Magna Gold Announces Completion of Debt Settlement with PEAL de Mexico S.A. de C.V.

Rhea-AI Summary

Magna Gold Corp. has successfully completed a debt settlement by issuing 1,660,132 common shares at $0.76 each to PEAL de Mexico S.A. de C.V., totaling US$1,000,000. This transaction reduces Magna's debt from US$4,054,351 to US$3,054,351. The settlement is classified as a related party transaction under MI 61-101, but the company is exempt from formal valuation and minority shareholder approval requirements. Common shares issued will be under a four-month hold period until August 20, 2022.

Positive

• Reduction of debt from US$4,054,351 to US$3,054,351 through share issuance.
• Completion of a debt settlement, improving financial position.

Negative

• Issuance of 1,660,132 shares may dilute existing shareholders' equity.

TORONTO, April 19, 2022 /PRNewswire/ - Magna Gold Corp. (TSXV: MGR) (OTCQB: MGLQF) ("Magna" or the "Company") announces that, further to its news release dated March 18, 2022, the Company has issued an aggregate of 1,660,132 common shares in the capital of the Company ("Common Shares") at a deemed price of $0.76 per Common Share to PEAL de Mexico S.A. de C.V. ("PEAL") in settlement of outstanding debt in the aggregate amount of US$1,000,000 (the "Debt Settlement"). The Debt Settlement was completed pursuant to an amending agreement dated February 22, 2022 between Molimentales del Noroeste S.A. de C.V. ("Molimentales"), a subsidiary of the Company, and PEAL which amended the terms of a settlement agreement dated June 30, 2020 between Molimentales and PEAL (the "Settlement Agreement") to settle US$1,000,000 of the outstanding amount owing by the Company under the Settlement Agreement in exchange for the issuance of Common Shares, thereby reducing the amount owing from US$4,054,351 to US$3,054,351.

The issuance of the Common Shares to PEAL pursuant to the Debt Settlement constitutes a "related party transaction" for the purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is exempt from the requirements to obtain a formal valuation and minority shareholder approval in connection with the Debt Settlement in reliance on sections 5.5(b) and 5.7(1)(a), respectively, of MI 61-101, as no securities of the Company are listed or quoted on the specified markets and, at the time the transaction was agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction exceeded 25% of the Company's market capitalization as calculated in accordance with MI 61-101.

The Common Shares issued pursuant to the Debt Settlement are subject to a four month hold period under Canadian securities laws which will expire on August 20, 2022.

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.

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SOURCE Magna Gold Corp.

FAQ

What debt settlement did Magna Gold announce on April 19, 2022?

Magna Gold announced a debt settlement involving the issuance of 1,660,132 common shares at $0.76 each to PEAL, reducing total debt from US$4,054,351 to US$3,054,351.

How does the debt settlement impact Magna Gold's financial position?

The debt settlement improves Magna Gold's financial position by reducing its outstanding debt by US$1,000,000.

What are the implications of the related party transaction involving Magna Gold?

The transaction is exempt from formal valuation and minority shareholder approval requirements, easing the settlement process for Magna Gold.

When will the common shares issued in the debt settlement be freely tradeable?

The common shares issued in the debt settlement are subject to a hold period that expires on August 20, 2022.