Mr. Joseph Ovsenek reports

P2 GOLD CLOSES AGREEMENT TO SETTLE OUTSTANDING DEBT AND CONVERTIBLE DEBENTURE UNIT OFFERING

P2 Gold Inc. has closed the agreement to settle the outstanding debt related to the acquisition of the Gabbs project and the first tranche of the concurrent non-brokered private placement of convertible debenture units for $1,362,000.

Debt settlement

In settling the debt, P2 entered into a termination agreement with Waterton Nevada Splitter LLC, an affiliate of Waterton Precious Metals Fund II Cayman LP, pursuant to which P2 will issue or pay to Splitter (a) $1-million (U.S.) (paid) and 5,231,869 common shares (issued) in the capital of the company at closing at a deemed price of seven cents per share; (b) $125,000 (U.S.) on or before Jan.31, 2025; and (c) $125,000 (U.S.) on or before Jan. 31, 2026.

Splitter currently has beneficial ownership of, and control or direction over, 23,552,403 shares of the company, representing approximately 19.9 per cent of the issued and outstanding shares.

Splitter is a related party of the company. The issuance of the shares and cash payments to splitter described above is considered a related party transaction subject to Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. The company relied on exemptions from the formal valuation and minority shareholder approval requirements provided under sections 5.5(g) and 5.7(1)(e) of Multilateral Instrument 61-101 on the basis that the debt settlement transaction is intended to improve the company's financial position.

In connection with the acquisition of the Gabbs project, P2 granted to Waterton a 2-per-cent net smelter returns royalty on production from the Gabbs project, of which 1 per cent may be repurchased at any time by P2 Gold for $1.5-million (U.S.) and the remaining 1 per cent of which may be repurchased for $5-million (U.S.). Waterton assigned its rights to the Royalty to Franco-Nevada Corp. in June of 2023.

The offering

The company expects to issue up to 1,700 units at a price of $1,000 per unit. Each unit will consist of one convertible debenture with a principal amount of $1,000 and 12,500 share purchase warrants.

The convertible debentures will bear interest at a rate of 7.5 per cent, payable semi-annually on the last day of June and December of each year, commencing on June 30, 2024. Interest will be paid in shares based on the greater of the market price (as defined in the policies of the exchange) and 15-day volume-weighted average price (VWAP) of the shares on the exchange or cash, at the company's election, subject to exchange approval. The convertible debentures will have approximately a two-year term, with the principal amount being due to be repaid in full by the company on Jan. 31, 2026. At any time during the term, the company will have the option to extend the term by up to one additional year on payment of an extension fee to the holders of the convertible debentures in the amount of six month's interest payable in shares based on the greater of the market price and the 15-day VWAP or cash, at the company's election, subject to exchange approval. The convertible debentures are unsecured.

Under the terms of the offering, at any time during the term, a holder may elect to convert the outstanding net principal amount, or any portion thereof, into common shares in the capital of the company at a conversion price of seven cents per share up to Jan. 31, 2025, and 10 cents per share from Feb. 1, 2025, up to Jan. 31, 2026. In the event the company announces a business combination and the 15-day VWAP of the shares on the exchange is greater than seven cents, the company will have the right to require the holders to convert the outstanding net principal amount into units at the conversion price by giving notice to the holders by news release or other form of notice permitted by the convertible debentures that the convertible debentures will convert on the closing of the business combination.

Each warrant shall entitle the holder thereof to acquire one share at an exercise price of 15 cents, for a period of 24 months, provided that, if after the later of four months from the date of issue and conversion, the closing price of the shares on the exchange is equal to or greater than 30 cents for a period of 10 consecutive trading days at any time prior to the expiry time, the company will have the right to accelerate the expiry time by giving notice to the holders of the warrants by news release or other form of notice permitted by the certificate representing the warrants that the warrants will expire at 4:30 p.m. (Vancouver time) on a date that is not less than 15 days from the date notice is given.

The majority of the proceeds of the offering will be used to finance obligations under the termination agreement. The offering will close on completion of documentation and is conditional upon receipt of all necessary regulatory approvals, including the approval of the exchange.

The offering will be offered to accredited investors in all provinces of Canada pursuant to applicable securities laws. The securities issued pursuant to the first tranche will be subject to a four-month hold period expiring on July 4, 2024. In connection with the first tranche, the company paid finder's fees of an aggregate of $59,640 and issued an aggregate of 745,500 warrants to an arm's-length finder, representing 6 per cent of the proceeds raised from subscriptions by, and 6 per cent of the units issued to, certain placees.

About P2 Gold Inc.

P2 is a mineral exploration and development company focused on advancing precious metals and copper discoveries and acquisitions in the western United States and British Columbia.

We seek Safe Harbor.