Bear Creek Mining Finalizes Agreement for Mercedes Mine Deferred Payment to Improve Its Balance Sheet and Yield Savings of US$6.6 Million over the Next Twelve Months

Vancouver, British Columbia--(Newsfile Corp. - July 5, 2023) - Bear Creek Mining Corporation (TSXV: BCM) (OTCQX: BCEKF) (BVL: BCM) (the "Company") is pleased to announce that it has executed documentation with Equinox Gold Corp. ("Equinox Gold") to defer a US$26 million current liability by issuing a five year convertible promissory note (the "Note"). Payment of the Note will satisfy the final purchase price installment (the "Deferred Payment") for the Mercedes Gold Mine in Sonora, Mexico ("Mercedes").

Eric Caba, President and CEO of Bear Creek Mining states, "Finalizing the Deferred Payment agreement improves our balance sheet by changing a US$26 million current liability into a long term obligation, and will reduce our debt service costs by US$548,000 per month over the next twelve months. The financial flexibility this provides will allow us to focus Mercedes' cash flow on increasing gold production and on growth initiatives at Mercedes and at our Corani silver project in Puno, Peru."

The Agreement

The Company has entered into an agreement (the "Agreement") dated June 30, 2023 with Premier Gold Mines Limited ("Premier"), a subsidiary of Equinox Gold, to convert approximately US$26 million (the "Principal") in near-term payment obligations into the Note (previously described as a 'convertible debenture' in the Company's May 30, 2023 news release). Issuing the Note is subject to compliance with applicable Canadian securities laws, the receipt of Shareholder Approval (as defined below) and TSX Venture Exchange ("TSXV") acceptance. The Note will be used to settle the US$25 million Deferred Payment pursuant to the share purchase agreement dated as of December 16, 2021 (as amended, restated or otherwise modified, the "Mercedes SPA") between, inter alios, the Company and Premier for the acquisition of Mercedes. In connection with the issuance of the Note, Premier and the Company intend to amend and restate the shareholder's agreement dated April 21, 2022 (the "Amended SHA") such that, among other things, Premier shall have the right to nominate one individual to the board of directors of the Company (the "Board").

The Company intends to hold a meeting of its shareholders (the "Special Meeting") within 85 days from the date hereof (the "Outside Date") to obtain disinterested shareholder approval for the Note as further discussed below (the "Shareholder Approval"). In the event that Shareholder Approval is not obtained before the Outside Date, the Note and the Amended SHA will terminate, the Company's obligations regarding the Deferred Payment under the Mercedes SPA will remain in full force and effect, and any amounts paid by the Company in connection with the Deferred Payment, including any interest payments made since October 26, 2022, shall automatically be applied against the Deferred Payment.

The Note

The Note provides for the conversion of the Deferred Payment into a secured, convertible, interest-bearing promissory note. The Principal reflects the Deferred Payment less US$1.4 million in prior payments and approximately US$2.5 million in accrued interest since October 26, 2022. The Note will mature on the date that is five years following the date of issuance of the Note (the "Maturity Date") with all of the outstanding Principal and accrued and unpaid interest due on the Maturity Date. Interest will accrue monthly on the unpaid Principal at a rate equal to 7% per annum starting on the last day of the month following the month of issuance of the Note and on the last day of each month thereafter, at an approximate amount of US$152,000 per month.

The Note will be secured by first and second lien pledges on certain of the Company's equity interests (of which the first lien pledge is shared pari passu with certain security held by the Company's existing creditors).Pursuant to the Amended SHA, Premier, for so long as it owns at least 10% of the issued and outstanding common shares of the Company ("Common Shares"), shall have the right to nominate one individual to the Board.

At any time at or prior to the Maturity Date, Premier may elect to convert the unpaid Principal into Common Shares at a price per share equal to CAD$0.73 (the "Conversion Price"); such amount being 1.25 times the volume-weighted average price on the TSXV ("VWAP") of the Common Shares for the 10 trading-day period ending on May 29, 2023.

Subject to Premier's conversion right, the Company may elect to prepay any portion of the Note at any time after the second anniversary of the date of issuance of the Note and before the Maturity Date; provided that, if at the time of such voluntary prepayment, the VWAP of the Common Shares for the 10 trading-day period ending on the last trading day before the date of such prepayment is greater than the Conversion Price, a top-up cash payment representing the option value from the difference between these amounts shall be paid by the Company to Premier in addition to the principal amount prepaid.

Effectiveness of the Note

Pursuant to the Agreement, the effectiveness of the respective covenants, agreements, and obligations of each party under the Note and the Amended SHA are subject to certain conditions. The issuance of the Note will constitute a "related party transaction" for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Accordingly, pursuant to the requirements of MI 61-101, the Company will be seeking approval to issue the Note from disinterested shareholders at the Special Meeting.

Approvals and Regulatory Considerations

MI 61-101 Requirements

Premier is a "related party" of the Company pursuant to MI 61-101 as it has beneficial ownership of, or control or direction over, directly or indirectly, securities of the Company carrying more than 10% of the voting rights attached to all of the Company's outstanding securities. The issuance of the Note will constitute a "related party transaction" under MI 61-101 because it is a transaction in which the Company materially amends the terms of an outstanding obligation owed to a related party and the Company will provide security for a liability of a related party.

Neither the Company nor any of its officers or directors, after reasonable inquiry, are aware of any prior valuations or bona fide offers that have been completed or received by the Company in the past 24 months in respect of the Company that relate to the subject matter of or are otherwise relevant to the Note.

Exemptions from Formal Valuation Requirements

The Company will rely upon the exemption from the formal valuation requirement of MI 61-101 which is available to it.

Minority Shareholder Approval

The Company will seek Shareholder Approval of the Note pursuant to section 5.6 of MI 61-101. In determining minority approval for a related party transaction, the Company is required to exclude the votes attached to Common Shares that, to the knowledge of the Company or any "interested party" or their respective directors and senior officers, after reasonable inquiry, are beneficially owned or over which control or direction is exercised by "interested parties" and their "related parties" and "joint actors" (all as defined in MI 61-101). At the Special Meeting, the Common Shares held by (i) Premier and (ii) any of its related parties, associates or affiliates, and any joint actors of the foregoing (collectively, the "Excluded Parties") will be excluded for the purposes of determining minority approval of the Note. At the Special Meeting, approval from "disinterested shareholders" (as defined in MI 61-101) shall mean a majority of votes cast by shareholders of the Company, excluding the votes of the Excluded Parties.

To the best of the Company's knowledge, approximately 25,397,160 Common Shares, representing approximately 16.4% of the Company's issued and outstanding Common Shares, are beneficially owned by Premier and its related parties, associates or affiliates as of the date hereof. Accordingly, the 25,397,160 votes attached to the Common Shares beneficially owned, or over which control or direction is exercised, by the Excluded Parties will be excluded from the vote.

Board Review and Approval

The proposed issuance of the Note and the terms thereof were reviewed and unanimously approved by the Board by resolutions passed on June 30, 2023. The Board considers the Note to be offered on reasonable commercial terms that it believes to be superior to terms the Company would reasonably expect if it obtained similar financing from a person dealing at arm's length with the Company. The Board's approval of the Note was based upon its assessment that, among other things, the restructuring of the Deferred Payment pursuant to the Note will: improve the Company's working capital position and reduce monthly interest and Principal repayments; provide the Company with the financial flexibility to better align debt repayments to production and cash flow trends; and allow the Company to better direct its exploration and development drilling programs at Mercedes.

Accordingly, after careful consideration, the Board has determined that the terms of the Note are fair and reasonable insofar as its shareholders are concerned and the approval of the proposed issuance of the Note is in the best interest of the Company.

On behalf of the Board of Directors,
Eric Caba
President & Chief Executive Officer

For further information contact:
Barbara Henderson - VP Corporate Communications
Direct: 604-628-1111
E-mail: barb@bearcreekmining.com
www.bearcreekmining.com

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Cautionary Statement Regarding Forward-Looking Information

This news release contains forward-looking statements regarding: the timing, calling and outcome of the Special Meeting; the Company's reliance on an exemption from the requirement of MI 61-101 to obtain a formal valuation; the Company's ability to obtain all requisite shareholder, TSXV, and regulatory approvals in connection with the Note and Amended SHA; the conversion of the amounts outstanding under the Note into Common Shares; the ability of the Company to meet the monthly interest payments and Principal repayment obligations under the Note; the reduction of debt service costs over the term of the Note; the voluntary repayment of any amount owed under the Note prior to the Maturity Date; the effect of the Note to reduce monthly interest and Principal repayments and its effect to better allow the Company to explore and develop Mercedes; and other statements regarding future plans, expectations, exploration potential, guidance, projections, objectives, estimates and forecasts as well as the Company's expectations with respect to such matters. These forward-looking statements are provided as of the date of this news release, or the effective date of the documents referred to in this news release, as applicable, and reflect predictions, expectations or beliefs regarding future events based on the Company's beliefs at the time the statements were made, as well as various assumptions made by and information currently available to them. In making the forward-looking statements included in this news release, the Company has applied several material assumptions, including, but not limited to: that the Note will be approved by the TSXV and the Company's shareholders, that the Note will be issued as expected in accordance with the Agreement, and that the Company will be able to meet its payment obligations under the Note. Although management considers these assumptions to be reasonable based on information available to it, they may prove to be incorrect. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions on which they are based do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important factors could cause the actual outcomes to differ materially from the expectations expressed in them. These risk factors may be generally stated as the risk that the assumptions expressed above do not occur, but specifically include, without limitation, risks relating to general market conditions and the additional risks described in the Company's latest Annual Information Form, and other disclosure documents filed by the Company on its SEDAR page at www.sedar.com. The foregoing list of factors that may affect future results is not exhaustive. Investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by the Company or on behalf of the Company, except as required by law.

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.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/172373