Kuya Silver Announces Closing of Convertible Financing

Rhea-AI Summary

Kuya Silver (CSE: KUYA) (OTCQB: KUYAF) has closed a convertible financing agreement with L1 Capital Global Opportunities Master Fund. The deal includes:

1. A CAD$1,000,000 secured convertible debenture (face value CAD$1,111,111) with an 8% annual interest rate and 15-month term.

2. 959,609 common share purchase warrants exercisable at CAD$0.435 until April 9, 2027.

3. An option for an additional CAD$500,000 debenture with similar terms.

The financing provides additional flexibility for Kuya Silver's Bethania Project in Peru. The debentures are convertible into common shares at the closing price of each fiscal quarter. Kuya can repay early at 110% of the principal amount plus accrued interest.

Positive

• Secured CAD$1,000,000 in financing to support silver mining operations at Bethania Project
• Option for additional CAD$500,000 financing available
• Convertible debenture structure provides flexibility for both company and investor
• No statutory hold period on securities, potentially improving liquidity

Negative

• 10% original issue discount on debentures increases effective cost of capital
• Potential dilution for existing shareholders if debentures are converted to common shares
• 8% annualized interest rate on debentures adds to company's debt servicing costs
• Early repayment option at 110% of principal amount increases potential cost of financing

Toronto, Ontario--(Newsfile Corp. - October 10, 2024) - Kuya Silver Corporation (CSE: KUYA) (OTCQB: KUYAF) (FSE: 6MR1) (the "Company" or "Kuya Silver") announces it has closed its convertible financing agreement (the "Agreement") with L1 Capital Global Opportunities Master Fund (the "Investor"). Under the terms of the Agreement, the Investor subscribed for, and the Company issued, a unit ("Unit") comprised of a secured convertible debenture of the Company in the principal amount of CAD$1,000,000 (face value of CAD$1,111,111) (the "Debenture") and 959,609 common share purchase warrants of the Company (each a "Warrant") exercisable at CAD$0.435 until April 9, 2027. The Debenture includes an original issue discount of 10% in favour of the Investor. The Company received net proceeds of CAD$1,000,000, less a 2% transaction fee to the Investor and applicable closing costs. The net proceeds of the financing will provide additional financial flexibility as the Company ramps up its silver mining operations at the Bethania Project, Peru.

The Agreement also contemplates that, at the option of the Company, and provided at the time that the outstanding principal amount of the Debenture is less than CAD$600,000 and the trading price of the common shares of the Company (each a "Common Share") is more than CAD$0.25 per share, the Investor shall subscribe for an additional unit ("Additional Unit") comprised of an additional secured convertible debenture of the Company in the principal amount of CAD$500,000 (face value of CAD$555,555) (the "Additional Debenture") and a number of Common Share purchase warrants of the Company (each an "Additional Warrant"). The Additional Debenture includes an original issue discount of 10% in favour of the Investor, with the Company to receive net proceeds of CAD$500,000, less a 2% transaction fee to the Investor and applicable closing costs. The number of Additional Warrants comprising the Additional Unit will be equal to the face value of the Additional Debenture divided by the 10-day volume weighted average trading price of the Common Shares prior to the issuance of the Additional Unit, multiplied by 33%. Each Additional Warrant may be exercised to acquire a Common Share for a period of 30 months from the date of issuance. The exercise price of the Additional Warrants will be equal to 130% of the closing price of the Common Shares on the Canadian Securities Exchange (the "CSE") on the day prior to the date of issuance of the Additional Warrants. The subscription for the Additional Unit shall be completed no later than January 17, 2025, being the later of December 15, 2024 and 100 days following issuance of the Unit.

Each of the Debenture and Additional Debenture will have a 15-month term from the date of issuance and will bear an annualized interest rate of 8% calculated daily and paid quarterly in cash or in Common Shares, at the option of the Company. At the option of the Investor, the principal amount of each of the Debenture (up to a maximum of $1,000,000) and Additional Debenture (up to a maximum of $500,000), together with accrued interest on such principal amounts, are convertible into Common Shares of the Company at a conversion price equal to the closing price of the Common Shares on the CSE on the last trading day in each of the Company's fiscal quarters. The Company may elect to repay all or part of the Debenture and/or the Additional Debenture prior to the respective maturity dates at an amount equal to 110% of the respective principal amounts, plus accrued interest and interest to the end of the quarter in which the repayment was made. Upon receipt of a notice of repayment, the Investor shall have the option to exclude up to one-third of the then outstanding principal amount of the Debenture and/or the Additional Debenture from such early repayment.

The securities underlying the Unit and Additional Unit will not be subject to any statutory hold period under applicable Canadian securities laws.

About Kuya Silver Corporation

Kuya Silver is a Canadian‐based, growth-oriented mining company with a focus on silver. Kuya Silver operates the Bethania silver mine in Peru, while developing district-scale silver projects in mining-friendly jurisdictions including Peru and Canada.

For more information, please contact:

David Stein, President and Chief Executive Officer
Telephone: (604) 398‐4493
info@kuyasilver.com
www.kuyasilver.com

Reader Advisory

This news release contains statements that constitute "forward-looking information," including statements regarding the plans, intentions, beliefs, and current expectations of the Company, its directors, or its officers with respect to the future business activities of the Company. The words "may," "would," "could," "will," "intend," "plan," "anticipate," "believe," "estimate," "expect," "must," "next," "propose," "new," "potential," "prospective," "target," "future," "verge," "favourable," "implications," and "ongoing," and similar expressions, as they relate to the Company or its management, are intended to identify such forward-looking information. Without limiting the generality of the foregoing statements, any discussion regarding the proposed use of the proceeds of the financing and the Company's business operations, is forward-looking information. Investors are cautioned that statements including forward-looking information are not guarantees of future business activities and involve risks and uncertainties, and that the Company's future business activities may differ materially from those described in the forward-looking information as a result of various factors, including but not limited to fluctuations in market prices, successes of the operations of the Company, continued availability of capital and financing, and general economic, market, and business conditions. There can be no assurances that such forward-looking information will prove accurate, and therefore, readers are advised to rely on their own evaluation of the risks and uncertainties. The Company does not assume any obligation to update any forward-looking information except as required under the applicable securities laws.

Neither the CSE nor the Canadian Investment Regulatory Organization of Canada 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/226301

FAQ

What is the total amount of convertible financing secured by Kuya Silver (KUYAF) in this agreement?

Kuya Silver (KUYAF) secured an initial CAD$1,000,000 in convertible financing, with an option for an additional CAD$500,000, totaling a potential CAD$1,500,000.

What is the conversion price for the debentures issued by Kuya Silver (KUYAF)?

The conversion price for the debentures is equal to the closing price of Kuya Silver's (KUYAF) common shares on the CSE on the last trading day of each fiscal quarter.

When do the warrants issued by Kuya Silver (KUYAF) in this financing expire?

The 959,609 common share purchase warrants issued by Kuya Silver (KUYAF) are exercisable until April 9, 2027.

What is the interest rate on the convertible debentures issued by Kuya Silver (KUYAF)?

The convertible debentures issued by Kuya Silver (KUYAF) bear an annualized interest rate of 8%, calculated daily and paid quarterly in cash or common shares.