Signs Financing Term Sheet for US$7.5m Silver/Gold Loan Facility

VanGold Mining Corp (TSX-V:VGLD) is pleased to announce that it has signed a binding letter agreement with Endeavour Silver Corp. (EXK) (EDR) to acquire the El Cubo mine and mill complex located 8km by road northeast of the Company’s El Pinguico silver-gold project near the city of Guanajuato, Mexico.

El Cubo Complex:

The Company has signed a binding letter agreement with Endeavour to acquire the El Cubo Mine and Mill complex. With a rated capacity of 1,500 tonnes per day, the El Cubo Complex included two operating underground silver-gold mines and a flotation plant and employed over 350 people and engaged over 200 contractors until Endeavour suspended operations at the end of November 2019. For the year ended December 31, 2018, Endeavour produced a total of 4,578,940 silver equivalent (AgEq) ounces at the El Cubo Complex at an all in sustaining cost (AISC) per ounce of US$8.86 (2019 – 1,923,944 AgEq ounces at an AISC of US$14.85).[i]

Currently, the El Cubo mine, plant and tailings facilities are on short term care and maintenance and VanGold intends to re-start the mill at approximately 750 tonnes per day using mineralized material from its surface and underground stockpiles at its El Pinguico project as a significant portion of its estimated throughput for the first 36 months of operation.

VanGold Director Daniel J. Oliver said, “This is a transformational acquisition for VanGold Mining. Our preliminary internal financial model shows a swift path to restarting production, a favorable payback period, and robust cash flows with silver at US$23 and gold at US$1850.”

As part of the El Cubo Complex, VanGold will acquire the El Cubo mine including remaining historical resources (see “Mining History of El Cubo Complex” below), the El Cubo mill (also known as the El Tajo mill), and approximately 7,000 hectares of prospective mining concessions located adjacent to the El Cubo mill and within the greater Guanajuato mine region. The Endeavour Agreement remains subject to acceptance of the TSX Venture Exchange (the “TSXV“).

Mining History of El Cubo Complex:

Mining on the El Cubo Complex has occurred since the 17th century. The Sierra structure, which includes the El Cubo Mine and the adjacent Peregrina Mine …., accounts for much of the gold and silver produced in the Guanajuato district – on the order of 2,000,000 ounces of gold and 80,000,000 ounces of silver.[ii] Gold was originally mined from shallow pits near the San Eusebio vein, one of those on the El Cubo concessions which later produced significant amounts of gold and silver. In the 19th and 20th centuries, mining at El Cubo focused on northwest striking veins known as the Villalpando, Dolores, La Loca, and La Fortuna, and production was divided between many operators… At the time, significant grades and widths were encountered on the Villalpando vein, including shoots up to 4 m wide and intercepts which assayed close to 1 kg of silver per tonne. (Source: NI 43-101 Technical Report prepared for Endeavour Silver Corp. by Hard Rock Consulting LLC., of Lakewood Colorado – Amended March 2018).

As reported by Endeavor on January 29, 2020 [iii], as at December 31, 2019, the El Cubo Complex contained the following silver-gold resources:

VanGold is not treating these estimates as current mineral resources as a qualified person on behalf of VanGold has not done sufficient work [iv] to classify these estimates as current resources. [v]

The Endeavour Agreement:

Chairman and CEO James Anderson said: “We are delighted to have come to this agreement with Endeavour – and look forward to welcoming Endeavour as our largest shareholder. After working well with the Endeavour team during our 1,000-tonne bulk sample in June 2020, it became clear that El Cubo would be the perfect production fit for VanGold. The availability of mineralised material from El Pinguico’s surface stockpile, El Pinguico’s underground stockpile, El Pinguico’s remaining high grade historical stopes and pillars, as well as El Cubo’s historical resources gives us great flexibility in deciding where to source material for the mill, and how to sequence that throughput.”

VanGold will pay US$15,000,000 for the El Cubo Complex as follows:

• An upfront non-refundable down-payment of US$500,000 cash (paid).

• US$7.0m cash on closing.

• US$5.0m in VanGold common shares on closing – priced at C$0.30 per share for a total of 21,331,058 VanGold shares.

• US$2.5m promissory note due 12 months from closing.

Endeavour has agreed to (a) abstain from voting its shares of VanGold, other than as recommended by VanGold’s management, for a period of 2 years and (b) a 12-month restriction on the resale of any VanGold shares acquired in this transaction.

VanGold has also agreed to pay Endeavour up to an additional US$3.0m in contingent payments based on the following:

• US$1.0m – upon VanGold producing 3,000,000 AgEq ounces from the El Cubo mill.

• US$1.0m – if the price of gold closes at or above US$2,000 per ounce for 20 consecutive days within two years after closing.

• US$1.0 m – if the price of gold closes at or above US$2,200 per ounce for 20 consecutive days within three years after closing.

Closing of the Endeavour Agreement is subject to satisfaction of certain conditions including final due diligence by VanGold, financing (see “Financing for the Acquisition” below) and receipt of all requisite third party and regulatory approvals including the acceptance of the TSXV on or before March 17, 2021, failing which either VanGold or Endeavour may terminate the Endeavour Agreement.

About Endeavour:

Endeavour Silver Corp. is a mid-tier precious metals mining company listed on the NYSE:EXK and TSX:EDR. Endeavour owns and operates three underground silver-gold mines in Mexico and is currently advancing the Terronera Mine Project towards a development decision. Endeavour is also exploring its portfolio of exploration and development projects in Mexico and Chile to facilitate its goal to become a premier senior silver producer.

Financing for the Acquisition:

VanGold also announces that it has signed an indicative term sheet with a Swiss based metals trading firm to provide US$7.5m of financing in the form of a gold and silver loan in support of VanGold’s acquisition of the El Cubo Complex. The loan will be for a term of 16 months, secured against VanGold’s assets and repayable over a period of 12 months (following a four month grace period) by VanGold delivering fixed monthly ounces of gold and silver produced through the El Cubo mill at a discount to the prevailing spot price. VanGold estimates the amount of gold and silver required to repay this loan facility will represent approximately 33% of the projected gold and silver to be recovered by VanGold from operations at the El Cubo mill during the 12 month repayment period of the loan. This financing is subject to various conditions of the lender including completion of satisfactory due diligence, execution of binding loan and security documentation and TSXV acceptance, which both parties anticipate completing in early 2021.

VanGold’s El Pinguico Project:

El Pinguico is a high-grade gold and silver deposit that was mined from the early 1890s until 1913. Toward the end of that period it was mined exclusively by The Pinguico Mines Company of New York City, whose shares traded on the Boston and New York Stock Exchanges. The mining was done principally from the El Pinguico and El Carmen veins, which are thought to be splays off the Mother Vein, or ‘Veta Madre’.

The Veta Madre is associated with a mega fault that outcrops for 25 kilometres and is the most important source of precious metal mineralization in the region. Current geologic interpretation, based on regional mapping and projections from the Veta Madre developed at adjacent historic mine operations, suggest that the Veta Madre vein system may cross VanGold’s property at depth, underneath the high grade El Pinguico and El Carmen veins. Very limited drilling has been done on the property and no drilling has yet attempted to encounter the Veta Madre at depth. The intersection of these major vein structures are excellent exploration targets and may result in zones of significant size and grades.

Hernan Dorado Smith, a director of VanGold 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 VanGold Mining Corp.

VanGold Mining is an exploration and development company engaged in reactivating high-grade past producing silver and gold mines near the city of Guanajuato, Mexico. The Company’s flagship El Pinguico project is a significant past producer of both silver and gold located just 7km south of the city. The Company remains focused on the near-term potential for development and monetization of its surface and underground stockpiles of mineralized material at El Pinguico, and in delineating silver and gold resources through underground and surface drilling on projects located in this historic mining camp.