REG - Guanajuato Silver Co - Statement re. new $5,000,000 facility with OCIM

Guanajuato SilverAnnouncement

17/03/2023 09:30

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RNS Number : 3656T  Guanajuato Silver Company Ltd.  17 March 2023

 

 

Guanajuato Silver Arranges New US$5,000,000 Facility with OCIM

~ New Facility Fully Repays and Replaces Current OCIM Facility ~

March 16, 2023 - Vancouver, British Columbia - Guanajuato Silver Company Ltd.
(the "Company" or "GSilver") (TSXV:GSVR)(AQUIS:GSVR)(OTCQX:GSVRF) is pleased
to announce that the Company has arranged a new US$5,000,000 silver and gold
pre-payment facility (the "New Pre-Payment Facility") with Swiss-based
precious metals trading firm, OCIM Metals & Mining S.A. ("OCIM"); upon
closing, the New Pre-Payment Facility will fully replace the current OCIM gold
and silver pre-payment facility (see Guanajuato Silver previous news release
dated May 9, 2022 - "GSilver Draws US$7.5M Silver/Gold Pre-Payment Facility
from OCIM" (https://pr.report/Ncws7m6E) , which has a balance remaining of
approximately US$5.5M as of the date hereof. The Company has reduced its
obligations to OCIM from a total of approximately US$10.5M in November of 2023
to US$5.0M under this new facility.  Any shortfall in the net proceeds from
the New Pre-Payment Facility to repay the existing pre-payment facility will
be funded out of the Company's current working capital.

The New Pre-Payment Facility is for US$5,000,000 and has a 19-month term,
which includes an initial three-month delivery-free grace period, and is then
repayable over the following 16 months by the Company delivering a set number
of silver and gold ounces based on a 12% discount to the LBMA fix price for
silver and gold on the date of closing. The New Pre-Payment Facility will be
secured by, among other things, a general security agreement over all present
and after-acquired personal property of the Company, subject to certain
carve-outs, and a share and asset pledge over the Company's El Cubo complex in
favour of OCIM. Subject to acceptance of the TSX Venture Exchange, closing of
the New-Prepayment Facility is expected to take place on or before March 31,
2023.

Lisa Dea, CFO of GSilver, said: "The new pre-payment facility with OCIM
provides additional financial flexibility for our balance sheet as we advance
ramp up operations across all four of our producing silver mines in Mexico.
The support of our partners at OCIM has proven to be critical to our success
and we look forward to continued collaboration with them as we grow Guanajuato
Silver into a mid-tier silver producer."

 

The Company also announces that it has entered into an amendment agreement
with Exploraciones Mineras Del Bajio S.A. de C.V. ("EMBSA"), the original
vendor of the Company's El Pinguico gold and silver project in Guanajuato,
Mexico, to extend the deadline for payment of the final option payment of
C$625,000 required to eliminate three of the underlying royalties on the El
Pinguico project held by EMBSA as more particularly described in the Company's
news release dated November 13, 2020 - "VanGold Amends El Pinguico Royalties
Purchase Agreement."
(https://www.gsilver.com/news/2020c/598-anoldmendslinguicooyaltiesurchasegreement20201113)
Under the terms of the amendment agreement, the final option payment of
C$625,000 has been split into two equal payments of C$312,500 each, of which
the first payment will be made to EMBSA immediately with the second payment
now due on or before October 16, 2023.  In addition, the Company purchased
all of EMBSA's interest in its 15% royalty on net profits derived from the
surface stockpile of historically mined (but unprocessed) mineralized material
at El Pinguico for a purchase price of US$70,000.  Accordingly, upon payment
of the final option payment of C$312,500 to EMBSA on or before October 16,
2023, the only royalty that will remain over the El Pinguico project will be a
15% net profits royalty on the underground stockpile of previously mined
material in favour of EMBSA.

Hernan Dorado Smith, the Chief Operating Officer and a director of GSilver is
also the Managing Director and a principal shareholder of EMBSA, and as such
the amendment agreement constitutes a "related party transaction" for the
purposes of Multilateral Instrument 61-101, Protection of Minority Security
Holders in Special Transactions ("MI 61-101").  GSilver has relied upon
exemptions from the requirement to obtain a formal valuation and seek minority
shareholder approval for its royalty purchase option agreement with EMBSA on
the basis that the fair market value of Mr. Smith's interest in such option
agreement, as amended, is less than 25% of GSilver's market capitalization.

 

About Guanajuato Silver

GSilver is a precious metals producer engaged in reactivating past producing
silver and gold mines in central Mexico. The Company produces silver and gold
concentrates from the El Cubo Mine, Valenciana Mines Complex, and the San
Ignacio mine; all three mines are located within the state of Guanajuato,
which has an established 480-year mining history. Additionally, the Company
produces silver, gold, lead, and zinc concentrates from the Topia mine in
northwestern Durango. With four operating mines and three processing
facilities, Guanajuato Silver is one of the fastest growing silver producers
in Mexico.

 

ON BEHALF OF THE BOARD OF DIRECTORS

"James Anderson"

Chairman and CEO

 

For further information regarding Guanajuato Silver Company Ltd., please
contact:

JJ Jennex, Communications Manager, +1 (604) 723-1433

Email: jjj@gsilver.com

Continue to watch our progress at: www.GSilver.com (http://www.GSilver.com)

 

VSA Capital - AQSE Corporate Adviser

T: +44 (0) 20 3005 5000

Simon Barton - Corporate Finance

Thomas Jackson - Corporate Finance

Andrew Monk - Corporate Broking

David Scriven - Corporate Broking

 

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