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Silver Elephant Mining Corp
Symbol ELEF
Shares Issued 191,168,829
Close 2021-02-10 C$ 0.44
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Silver Elephant acquires Minago from Victory

2021-02-10 10:43 ET - News Release

Mr. John Lee reports


Silver Elephant Mining Corp., further to its press release dated Jan. 22, 2021, has acquired the Minago nickel project from Victory Nickel Inc. pursuant to an asset purchase agreement (APA) dated Jan. 21, 2021, between the company and Victory Nickel.

The Minago project encompasses a 197-square-kilometre prospective land package and hosts one of the largest greenfield open-pit nickel sulphide deposits in Canada, the Nose deposit, which contains 790 million pounds of historic nickel resource (68.7 million tonnes grading 0.52 per cent Ni). Besides the Nose deposit, other drilled discoveries that have been made at the project include the North Limb deposit, which will add to Minago's future global nickel resource estimate.

A qualified person as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves. The company is not treating the historical estimate as current mineral resources or mineral reserves.

Transaction details

Under the terms of the APA, Silver Elephant acquired the Minago project from Victory Nickel for aggregate consideration of $11,675,000 (U.S.), which consists of a $6,675,000 (U.S.) credit against certain secured debt owed by Victory Nickel to Silver Elephant and $5-million (U.S.) worth of Silver Elephant common shares to be issued to Victory Nickel over a one-year period. An initial tranche of 5,363,630 consideration shares worth $2-million (U.S.) was issued on Feb. 9, 2021, a further $2-million (U.S.) worth of consideration shares will be issued on or before Aug. 31, 2021, and a further $1-million (U.S.) worth of consideration shares on or before Dec. 31, 2021, at such timings as may be determined at the sole option of Silver Elephant. All consideration shares are subject to four-month-plus-one-day statutory hold period.

The property payment was a credit in favour of Victory Nickel against an aggregate of approximately $11.88-million (U.S.) owed by Victory Nickel pursuant to a secured debt facility (SDF).

Immediately prior to acquiring the Minago project, Silver Elephant acquired the SDF for $6,675,000 (U.S.) in cash and three million Silver Elephant common share purchase warrants, each exercisable for a period of two years at an exercise price of 47.64 cents from an arm's-length party pursuant to a debt purchase and assignment agreement signed on Jan. 15, 2021.

The SDF has been restructured to bear 0-per-cent interest and to expire on Feb. 8, 2026, which will automatically be extended in five-year increments. Silver Elephant will credit the remaining balance under the SDF to Victory Nickel's benefit, upon completion of an independent economic study proving positive net present value in respect of the Minago project during the term of the SDF. Silver Elephant has agreed to reimburse up to $200,000 of financial advisory services rendered by Red Cloud Securities Inc. as disclosed in a news release dated Oct. 30, 2020, of Victory Nickel.

Silver Elephant has subscribed to 40 million common shares of Victory Nickel at a price per Victory Nickel share of 2.5 cents for cash consideration of $1-million, which will result in Silver Elephant owning approximately 29 per cent of Victory Nickel postinvestment on a non-diluted basis. Each Victory Nickel share is subject to four-month-plus-one-day statutory hold period.

Additionally, Silver Elephant has agreed to issue to Victory Nickel $2-million in Silver Elephant common shares, upon the price of nickel exceeding $10 (U.S.) per pound for 30 consecutive business days, at any time before Dec. 31, 2023. Silver Elephant granted Victory Nickel the right of first refusal exercisable until Dec. 31, 2023, with respect to the exploration of the sandstone (non-nickel-bearing sulphides) resources for frac sand extraction at the Minago project.

Qualified person

The technical contents of this news release have been prepared under the supervision of Danniel Oosterman, vice-president of exploration. Mr. Oosterman is not independent of the company in that he is employed by it. Mr. Oosterman is a qualified person as defined by the guidelines in National Instrument 43-101.

About Silver Elephant Mining Corp.

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