Colorado Increases Non-Brokered Financing to $4.73m and Completes Tranche 2 of $2.09m

WEST KELOWNA, BRITISH COLUMBIA--(Marketwired - May 31, 2016) - COLORADO RESOURCES LTD. (TSX VENTURE:CXO) ("Colorado" or the "Company") is pleased to announce that, further to its press release of May 19, 2016, it has completed the second tranche of its non-brokered private placement (the "Offering") for aggregate gross proceeds of $2,091,425. The Offering consists of 9,274,931 (non-flow through) units of the Company (the "NFT Units") at an issue price of $0.35 per Unit and 3,542,334 common shares of the Company that qualify as flow-through shares for purposes of the Income Tax Act (Canada) and 1,771,167 warrants (one share and half a warrant being a "FT Unit") at an issue price of $0.42 per FT Unit.

The initial tranche ("Tranche 1"), which closed effective May 19, 2016, consisted of the issuance of 2,211,430 NFT Units and 2,282,334 FT Units for aggregate gross proceeds of $1,732,580.

The second tranche ("Tranche 2"), which closed effective May 31, 2016, consisted of the issuance of 4,463,500 NFT Units and 1,260,000 FT Units for aggregate gross proceeds of $2,091,425.

The third and final tranche of 2,600,001 NFT Units for proceeds of $910,000 is expected to close on June 1, 2016.

In connection with Tranche 1 and Tranche 2 the Company paid aggregate finders' fees of $182,279 cash and issued to finders 68,880 warrants at an exercise price of $0.35 and 128,119 warrants at an exercise price of $0.42 (collectively the "Finder Warrants"). Each Finder Warrant is otherwise exercisable on the same terms as the warrants issued to investors in the Offering.

For Tranche 2, each NFT Unit consisted of one common share in the capital of the Company (a "NFT Share") and one common share purchase warrant (a "NFT Warrant"), with each NFT Warrant entitling the holder to acquire an additional NFT Share at an exercise price of $0.50 until May 31, 2018.

For Tranche 2, each FT Unit consisted of one flow-through common share in the capital of the Company (a "FT Share") and one-half of one non-transferable non-flow through common share purchase warrant. Each whole warrant (a "NFT Warrant") will entitle the holder to purchase one additional (non-flow through) common share of the Company (a "NFT Share") at an exercise price of $0.60 until May 31, 2018.

The NFT Warrant and FT Warrant terms for Tranche 2 contain an acceleration provision such that if, commencing on October 2, 2016 the closing price of the common shares of the Company on the TSX Venture Exchange is higher than $0.75 for 20 consecutive trading days then on the 20^th consecutive trading day (the "Acceleration Trigger Date") the expiry date of the Warrants may be accelerated to the date that is 20 trading days after the Acceleration Trigger Date by the issuance of a news release announcing such acceleration within two trading days of the Acceleration Trigger Date.