May 13, 2021
Toronto, Ontario – May 13, 2021 – Magna Gold Corp. (TSXV: MGR, OTCQB: MGLQF) (“Magna” or the “Company”) is pleased to announce a non-brokered private placement of CAD$10,000,000 secured convertible debentures (the “Debentures”) with Delbrook Capital Advisors Inc. (“Delbrook”) on behalf of funds managed by Delbrook. The Debentures mature in 24 months from issuance and bear interest at a rate of 6.5% per year. The principal amount of the Debentures is convertible, at the election of Delbrook, into common shares of the Company at a conversion price of CAD$1.25 per common share, representing a 35.5% premium to the 10-day VWAP. The interest on the Debentures is convertible at the election of Delbrook into either cash or common shares of the Company based on the closing price on the day prior to the applicable interest payment date and will be paid in full, including in the event of early conversion. The Company will pay Delbrook a 1.25% arrangement fee on closing of the private placement. The private placement, which received approval by Magna’s board of directors on May 11, 2021, is subject to the approval of the TSX Venture Exchange.
Delbrook, which is a founding shareholder of Magna and assisted in acquiring the Mercedes property in 2018, will become an insider of the Company upon conversion of the Debentures. Matthew Zabloski, the Managing Director of Delbrook commented: “We are excited to continue supporting Magna as it enters the next phase of its evolution into a production company with significant exploration potential. This capital will help Magna accelerate its exploration pipeline while delivering operationally at the San Francisco Mine. It is rare to be able to invest in an emerging gold producer with such an exciting portfolio of assets”.
Arturo Bonillas, President and CEO of Magna stated: “This financing will allow us to categorically advance on some of the most interesting exploration gold and silver properties that the Company has acquired in the last year. Now that the San Francisco Mine is reaching full scale production, we plan to focus on bringing value to stakeholders by increasing the Company’s geological and mineral resources via intense drilling and exploration.”
After the closing of the private placement, Magna will commence mobilization and exploration activities across its portfolio. Exploration activities include:
- Margarita Silver Project – 10,000 metres (“m”) of core drilling for expansion exploration at depth of the Margarita vein system and infill resource definition along strike. Margarita is a high-grade silver target located in the State of Chihuahua acquired from Sable Resources late in 2020 who conducted two successful drill campaigns. The property hosts five quartz-barite and minor calcite epithermal veins-breccias of low to intermediate sulphidation affinity hosted by volcanic rocks of andesitic and rhyolitic composition. The property lies 15 kilometres (“km”) northwest on strike with Gatos Silver Inc.’s Los Gatos Mine. Magna intends to carry out a mineral resource and preliminary economic assessment upon completion of the drill program.
- Mercedes Gold Project – 1,500 m of core drilling and 10,000 m of reverse circulation (“RC”) drilling for expansion and infill on the La Lamosa target to convert and expand the current inferred geological resource into M+I+I categories. Also 1,500 m of core drilling on the Mina del Oro target to define an initial gold and silver resource on that area near la Lamosa Hill. Additionally, carry out Induced Polarization & Resistivity lines to test the quartz-tourmaline breccias at depth, including five targets located in a geological environment of epithermal high sulphidation copper porphyry targets.
- San Judas Gold Project – 5,000 m of RC drilling and 1,000 m of core drilling on four different targets within the property. San Judas is located within the prolific Mojave – Sonora Megashear and 40 km west of the San Francisco Mine.
- Veta Tierra Gold Project – 2,000 m of RC drilling to follow up on discovery hole VT14-002 (1.286 g/t Au over 33.85 m including 22.40 m of 3.26 g/t Au) from a drill program carried out in 2014 drill program. Veta Tierra is located 4 km north of the San Francisco Mine and the objective of the drill program is to potentially define a satellite open pit target for heap leaching.
- La Pima Silver Project – 3,000 m of RC drilling to test down dip extension of the discovery holes on four different areas and test new gold anomalies north of the project. The target at La Pima is limestone ridges approximately 2.5 km long with varying surface thicknesses from 40 to 10 m. The Pima mine, West and North targets are the focus of drilling to test the continuity of this mineralization at depth. In the Pima mine target, the mineralized limestones have a thickness of 40 to 60 m wide and a known depth of 70 m and a length of at least 150 m near the main intersection of the northwest and northeast structures, leaving the exploration potential open at depth and laterally.
- Los Muertos – Carry out extensive field work to further define drill targets. The property is in the La Colorada District in Sonora, Mexico, defined by hundreds of low sulphidation epithermal-vein type historic silver-gold deposits and showings which remain largely unexplored. Vein clusters at Los Muertos share a common orientation with the four main zones at Argonaut’s La Colorada mine. Los Muertos project’s immediate area is characterized by extreme silicification, hematization and argillic alteration, suggesting the potential for both extensive silver-gold veins systems, and coincident, pervasive disseminated mineralization in the host sedimentary and volcanic rocks.