Santacruz Silver Mining Ltd. Announces Settlement of Debts with Third Party Creditors

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Algemeen advies 08/06/2021 05:54
Vancouver, British Columbia – Santacruz Silver Mining Ltd. (TSXV: SCZ) (FSE: 1SZ) (“Santacruz”, or the “Company”) announces that it intends to issue an aggregate of 10,342,604 common shares of the Company at a price of $0.432 per share in settlement of outstanding debts totalling C$4,468,005.10 (the "Debt Settlements").

Pursuant to the terms of a debt settlement agreement dated as of the date hereof, the Company has agreed to issue 9,907,530 common shares of the Company (the “Manquiri Settlement Shares”) in settlement of outstanding debts totaling C$4,280,053 (US$3,545,438) (the “Manquiri Debt”) owing to Empresa Minera Manquiri, S.A. (“Manquiri”). The Manquiri Debt was accrued pursuant to a loan agreement dated March 6, 2018, among Impulsora Minera Santacruz, S.A. de C.V. (the “Borrower”), a wholly owned subsidiary of the Company, the Company, as guarantor, and Manquiri, as amended by a first amendment agreement dated July 2, 2018, as amended by a second amendment agreement dated October 2, 2018 and further amended by a third amendment agreement dated January 30, 2020 (together, the “Loan Agreement”). Pursuant to the Loan Agreement, Manquiri advanced to the Borrower the sum of US$2,300,000 (the "Manquiri Loan") that accrued interest at the rate of 9% per annum, which was subsequently amended to 12% per annum. The Manquiri Loan had a maturity date of March 31, 2021; however, pursuant to a debt acknowledgement and obligation of payment agreement dated April 21, 2021, the parties agreed to settle the Manquiri Debt by July 21, 2021.

Pursuant to a debt NSR settlement agreement dated as of the date hereof, the Company has also agreed to issue 435,074 common shares of the Company (the “Güilloyna Settlement Shares” together with the Manquiri Settlement Shares, the “Settlement Shares”) in settlement of outstanding debts totaling CAD$187,952 (USD$156,000) (the “Güilloyna Debt”) owing to Minas Güilloyna, S.A. de C.V. (“Güilloyna”). The Güilloyna Debt was accrued pursuant to a Net Smelter Returns Agreement dated September 19, 2014 (the “NSR Agreement”) among the Borrower, the Company, as guarantor, and Güilloyna, that was entered into in connection with the Company's acquisition of the Rosario Mine from Güilloyna. Pursuant to the NSR Agreement, the Borrower agreed to pay a net smelter return royalty for of up to 1.0% on precious metals produced from the Rosario Mine. On December 31, 2016, the net smelter return royalty in the amount of US$156,000 became due and owing to Güilloyna.

By issuing the Settlement Shares, the Manquiri Debt and Güilloyna Debt will be definitively extinguished. The Company is proposing to issue the Settlement Shares in order to preserve cash to fund future operations.

The Debt Settlements are subject to all necessary regulatory approvals, including acceptance from the TSX Venture Exchange. All securities issued in connection with the Debt Settlements will be subject to a four-month hold period from the closing date under applicable Canadian securities laws, in addition to such other restrictions as may apply under applicable securities laws of jurisdictions outside Canada.

About Santacruz Silver Mining Ltd.

Santacruz is a Mexican focused silver company that currently owns and operates the Rosario Project and the Zimapan Mine.

The Company is managed by a technical team of professionals with proven track records in developing, operating and discovering silver mines in Mexico. Our corporate objective is to become a mid-tier silver producer.


Arturo Préstamo Elizondo,
Executive Chairman

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