P2 Gold Inc. (TSX-V: PGLD) (OTCQB: PGLDF) reports that it has closed the agreement to settle the outstanding debt related to the acquisition of the Gabbs Project and the first tranche of the concurrent non-brokered private placement of convertible debenture units for $1,362,000.

Debt Settlement

In settling the debt, P2 entered into a termination agreement (the “Termination Agreement”) with Waterton Nevada Splitter, LLC an affiliate of Waterton Precious Metals Fund II Cayman, LP pursuant to which P2 will issue or pay to Splitter (a) US$1 million and 5,231,869 common shares (issued) in the capital of the Company at closing at a deemed price of C$0.07 per Share, (b) US$125,000 on or before January 31, 2025, and (c) US$125,000 on or before January 31, 2026.

Splitter currently has beneficial ownership of, and control or direction over, 23,552,403 Shares of the Company, representing approximately 19.9% of the issued and outstanding Shares.

Splitter is a “related party” of the Company.  The issuance of the Shares and cash payments to Splitter described above is considered a related party transaction subject to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.  The Company relied on exemptions from the formal valuation and minority shareholder approval requirements provided under sections 5.5(g) and 5.7(1)(e) of Multilateral Instrument 61-101 on the basis that the debt settlement transaction is intended to improve the Company’s financial position.

In connection with the acquisition of the Gabbs Project, P2 granted to Waterton a 2% net smelter returns royalty on production from the Gabbs Project, of which one percent may be repurchased at any time by P2 Gold for US$1.5 million and the remaining one percent of which may be repurchased for US$5 million. Waterton assigned its rights to the Royalty to Franco-Nevada Corporation in June of 2023.

The Offering

The Company expects to issue up to 1,700 Units at a price of C$1,000 per Unit.  Each Unit will consist of one convertible debenture with a principal amount of $1,000 and 12,500 Share purchase warrants.

The Convertible Debentures will bear interest at a rate of 7.5%, payable semi-annually on the last day of June and December of each year, commencing on June 30, 2024. Interest will be paid in Shares based on the greater of the Market Price (as defined in the policies of the Exchange) and 15-day volume weighted average price of the Shares on the Exchange or cash, at the Company’s election, subject to Exchange approval.  The Convertible Debentures will have approximately a two-year term, with the principal amount being due to be repaid in full by the Company on January 31, 2026.  At any time during the Term, the Company will have the option to extend the Term by up to one additional year on payment of an extension fee to the holders of the Convertible Debentures (the “Holders”) in the amount of six month’s interest payable in Shares based on the greater of the Market Price and the 15-day VWAP or cash, at the Company’s election, subject to Exchange approval. The Convertible Debentures are unsecured.

Under the terms of the Offering, at any time during the Term, a Holder may elect to convert the outstanding net principal amount, or any portion thereof, into common shares in the capital of the Company at a conversion price of C$0.07 per Share up to January 31, 2025 and $0.10 per Share from February 1, 2025 up to January 31, 2026 (the “Conversion Price”).  In the event the Company announces a business combination and the 15-day VWAP of the Shares on the Exchange is greater than $0.07, the Company will have the right to require the Holders to convert the outstanding net principal amount into Units at the Conversion Price by giving notice to the Holders by news release or other form of notice permitted by the Convertible Debentures that the Convertible Debentures will convert on the closing of the business combination.

Each Warrant shall entitle the holder thereof to acquire one Share at an exercise price of $0.15, for a period of 24 months (the “Expiry Time”), provided that, if after the later of four months from the date of issue and conversion, the closing price of the Shares on the Exchange is equal to or greater than $0.30 for a period of 10 consecutive trading days at any time prior to the Expiry Time, the Company will have the right to accelerate the Expiry Time by giving notice to the holders of the Warrants by news release or other form of notice permitted by the certificate representing the Warrants that the Warrants will expire at 4:30 p.m. (Vancouver time) on a date that is not less than 15 days from the date notice is given.

The majority of the proceeds of the Offering will be used to fund obligations under the Termination Agreement.  The Offering will close on completion of documentation and is conditional upon receipt of all necessary regulatory approvals, including the approval of the Exchange.

The Offering will be offered to accredited investors in all Provinces of Canada pursuant to applicable securities laws. The securities issued pursuant to the First Tranche will be subject to a four-month hold period expiring on July 4, 2024. In connection with the First Tranche, the Company paid finder’s fees of an aggregate of $59,640 and issued an aggregate of 745,500 warrants to an arm’s length finder, representing 6% of the proceeds raised from subscriptions by, and 6% of the Units issued to, certain placees.

The securities to be offered in the Offering have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About P2 Gold Inc.

P2 is a mineral exploration and development company focused on advancing precious metals and copper discoveries and acquisitions in the western United States and British Columbia.