Magna Gold Provides an Update to its Previously Announced Non-Brokered Private Placement of C$10,000,000 Convertible Debentures with Delbrook Capital Advisors Inc.

Rhea-AI Summary

Magna Gold Corp. has announced an update on its non-brokered private placement of C$10,000,000 in convertible debentures with Delbrook Capital Advisors. The debentures are convertible into common shares at a price of C$1.25 per share. Interest on the debentures is 8.5% per annum for the first 24 months, reducing to 6.5% upon delivery of the required security. The placement is pending approval from the TSX Venture Exchange and is expected to close around August 19, 2021.

Positive

• Secured a private placement of C$10,000,000, enhancing liquidity.
• Debentures convertible at C$1.25 per share, potentially increasing shareholder value.
• Initial interest rate of 8.5% could attract investors looking for income.

Negative

• Potential dilution of existing shareholders if debentures are converted.
• Interest rate drops to 6.5% after security delivery, reducing income potential.

TORONTO, Aug. 9, 2021 /PRNewswire/ - Magna Gold Corp. (TSXV: MGR) (OTCQB: MGLQF) ("Magna" or the "Company") is pleased to provide an update to its previously announced non-brokered private placement of C$10,000,000 convertible debentures (the "Debentures") with Delbrook Capital Advisors Inc. ("Delbrook").  The principal amount of the Debentures is convertible, at the election of Delbrook, into common shares of the Company at a conversion price of C$1.25 per common share.  The interest on the Debentures is convertible, at the election of Delbrook and subject to the approval of the TSX Venture Exchange, into either cash or common shares of the Company based on the closing price on the day prior to the issuance of a press release relating to the applicable interest payment date and will be paid in full, including in the event of early conversion. The Company will pay Delbrook a 1.25% arrangement fee on closing of the private placement.  The private placement is subject to the approval of the TSX Venture Exchange.

The Debentures mature in 24 months from the closing date. The Debentures will initially be unsecured obligations of the Company and will bear interest at a rate of 8.5% per annum until the date, on or before September 30, 2021 (or such later date as may be agreed by the Company and Delbrook), that the security contemplated by the Debentures is delivered to Delbrook. Following such delivery, if applicable, the Debentures will bear interest at a rate of 6.5% per annum. The completion of the private placement is subject to TSX Venture Exchange approval and is expected to be completed on or about August 19, 2021.

About Magna Gold Corp
Magna is a Mexico focused gold/silver production company focused on acquiring, exploring, developing and operating quality precious metals properties in Mexico. It is committed to advancing its 100% owned flagship San Francisco Mine and other highly prospective mineral properties located in Sonora and in Chihuahua. The primary strength of the Company is the team of highly experienced mining professionals with a proven track record of developing properties in Mexico from discovery to production. Magna employs community members and services in its operations.

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 policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Statements
This News Release includes certain "forward-looking statements" which are not comprised of historical facts. Forward-looking statements include estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as "believes", "anticipates", "expects", "estimates", "may", "could", "would", "will", or "plans". Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Although these statements are based on information currently available to the Company, the Company provides no assurance that actual results will meet management's expectations. Risks, uncertainties and other factors involved with 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 news release includes, but is not limited to, the Company's objectives, goals or future plans, exploration results, potential mineralization (including estimates of measured and indicated resources, inferred resources and probable reserves), exploration and mine development plans, production (including gold production expectations and guidance and expectations of becoming a mid-tier producer), processing and mining expectations (including statements regarding expansion and advancement of assets) and strip ratio trends and expectations . Factors that could cause actual results to differ materially from such forward-looking information include, but are not limited to failure to identify mineral resources, failure to convert estimated mineral resources to reserves, the inability to complete a feasibility study which recommends a production decision, the preliminary nature of metallurgical test results, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, political risks, uncertainties relating to the availability and costs of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects, capital, operating and reclamation costs varying significantly from estimates and the other risks involved in the mineral exploration and development industry,  risks related to the effects of COVID-19 on the Company; and those risks set out in the Company's public documents filed on SEDAR. Although the Company believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames 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, other than as required by law.

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SOURCE Magna Gold Corp.

FAQ

What is the purpose of Magna Gold's C$10,000,000 convertible debentures?

The placement aims to enhance liquidity for the company's operations.

What is the conversion price for the convertible debentures?

The convertible debentures can be converted into common shares at C$1.25 each.

When is the expected closing date for the private placement?

The private placement is expected to close on or about August 19, 2021.

What is the initial interest rate on the convertible debentures?

The initial interest rate is 8.5% per annum until security delivery.

What risks are associated with the convertible debentures?

There is a risk of dilution for existing shareholders if the debentures are converted.