Kerr Mines Inc. (TSX: KER) (OTC: KERMF) announces the closing of its non-brokered private placement raising gross proceeds of $3.21 million (the “Offering”). The Offering, previously announced on February 11, 2020 and targeting proceeds of $2.5 million, was oversubscribed due to investor demand. Furthermore, Sprott Private Resource Lending LP has agreed to increase its current US$1.5 million senior secured convertible note by US$500,000 (Cdn$670,000).

Giulio T. Bonifacio, Chief Executive Officer stated: “The total proceeds from this financing inclusive of funding from Sprott Lending further endorses the Company’s short term objectives by allowing the Company to commence a targeted drilling program for purposes of resource expansion while also testing the exploration upside with defined follow up targets within the 50 square kilometre land position at Copperstone. Additionally the Company will further advance detailed engineering and project optimization for purposes of the re-start of commercial production at the Company’s high grade Copperstone gold project.”

Private Placement

The Company completed the Offering consisting of 22,913,486 units of the Company at a price of CDN$0.14 per Unit for total gross proceeds of CDN$3.21 million. Each Unit consists of one common share of the Company and one Common Share purchase warrant.

Each Warrant entitles the holder to purchase one Common Share at a price of CDN$0.21 per Common Share until February 28, 2022 provided that if, at any time the Common Shares trade on a stock exchange at a volume weighted average trading price of CDN$0.30, or greater, per Common Share for a period of 20 consecutive trading days, the Company may accelerate the expiry date of the Warrants by giving notice to the holders thereof and in such case the Warrants will expire on the 30th day after the date on which such notice is given by the Company. All securities issued pursuant to the Offering shall be subject to a hold period of four months from the date of closing. In connection with the Offering the Company paid finders fees totalling $63,410 to certain eligible persons. Senior Officers and directors subscribed for 8,107,430 Units under the Offering.

The Offering has been conditionally approved by the Toronto Stock Exchange but remains subject to final approval from the TSX. The securities issued pursuant to the Offering are subject to a four month hold period in accordance with applicable securities laws.

The issuance and sale of 8,107,430 Units under the Offering to certain Senior Officers and directors of the Company constituted related party transactions within the meaning of Multilateral Instrument 61-101- Protection of Minority Security Holders in Special Transactions. The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1) (a) of MI 61-101, as the fair market value of the participation in the Offering by each insider will not exceed 25% of the market capitalization of the Company, as determined in accordance with MI 61-101. The Company did not file a material change report in respect of the related party transaction at least 21 days before the closing of the Offering, which the Company deems reasonable in the circumstances so as to be able to avail itself of the proceeds of the Offering in an expeditious manner.

Sprott Convertible Note

The Note, including the US$500,000 increase, forms part of the Sprott project financing facility for US$25 million. The advance of the balance of the project financing facility remains subject to achieving defined project milestones. The Note bears interest at a rate of 9% per annum payable semi-annually. The maturity date of the Convertible Note will be extended to May 31, 2021. The Note is convertible into Common Shares at any time prior to maturity at a conversion price of CDN$0.16 per share. The Company can redeem the Note at any time by paying the outstanding principal amount in cash, or with the agreement of the holder, in Common Shares of the Company, together with interest payable to maturity.

In connection with the Note and extension, the Company will issue Sprott an additional 650,000 common share purchase warrants. Each Sprott Warrant will entitle the holder to purchase one Common Share at a price of CDN$0.15 with an expiry date of November 28, 2023. The previously issued 1,000,000 common share purchase warrants will also be extended to an expiry date of November 28, 2023. The expiry of all common share purchase Warrants issued to Sprott can be accelerated at the Company’s election if the trading price of the common shares is higher than 2.5 times the exercise price for 30 consecutive trading days

The increase in the principal amount of the Note and extension of its terms, the issuance of the Sprott Warrants and the extension of the previously issued warrants remains subject to the approval of the TSX.

About Kerr Mines Inc.

Kerr Mines is an Emerging American Gold Producer advancing the re-start of production at its 100% owned, fully permitted past-producing Copperstone Mine project located in mining-friendly Arizona. The Copperstone project demonstrates significant upside exploration potential within a 50 Square Kilometre (12,260 acre) land package that includes past production of over 500,000 ounces of gold by way of an open pit operation. The Company’s current focus is on maximizing Copperstone’s potential by defining and expanding current resources and further optimizing mine’s economics for purposes of the re-start of production.