Scorpio Gold – Equity Convertible Loans up to $2,450,000


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VANCOUVER, BC /ACCESSWIRE/May 30, 2022/ Scorpion Gold Corporation (“Scorpio Gold“or the”Company“) (TSX-V:SGN) announces that it has entered into two convertible loan agreements dated May 24, 2022 (the “Convertible loan agreements“) with Ianco Holdings Ltd. and Matco Holdings Ltd. (collectively, the “Lenders“) pursuant to which the Company may borrow the aggregate principal amount of up to $2,450,000 under two loans to be advanced by the lenders (the “Loans“), subject to satisfaction of certain conditions precedent described in the Convertible Loan Agreements, including the approval of the TSX Venture Exchange (the “SwapThe Company intends to use the proceeds of the loans to advance its Goldwedge property and for general working capital purposes.

Convertible Loan Terms

Subject to the terms and conditions of the Convertible Loan Agreements, the Lenders will advance the Loans to the Company in drawings from the Closing Date (the “Closing Date“) until maturity on December 31, 2022 (the “Due date), in amounts agreed between the lenders and the company, provided that the principal amount of each loan advanced does not exceed in the aggregate USD 1,225,000.

The unpaid principal amount of each Loan shall be convertible, at the option of the relevant Lender, into ordinary shares in the capital of the Company (each, a “Ordinary share“) at a conversion price of US$0.06 per common share, subject to adjustment, from the closing date until the earlier of: (i) the expiration date, and (ii ) the date on which all of the outstanding principal amount of the applicable loan has been repaid.

The unpaid principal amount of each drawdown under the Loans will bear interest at the rate of 123/8% per annum, compounded monthly, not in advance, for the period commencing on the date the relevant lender advances the drawdown to the Company until the outstanding principal and accrued interest have been repaid or converted into shares ordinary, as the case may be. Interest will be due and payable by the Company in cash on the earliest of the following dates: (i) the maturity date and (ii) the date on which all of the outstanding principal amount of the applicable loan has been repaid or converted into common shares .

For each drawdown under the Loans, the Company will pay the relevant Lender a credit fee of USD 3,250, which will be deducted from the amount of the drawdown and retained by the relevant Lender.

The Loans will also be secured on a past bet on the basis of certain security documents in favor of the lenders to be provided by the company and its subsidiaries pursuant to which the company will provide the lenders with a security interest in all present and future personal property of the company and its subsidiaries.

The Loans and Common Shares issuable upon conversion of Loan principal will be subject to a four-month hold period expiring September 25, 2022, in accordance with applicable Securities Laws and Exchange Policies.

Bridging loans

As disclosed in the Company’s press release dated April 28, 2022, Ian Dawson and Bruce Dawson, directors of the Company, have previously advanced two bridge loans (the “April Loans“) to the Company on behalf of the Lenders for an aggregate principal amount of USD 450,000.

The Company announces that it has also obtained two additional bridging loans (the “May Loans“) on May 18, 2022 and May 20, 2022 from the lenders for an aggregate principal amount of USD 700,000.

The April loans and the May loans are repayable on demand and bear interest at the rate of 123/8% per annum compounded monthly, and were evidenced by promissory notes delivered by the Company to the lenders.

On the Closing Date, the April Loans and the May Loans and any unpaid interest thereon will be incorporated into the Loans as first and second drawdowns, respectively.

Disclosure of Related Party Transactions

The Lenders are related parties of the Company by virtue of being companies wholly owned by directors of the Company and therefore the Loans constitute a “related party transaction” for the purposes of the Instrument. multilateral 61-101. Protection of holders of minority securities in special transactions (“MI 61-101Ianco Holdings Ltd. is 100% owned by Ian Dawson and Matco Holdings Ltd. is 100% owned by Bruce Dawson.

The Company anticipates that there will be a material change in the percentage of the Company’s outstanding securities held by Ian Dawson and Bruce Dawson as a result of the Loans. As of the Closing Date, Ian Dawson is expected to beneficially own or exercise control or direction over 22,275,977 Common Shares or approximately 10.56% of the issued and outstanding Common Shares on a non-diluted basis (or approximately 18 .69% of issued and outstanding common shares on a partially diluted basis, including all convertible securities of the Company owned or controlled by Ian Dawson). As of the Closing Date, Bruce Dawson is expected to beneficially own or exercise control or direction over 24,165,637 Common Shares or approximately 11.46% of the issued and outstanding Common Shares on a non-diluted basis (or approximately 19 .50% of issued and outstanding common shares on a partially diluted basis, including all convertible securities of the Company owned or controlled by Bruce Dawson).

The Company is relying on exemptions from the formal valuation and minority shareholder approval requirements under NI 61-101 with respect to loans, relying on sections 5.5(b) and 5.7(1) (a) of NI 61-101, respectively, as no securities of the Company are listed on a specified market under NI 61-101 and the fair market value of the loans does not exceed 25% of the market capitalization of the Company determined in accordance with NI 61-101. The Company’s Board of Directors approved the loans, with Ian Dawson and Bruce Dawson declaring their interest and abstaining from voting on the consent resolutions. No materially contrary opinion or abstention has been expressed or made by any director of the Company in this regard.

ON BEHALF OF COUNCIL

SCORPION GOLD CORPORATION

Chris Zerg
President and CEO
Tel: (775) 753-4778
E-mail: [email protected]
Website: www.scorpiogold.com

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.

Caution Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding the Company. By their nature, forward-looking statements are subject to a variety of factors that could cause actual results to differ materially from those suggested by the forward-looking statements. In addition, forward-looking statements require management to make assumptions and are subject to inherent risks and uncertainties, including, but not limited to, the Company’s ability to obtain stock exchange approval for loans. There is a significant risk that forward-looking statements will not prove to be accurate, that management’s assumptions may not be correct, and that actual results may differ materially from such forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Generally, forward-looking statements can be identified by the use of terms such as “anticipate”, “will”, “expect”, “may”, “continue”, “could”, “estimate”, ” foresee”, “plan”, “potential” and similar expressions. Forward-looking statements in this press release may include, but are not limited to, the fulfillment of conditions precedent to the loans, including the approval of the exchange of the loans, the completion of the transactions under the convertible loan agreements , the effect on the Company’s securities held by Ian Dawson and Bruce Dawson and the intended use of funds for the loans. These forward-looking statements are based on a number of assumptions which may prove to be incorrect.

The forward-looking statements contained in this press release are made as of the date hereof or as of the dates specifically referenced in this press release, as the case may be. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements contained or incorporated in this press release. All forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

THE SOURCE: Scorpion Gold Corporation

See the source version on accesswire.com:
https://www.accesswire.com/703308/Scorpio-Gold–Convertible-Loans-in-Principal-Amount-of-up-to-US2450000

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