Magna Gold Reports on Final Payments for the San Francisco Mine Acquisition

Rhea-AI Summary

Magna Gold Corp. has fulfilled a $5 million payment to Argonaut Gold Inc. for the San Francisco Mine acquisition, as outlined in their share purchase agreement. This payment follows a prior agreement and includes a promissory note for an additional $2.675 million due in four installments starting July 6, 2021, with a 5% annual interest rate. CEO Arturo Bonillas expressed optimism for production stability at the mine and enhanced cash flow for the company. Magna aims to strengthen its financial position through this acquisition.

Positive

• Successful completion of $5 million payment enhances credibility.
• Acquisition of San Francisco Mine expected to stabilize production and improve cash flow.

Negative

• Promissory note for $2.675 million indicates ongoing financial obligations.
• Potential financial strain due to interest on promissory note.

TORONTO, May 7, 2021 /PRNewswire/ - Magna Gold Corp. (TSXV: MGR) (OTCQB: MGLQF) ("Magna" or the "Company") is pleased to announce the payment of US$5,000,000 to Argonaut Gold Inc. ("Argonaut") in relation to the acquisition of the San Francisco Mine.   

Pursuant to a definitive share purchase agreement dated March 5, 2020, as amended April 24, 2020, between Mexican subsidiaries of Argonaut and Magna for the acquisition of the San Francisco Mine, Magna was required to pay US$5,000,000 plus a working capital differential by May 6, 2021. Magna has completed the US$5,000,000 payment from working capital and provided a promissory note for the remaining balance of US$2,675,000 to be paid in four monthly installments commencing July 6, 2021 and ending October 6, 2021. The promissory note bears uncompounded interest at a rate of 5% per annum.

Magna President and CEO Arturo Bonillas commented: "We are very pleased to be fulfilling our obligations to Argonaut.  With this payment behind us we are looking forward to reaching a steady rate of production at the San Francisco Mine and strengthening our balance sheet primarily through the cash flow generated by the operations."

About Magna Gold Corp

Magna is a mineral exploration company focused on acquiring, exploring, developing and operating quality precious metals properties in Mexico. 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 on budget and on time.

Magna is a Mexico focused gold/silver exploration company that is committed to advancing its 100% owned highly prospective mineral properties located in Sonora and in Chihuahua. The Company's shares trade on the TSXV under the trading symbol "MGR" and OTCQB under the trading symbol "MGLQF". Magna employs community members and services in its operations.    

ON BEHALF OF THE BOARD OF DIRECTORS

Arturo Bonillas

President and CEO

THIS PRESS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION, NOR SHALL THERE BE ANY OFFER, SALE, OR SOLICITATION OF SECURITIES IN ANY STATE IN THE UNITED STATES IN WHICH SUCH OFFER, SALE, OR SOLICITATION WOULD BE UNLAWFUL.

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 "plan". 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, statements, exploration results, potential mineralization, exploration and mine development plans, production (including the timing of the commencement of commercial production), processing and mining expectations, cash flow generation and balance sheet projections. 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 significance of Magna Gold's $5 million payment to Argonaut Gold Inc. on May 6, 2021?

The payment marks a milestone in the acquisition process of the San Francisco Mine, confirming Magna's commitment to fulfilling its financial obligations.

What are the terms of the promissory note issued by Magna Gold?

Magna Gold issued a promissory note for $2.675 million to be paid in four installments starting July 6, 2021, with 5% annual interest.

How does the acquisition of the San Francisco Mine impact Magna Gold's financial stability?

The acquisition is expected to enhance cash flow and stabilize production, which may strengthen Magna's balance sheet over time.

What is the future payment schedule for Magna Gold related to the San Francisco Mine acquisition?

The remaining payment of $2.675 million is scheduled in four monthly installments ending on October 6, 2021.