VANCOUVER, British Columbia, Oct. 20, 2020 (GLOBE NEWSWIRE) -- Patagonia Gold Corp. (“Patagonia” or the “Company”) (TSXV: PGDC) is pleased to announce that it has entered into an agreement with Tim Hunt to convert an aggregate of US$10 million of outstanding debt into common shares of the Company (the “Debt Conversion”) at a price per share that is equal to $0.30. This price represents a premium of approximately 100% to the closing price of the common shares on the TSX Venture Exchange (the “TSXV”) on October 19, 2020, prior to the parties entering into such agreement.
The debt to be converted in connection with the Debt Conversion includes US$4,821,835 of principal and accrued interest owed to Mr. Hunt by the Company, and US$5,178,165 in accounts payable owed to Mr. Hunt in respect of interest, rent and administration expenses accrued by the Company. Following the Debt Conversion, the balance of the US$1,457,807 in accounts payable owed to Mr. Hunt and a related party to Mr. Hunt in respect of interest, wages, rent and administration expenses is expected to be settled in full by December 10, 2020 by a cash payment in the amount of US$720,397 plus 7% accrued interest.
Christopher van Tienhoven, Chief Executive Officer states, “The Debt Conversion shows a strong support for the long-term growth of the Company and is in line with the Company’s mission of becoming an intermediate mining producer through the acquisition, exploration and development of gold and silver projects in South America.”
Completion of the Debt Conversion is subject to approval of the TSXV and closing is expected to occur within five business days of the receipt of such approval. Upon completion of the Debt Conversion, Tim Hunt, a director of Patagonia, is expected to own or control 97,693,902 common shares in Patagonia, representing a 27% interest in the Company on an undiluted basis.
The Debt Conversion is a “related party transaction” under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) because Tim Hunt is a related party to Patagonia as a director of the Company and a shareholder with an interest of more than 10%. Pursuant to Section 5.5(b) and 5.7(1)(c) of MI 61-101, the Company is exempt from obtaining a formal valuation and approval of the Company’s minority shareholders because the Company’s shares trade on the TSX Venture Exchange and, pursuant to Section 5.5(e) of MI 61-101, the Debt Conversion is supported by Carlos Miguens, the Company’s controlling shareholder.
The Company will file a material change report in respect of the Debt Conversion. However, the material change report will be filed less than 21 days prior to the closing, which the Company deems reasonable in the circumstances.
About Patagonia Gold
Patagonia Gold Corp. is a mining and development company listed on the TSX Venture Exchange. The Company seeks to grow shareholder value through exploration and development of gold and silver projects in the Patagonia region of Argentina. The Company is primarily focused on the Calcatreu project in Rio Negro and the development of the Cap-Oeste underground project. Patagonia, indirectly through its subsidiaries or under option agreements, has mineral rights to over 360 properties in several provinces of Argentina and Chile and is one of the largest landholders in the province of Santa Cruz, Argentina.
For more information, please contact:
T: 403 617 7609
Christopher van Tienhoven, Chief Executive Officer
Patagonia Gold Corp
T: +54 11 5278 6950
This news release contains certain forward-looking statements, including, but not limited to, statements with respect to the Debt Conversion and repayment and settlement of remaining debt owned to Mr. Hunt and his related parties. Wherever possible, words such as “may”, “will”, “should”, “could”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict” or “potential” or the negative or other variations of these words, or similar words or phrases, have been used to identify these forward-looking statements. These statements reflect management’s current beliefs and are based on information currently available to management as at the date hereof.
Forward-looking statements involve significant risk, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this news release are based upon what management believes to be reasonable assumptions, the Company cannot assure readers that actual results will be consistent with these forward-looking statements. These forward- looking statements are made as of the date of this news release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.