Mr. Jose Bordogna reports

AUSTRAL GOLD OBTAINS TAKEOVER OPTION AT RAWHIDE MINE

Austral Gold Ltd. subsidiary AGNA has agreed to provide $555,000 (U.S.) bridge financing to the Rawhide mine in Nevada and has acquired a takeover option under an agreement with Rawhide Acquisition Holding LLC (RAH), the RAH unit owners and the Rawhide lenders.

Agreement overview

AGNA currently owns 24.74 per cent of RAH. RAH is a privately held Delaware limited liability company that owns Rawhide Mining LLC, a Nevada limited liability company that owns the Rawhide mine in Nevada, United States. AGNA has entered into an agreement with Rawhide, RAH, all of the RAH limited partnership unit owners and the lenders, pursuant to which:

• AGNA has an exclusive period to perform due diligence on RAH and Rawhide during a 21-day period expiring on May 29, 2023.
• AGNA has agreed to provide Rawhide with bridge financing in the amount of $555,000 (U.S.) for the purpose of helping Rawhide finance its current operations while AGNA performs due diligence.
• AGNA has acquired an option to purchase all of the limited partnership units of the other unit owners, other than management of Rawhide who collectively own 0.15 per cent of RAH, for a total of $100.
• The lenders have agreed to restructure the existing Rawhide financial debt, in the amount of approximately $18.5-million (U.S.), on the following terms: (i) upfront payment of $1.5-million (U.S.) cash; (ii) a senior loan of $7.5-million (U.S.) with a fixed interest rate of 7.5 per cent per year, payable in 13 equal semi-annual instalments of principal and interest, with the first payment due on Dec. 31, 2023; (iii) the lenders will keep their guarantees under the existing loan agreement; and (iv) lenders will provide AGNA with a one-year call option, exercisable after Dec. 31, 2024, to cancel the lender's remaining loan and security for a lump sum payment of $4.5-million (U.S.), while during the same period the lenders will have a one-year put option to have the outstanding loan and security precancelled for a lump sum payment of $3-million (U.S.), with a six-month prior notice and the amount cancelled on or June 30, 2025.

The transaction is subject to and conditioned upon (i) satisfactory due diligence by AGNA to review, determine and/or confirm, among other things, the current operational status, that there are no other liabilities than those disclosed in the financial statements of Rawhide (except for those incurred in the ordinary course of business) and current agreements with the insurance company and Nevada; (ii) the execution of definitive agreements and documents in form and substance satisfactory to the parties; (iii) mutually satisfactory amendment of the loan agreement and/or any other agreements to implement the loan restructuring, as applicable; (iv) obtaining Rawhide Mining and Rawhide's management committee and regulatory authorities, including Australian Securities Exchange and TSX Venture Exchange approvals for closing the transaction.

Key transaction terms:

• AGNA to provide short term bridge of $555,000 (U.S.);
• AGNA acquires each option in consideration of providing the bridge, with the right to exercise all options for a total of $100;
• Exclusivity period to implement the loan restructuring during due diligence;
• Break-up fee of $500,000 (U.S.) if the lenders, RAH or Rawhide receive and accept an alternative strategic sale offer within a 30-day period from the expiration of the exclusivity period.

About Austral Gold Ltd.

Austral Gold is a growing gold and silver mining producer building a portfolio of quality assets in the Americas. Austral continues to lay the foundation for its growth strategy by advancing its attractive portfolio of producing and exploration assets.

We seek Safe Harbor.