New Facility Fully Repays and Replaces Current OCIM Facility

Guanajuato Silver Company Ltd. (TSX-V:GSVR) (AQUIS:GSVR) (OTCQX:GSVRF) is pleased to announce that the Company has arranged a new US$5,000,000 silver and gold pre-payment facility (the “New Pre-Payment Facility”) with Swiss-based precious metals trading firm, OCIM Metals & Mining S.A. (“OCIM”); upon closing, the New Pre-Payment Facility will fully replace the current OCIM gold and silver pre-payment facility (see Guanajuato Silver previous news release dated May 9, 2022 – “GSilver Draws US$7.5M Silver/Gold Pre-Payment Facility from OCIM”, which has a balance remaining of approximately US$5.5M as of the date hereof. The Company has reduced its obligations to OCIM from a total of approximately US$10.5M in November of 2023 to US$5.0M under this new facility. Any shortfall in the net proceeds from the New Pre-Payment Facility to repay the existing pre-payment facility will be funded out of the Company’s current working capital.

The New Pre-Payment Facility is for US$5,000,000 and has a 19-month term, which includes an initial three-month delivery-free grace period, and is then repayable over the following 16 months by the Company delivering a set number of silver and gold ounces based on a 12% discount to the LBMA fix price for silver and gold on the date of closing. The New Pre-Payment Facility will be secured by, among other things, a general security agreement over all present and after-acquired personal property of the Company, subject to certain carve-outs, and a share and asset pledge over the Company’s El Cubo complex in favour of OCIM. Subject to acceptance of the TSX Venture Exchange, closing of the New-Prepayment Facility is expected to take place on or before March 31, 2023.

Lisa Dea, CFO of GSilver, said: “The new pre-payment facility with OCIM provides additional financial flexibility for our balance sheet as we advance ramp up operations across all four of our producing silver mines in Mexico. The support of our partners at OCIM has proven to be critical to our success and we look forward to continued collaboration with them as we grow Guanajuato Silver into a mid-tier silver producer.”

The Company also announces that it has entered into an amendment agreement with Exploraciones Mineras Del Bajio S.A. de C.V. the original vendor of the Company’s El Pinguico gold and silver project in Guanajuato, Mexico, to extend the deadline for payment of the final option payment of C$625,000 required to eliminate three of the underlying royalties on the El Pinguico project held by EMBSA as more particularly described in the Company’s news release dated November 13, 2020 – “VanGold Amends El Pinguico Royalties Purchase Agreement.” Under the terms of the amendment agreement, the final option payment of C$625,000 has been split into two equal payments of C$312,500 each, of which the first payment will be made to EMBSA immediately with the second payment now due on or before October 16, 2023. In addition, the Company purchased all of EMBSA’s interest in its 15% royalty on net profits derived from the surface stockpile of historically mined (but unprocessed) mineralized material at El Pinguico for a purchase price of US$70,000. Accordingly, upon payment of the final option payment of C$312,500 to EMBSA on or before October 16, 2023, the only royalty that will remain over the El Pinguico project will be a 15% net profits royalty on the underground stockpile of previously mined material in favour of EMBSA.

Hernan Dorado Smith, the Chief Operating Officer and a director of GSilver is also the Managing Director and a principal shareholder of EMBSA, and as such the amendment agreement constitutes a “related party transaction” for the purposes of Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions. GSilver has relied upon exemptions from the requirement to obtain a formal valuation and seek minority shareholder approval for its royalty purchase option agreement with EMBSA on the basis that the fair market value of Mr. Smith’s interest in such option agreement, as amended, is less than 25% of GSilver’s market capitalization.

About Guanajuato Silver

GSilver is a precious metals producer engaged in reactivating past producing silver and gold mines in central Mexico. The Company produces silver and gold concentrates from the El Cubo Mine, Valenciana Mines Complex, and the San Ignacio mine; all three mines are located within the state of Guanajuato, which has an established 480-year mining history. Additionally, the Company produces silver, gold, lead, and zinc concentrates from the Topia mine in northwestern Durango. With four operating mines and three processing facilities, Guanajuato Silver is one of the fastest growing silver producers in Mexico.