Funds to be Used for Planned El Cubo Restart

Guanajuato Silver Company Ltd. (TSX-V:GSVR) (OTCQX:GSVRF) announces it has drawn down US$7,500,000 from its loan facility with European based metals trading firm OCIM Group. This non-dilutive financing is designed to strengthen the Company’s balance sheet during the refurbishment of the Company’s El Cubo mine and mill complex located approximately 11 kilometers east of the city of Guanajuato, in central Mexico.

OCIM Loan Details:

On July 26, 2021the Company issued notice to OCIM to draw down funds from the US$7,500,000 silver and gold loan facility discussed and detailed in GSilver’s news releases of Dec. 18, 2020 and June 1, 2021, with funds delivered to the Company on July 27, 2021.

GSilver Chairman and CEO James Anderson stated: “We would like to thank everyone at OCIM for their constant support and consistent flexibility. This funding arrangement has allowed us to access their funds at precisely the time we need them to complete our work on the El Cubo mill and continue necessary mine development in preparation for the commencement of commercial production in Q4 2021.”

The OCIM loan facility has an 18-month term, including an initial six-month payment-free grace period, and is then repayable over the following 12 months by the Company delivering a set number of silver and gold ounces based on a discount to the LBMA fix price for silver and gold on July 26, 2021. GSilver estimates that the amount of silver and gold required to repay this loan facility will represent approximately 25% of the projected silver and gold to be produced by GSilver from its operations at the El Cubo mill during the 12-month repayment period of the loan. The loan is secured by, among other things, a general security agreement and pledge over the El Cubo complex in favour of OCIM.

Combined with cash on hand of approximately C$4.1m, these additional funds will give the Company a total of approximately C$13.3m to complete mine and mill development prior to initial cash flow from operations. The Company will use the proceeds from this facility to finance the continued refurbishment of the El Cubo mine and mill complex and for general corporate and working capital purposes.

GSilver CFO Lisa Dea said: “Our financial model anticipates initial concentrate sales in November of this year, as we position the Company to be Mexico’s next silver and gold producer. We look forward to ramping up to planned production of 29,000 tonnes per month by mid 2022.”

Additional news regarding the Company’s progress towards commencement of mining activities is anticipated shortly.

Market Maker:

GSilver announces that it has, subject to acceptance of the TSX Venture Exchange retained Red Cloud Securities Inc. to act as trading adviser and provide market-making services to the Company in compliance with TSXV policies and applicable securities legislation.

Red Cloud will trade shares of GSilver on the TSXV for the purposes of maintaining an orderly market and improving the liquidity of the Company’s common shares. Red Cloud acts on an arm’s length basis and will be paid a fee of $5,000 per month on a month-to month basis, subject to termination by either party with written notice of 30 days. There are no performance factors contained in the agreement between Red Cloud and the Company, and Red Cloud will not receive any shares or options from the Company as compensation for its services.

A similar arrangement with Mackie Research Capital Corp., announced on Dec. 1, 2020 is no longer in effect.

Hernan Dorado Smith, a director of GSilver and a “qualified person” as defined by National Instrument 43-101, Standards of Disclosure for Mineral Projects, has approved the scientific and technical information contained in this news release.

About Guanajuato Silver Co. Ltd.

GSilver is a mining development company engaged in reactivating past producing silver and gold mines near the city of Guanajuato, Mexico. The Company is focused on the refurbishment and swift re-commencement of production from its El Cubo mine and mill and its nearby El Pinguico project, as well as the delineation of additional silver and gold resources through underground and surface drilling. Both projects are located within 11km of the city of Guanajuato, which has an established 480-year mining history.