Mr. James Anderson reports

GUANAJUATO SILVER INCREASES SIZE OF GOLD LOAN CREDIT FACILITY TO US$13.3M

Guanajuato Silver Company Ltd. has increased its previously arranged $7.5-million (U.S.) gold loan credit facility financing with Ocean Partners U.K. Ltd. to $13.3-million (U.S.) (see Guanajuato Silver's news release dated Dec. 5, 2023). The loan facility is for a term of 36 months from the date of the initial draw; it is repayable in equal fixed monthly instalments of gold totalling approximately 338 ounces per month for a period of 30 months following a six-month grace period from the date of the initial draw. The number of ounces to be delivered per month is based on a discount to the London Bullion Market Association (LBMA) gold closing price of $2,046.95 (U.S.) on Nov. 29, 2023, plus an imputed interest amount.

James Anderson, chairman and chief executive officer, said: "The expanded credit facility will provide enhanced financial flexibility as we look to expand production throughout 2024 at all four of our producing silver mines in Mexico. Approximately three years ago, from among numerous competing firms, we chose Ocean Partners to be our primary metals trader; daily, we see evidence that this was an astute business decision. Ocean Partners has always acted as a genuine partner to our business in Mexico; their support remains invaluable as we grow GSilver into a significant producer of precious metals."

The additional principal amount of the expanded facility has been advanced in single draw to the company. A portion of the expanded facility will be used to pay down a portion of the outstanding loan due to Ocean Partners totalling approximately $3.8-million (see Guanajuato Silver's news release dated Aug. 30, 2022). The remainder of the funds will be used for capex (capital expenditure) initiatives and for general working capital purposes.

In connection with the expanded facility, the company and an affiliate of Ocean Partners have also extended the concentrate sales agreements related to the El Cubo mine complex, the Valenciana mine complex, the San Ignacio mine and the Topia mine to Dec. 31, 2028. The expanded facility will be secured by a pledge of the shares and assets of Guanajuato Silver's Mexican subsidiaries, Minera Mexicana el Rosario SA de CV and Obras Mineras el Pinguico SA de CV. The company has the option to repay all or part of the expanded facility at any time with 30 days of notice and the payment of a fee of 3.0 per cent of the expanded facility amount repaid.

Shares for debt

The company has completed its previously announced shares for debt transaction totalling $414,727.89 (see Guanajuato Silver's news release dated Jan. 5, 2024) through the issuance of 1,658,912 common shares, including 160,000 shares issued to three non-arm's-length parties to settle indebtedness totalling $40,000. The shares issued for this debt settlement are subject to a four-month hold period expiring June 29, 2024.

The issuance of 160,000 shares directly to James Anderson and Ramon Davila and indirectly to Richard Silas, who are insiders of the company, is considered a related party transaction within the meaning of Policy 5.9 of the TSX Venture Exchange and Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions, adopted in the policy. The company is relying on the exemptions from the formal 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 in respect of such related party's participation in the transaction as neither the fair market value of the transaction nor the fair market value of the shares to be issued thereunder, insofar as it involves related parties, exceeds 25 per cent of the company's market capitalization (all as determined under MI 61-101). Guanajuato Silver will not file a material change report in connection with this transaction more than 21 days in advance of the closing of the transaction due to current market conditions and the desire of all parties to complete the transaction as expeditiously as possible. The securities of the company that have been acquired by the related party were acquired pursuant to an exemption from the prospectus requirement in Section 2.14 of National Instrument 45-106, Prospectus Exemptions. In approving this transaction, each of the insiders declared his interest in the transaction and abstained from voting as to its approval.

About Guanajuato Silver Company Ltd.

Guanajuato Silver is a precious metal 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 complex, the Valenciana mine 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.

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