Red Eagle Mining Corporation (TSX: R) (BVL: R) (OTCQX: RDEMF) is pleased to announce that major shareholders Liberty Metals & Mining Holdings, LLC Vertex Value Fund and Orion Mine Finance have informed Red Eagle Mining that they intend to fully exercise their Rights, which will result in gross proceeds to Red Eagle Mining from these shareholders of approximately C $16 million under the Rights Offering.

A Rights Offering was chosen to give the opportunity to all existing shareholders to participate.  Proceeds from the Rights Offering will be used to construct an add-on paste backfill plant.  Capital expenditure for the add-on plant are estimated at US $3M, time to construct between 3-5 months and is fully permitted.  Paste backfill has provided much improved ground stability and will result in stope mucking from a smooth floor minimizing gold losses.  Paste backfill will also result in improved underground operating efficiencies and overall better mining conditions.

While the paste backfill plant is being constructed, production crews have been diverted to underground mine development.  This will ensure greater operational flexibility once the paste backfill plant is in operation.  During this period an additional four kilometres of development will have been completed giving access to 54 ore development headings by December 2017 when ore production is scheduled to re-commence.  Development ore will continue to be mined and stockpiled.  Upon completion, the additional development and paste back fill system will allow consistent production resulting in an estimated 50,000 ounces of gold produced during 2018.

Rights Offering

Red Eagle Mining has announced (news release dated June 26, 2017) an offering of rights to acquire units of Red Eagle Mining.  Pursuant to the Rights Offering, each eligible registered holder of common shares of Red Eagle Mining as at the close of business on July 5, 2017 will receive one Right for each Share held.  For each two Rights the holder will be entitled to subscribe for one Unit at a subscription price of C $0.35 per Unit.  Each Unit will consist of:

• One Share of Red Eagle Mining; and
• One transferable Share purchase warrant exercisable into one Share of Red Eagle Mining at a purchase price of C $0.50 per Share for a period of five years from the issue date. The Warrants will be listed for trading on the TSX subject to fulfilling the TSX minimum listing conditions.

The Rights Offering includes an additional subscription privilege under which eligible holders of Rights, who fully exercise their Rights, will be entitled to subscribe, on a pro rata basis with other shareholders who participated in the oversubscription, for Units that have not been purchased under the Rights Offering.

The Shares trade on the TSX and will commence trading on an ex-rights basis on June 30, 2017.  The Notice of Rights Offering and related Rights Certificates will be mailed to all registered holders of Shares as of the close of business on July 5, 2017.  Shareholders who own their Shares through an intermediary, such as a bank or broker, will receive materials and instructions from their intermediary.

Credit Facility

Red Eagle Mining expects to amend its US $60 million credit facility with Orion and LMM as follows:

• A bridge loan of US $6.5 million will be added to the existing credit facility and upon completion of the Rights Offering will be repaid out of Orion and LMM’s expected participation in the Rights Offering on closing;
• Interest will be capitalized and monthly principal repayments will be deferred until April 1, 2018; and
• Interest rate will be increased to LIBOR + 11%.

About Red Eagle Mining

Red Eagle Mining is a gold producer focused on building shareholder value through acquiring, developing and operating gold projects in Colombia, a jurisdiction with prolific historic production but until recently limited modern exploration.  Red Eagle Mining owns 100% of the Santa Rosa Gold Project, where the San Ramon Gold Mine has commenced production.  Red Eagle Mining also controls Red Eagle Exploration Limited which owns 100% of the Vetas Gold, California Gold and Santa Ana Silver Projects and is actively consolidating additional high grade precious metal deposits in Colombia.