Magna Gold amends loan agreement with Auramet International LLC

TORONTO, March 4, 2022 /PRNewswire/ – Magna Gold Corp. (TSXV: MGR) (OTCQB: MGLQF) (“Magna” or the “Company”), announces that it has entered into an amending agreement (the “Amending Agreement”) relating to the promissory note and collateral secured property in dated February 11, 2021 (as amended for the first time on September 21, 2021, the “Note”) previously issued by Magna’s subsidiary, Molimentales del Noroeste, SA (“Molimentales”), to Auramet International LLC (the “Lender”), an arm’s length third party. The amendments to the note provide, among other things, for the payment to Molimentales of an additional amount $2,000,000 lender’s loan, which will be governed in accordance with the terms of the amended note (the “New Loan” and, together with the $2,000,000 principal amount previously unpaid under the original note, the “loan”). Proceeds from the new loan are expected to be used for general working capital and other business and operational needs of the Company and its subsidiaries.

Magna Gold Corp logo. (CNW Group/Magna Gold Corp.)

In consideration of the Lender’s agreement to advance the New Loan, the Company has agreed to issue to the Lender 1,500,000 non-transferable common stock purchase warrants of the Company (the “Bonus Warrants”). Each Enhanced Warrant is exercisable into one common share of the Company for a period of one year from the date of issue at an exercise price of CA$0.78 per share. The issuance of the Bonus Warrants remains subject to the approval of the TSX Venture Exchange (the “Exchange”). In addition, the free warrants and all shares issued upon their exercise will be subject to a hold period expiring four months and one day after the date of issue.

Pursuant to the terms of the Amended Note, the Loan will be paid and satisfied by delivery to the Lender, commencing on July 29, 2022of a total of 2,586 ounces of gold (at a gold price of $1,816.80 per ounce) in six equal monthly installments. In addition, pursuant to the terms of the Amended Note, the Loan will bear no interest until an Event of Default occurs, in which event the Lender may, upon notice, cause the principal amount outstanding under the Loan to interest at a rate equal to the lesser of 18% per annum and the highest rate permitted by applicable law. Molimentales’ obligations under the amended note are guaranteed by the Company and its subsidiary, Minera Magna SA de CV (“Minera Magna”), and are secured by a pledge, in favor of the lender, of certain securities of Molimentales and Minera Magna held by the Company.

ON BEHALF OF THE BOARD OF DIRECTORS

Arturo Bonillas
President and CEO

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.

Warnings

This press release contains certain “forward-looking statements” that do not consist of historical facts. Forward-looking statements include estimates and statements that describe the Company’s future plans, objectives or goals, including words that indicate that the Company or management expects a stated condition or result to occur. Forward-looking statements can be identified by words such as “believes”, “anticipates”, “expects”, “estimates”, “may”, “could”, “will”, “will” or “plans”. Because forward-looking statements are based on assumptions and address future events and conditions, they, by their very nature, involve inherent risks and uncertainties. Although these statements are based on information currently available to the Company, the Company does not guarantee that actual results will meet management’s expectations. The risks, uncertainties and other factors involved in forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward-looking information in this press release includes, but is not limited to, statements regarding (i) the Company’s objectives, goals or future expectations (including, with respect to the use of proceeds of the New Loan), (ii) the Exchange’s approval of the Bonus Warrants and their issuance, (iii) the completion of the transactions contemplated herein (including the Exchange’s approval of such transactions), and (iv ) future prepayment obligations of the Company and/or its subsidiaries under the terms of the Note, as amended. These forward-looking statements are based on current expectations and are naturally subject to uncertainties and changes in circumstances that could cause actual results to differ materially. Factors that could cause actual results to differ materially from such forward-looking information include, but are not limited to, the inability to identify mineral resources, the inability to convert estimated mineral resources to reserves, the failure to complete a feasibility study that recommends a production decision, the preliminary nature of metallurgical test results, delays in obtaining or failure to obtain governmental, environmental or other approvals required for projects, political risks, uncertainties relating to the availability and costs of financing needed in the future, changes in stock markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the project development, with capital, operating and rehabilitation costs varying significantly from estimates. and other risks associated with the mining exploration and development industry, risks related to the effects of COVID-19 on the Company; and risks set forth in the Company’s public filings on SEDAR. Although the Company believes that the assumptions and factors used in preparing the forward-looking information contained in this press release are reasonable, undue reliance should not be placed on such information, which speaks only as of the date of this press release, and no assurance can be given that such events will occur within the time frames disclosed or at all. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

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SOURCE Magna Gold Corp.

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