Mr. Francisco Zepeda reports
MAGNA GOLD CORP. ANNOUNCES SETTLEMENT OF EXISTING ARBITRATION PROCEEDINGS IN RELATION TO THE SAN FRANCISCO MINE
Further to its news release dated April 24, 2020, Magna Gold Corp.'s subsidiary, Molimentales del Noroeste SA de CV, has entered into a definitive agreement with Peal de Mexico SA de CV to settle the existing arbitration proceedings between Peal and Molimentales in relation to the company's San Francisco gold mine located in Sonora, Mexico. Pursuant to the terms of the definitive agreement, Peal has agreed to the settlement in exchange for aggregate consideration of approximately $6,354,782.81 (U.S.) (plus value added taxes). In satisfaction of the consideration, the company issued 11 million common shares in the capital of the company to Peal at a deemed price of 35 cents per settlement share and Molimentales has agreed to pay $3,495,130.18 (U.S.) (plus valued added taxes) in cash to Peal by Dec. 30, 2021.
The settlement shares are subject to a lock-up agreement until the earlier of (i) June 30, 2021, and (ii) the date on which Peal and its affiliates collectively hold less than 9.9 per cent of the outstanding common shares in the capital of the company. In the event that Peal or any of its affiliates wishes to sell or transfer any or all of the settlement shares, the company will have the option to arrange for the purchaser of such shares until the date on which Peal and its affiliates collectively hold less than 9.9 per cent of the issued and outstanding common shares in the capital of the company. Until the date on which Peal holds less than 10 per cent of the issued and outstanding common shares in the capital of the company, Peal will have the right to participate in any future issuance or sale by the company of common shares in the capital the company or securities convertible into common shares in the capital of the company on a pro rata basis in proportion to, and to maintain, its percentage interest in the issued and outstanding common shares in the capital of the company immediately prior to the applicable issuance or sale (up to a maximum percentage interest of 19 per cent) on the same terms that such securities are offered for issuance or sale to other purchasers, subject to certain customary exceptions.
The settlement is subject to the receipt of all required regulatory approvals, including the final acceptance of the TSX Venture Exchange.
The settlement shares are subject to resale restrictions pursuant to the policies of the exchange which will expire on Oct. 31, 2020.
About Magna Gold Corp.
Magna Gold is a Canadian gold company engaged in operations, development, exploration and acquisitions in Mexico. Its primary asset is the San Francisco gold mine in Sonora, Mexico, and exploration-stage projects include San Judas, La Pima and Mercedes.
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