Offering will be used to fund capital expenditures related to the Steveville production facilities and for general corporate purposes.

The Subscription Receipts and the Convertible Debentures and the Warrants comprising the Debenture Units (and any Shares issuable upon conversion or exercise thereof, as applicable) will be subject to a statutory hold period in Canada of four months and one day following the Closing Date. The offering is subject to normal regulatory approvals, including approval of the TSX Venture Exchange, and is expected to close on or about January 10, 2023.

Cancellation of Previously Announced Credit Facility

Royal announces that the previously announced project financing of US$20 million has been cancelled (see news release dated November 22, 2022 for details).

About Royal Helium Ltd.

Royal controls over 1,000,000 acres of prospective helium land across southern Saskatchewan and southeastern Alberta. All of Royal's lands are in close vicinity to highways, roads, cities and importantly, close to existing oil and gas infrastructure, with a significant portion of its land near existing helium producing locations. With stable, rising prices and limited, non-renewable sources for helium worldwide, Royal intends to become a leading North American producer of this high value commodity. Royal's helium reservoirs are carried primarily with nitrogen. Nitrogen is not considered a greenhouse gas ("GHG") and therefore has a low GHG footprint when compared to other jurisdictions that rely on large scale natural gas production for helium extraction. Helium extracted from wells in Saskatchewan and Alberta can be up to 99% less carbon intensive than helium extraction processes in other jurisdictions.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION.

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 news release.

This news release includes certain statements that may be deemed to be "forward-looking statements". All statements in this news release, other than statements of historical facts, that address events or developments that management of the Company expects, are forward-looking statements, including anticipated deliveries under Royal's offtake agreement, anticipated drilling of the Nazare horizontal well and other drilling plans, the intended construction of a Steveville Helium Processing Plant and pipelines and accelerated development of the Company's other assets. In addition, all references to resources are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the resources described exist in the quantities predicted or estimated and can be profitably produced in the future. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, volatility in production rates, environmental risks, inability to obtain drilling rigs or other services, capital expenditure costs, including drilling, completion and facility costs, unexpected decline rates in wells, wells not performing as expected, delays resulting from or inability to obtain required third party and regulatory approvals, ability to access sufficient capital from internal and external sources, inability to access gas transportation and processing infrastructure, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, and the uncertainty of estimates and projections of production, costs and expenses. Although management believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance, and actual results or developments may differ materially from those in the forward-looking statements. The Company undertakes no obligation to update these forward-looking statements if management's beliefs, estimates or opinions, or other factors, should change. Factors that could cause actual results to differ materially from those in forward-looking statements, include market prices, exploration and development successes, continued availability of capital and financing, and general economic, market or business conditions. Please see the public filings of the Company at www.sedar.com for further information and risks applicable to the Company.

SOURCE Royal Helium Ltd.

For more information, please contact the Company. Andrew Davidson, President and CEO, Royal Helium Ltd., 1 [phone], [email protected]; Dean Nawata, Manager of Corporate Development, Royal Helium Ltd., [phone], [email protected]