Ms. Jaclyn Ruptash reports

PREMIUM NICKEL RESOURCES LTD. ANNOUNCES PROPOSED $20 MILLION EQUITY AND DEBT FINANCING PACKAGE

Premium Nickel Resources Ltd. has arranged a proposed equity and debt financing package of $20-million, comprising:

• Brokered private placement: a best effort private placement offering of 11,765,000 common shares of the company at a price of $1.20 per common share for aggregate gross proceeds of approximately $14.1-million;
• Amended term loan: a second amended and restated commitment letter between the company and Cymbria Corp. to, inter alia, amend the terms of their existing term loan to increase the principal amount of the loan from $15-million to $20,882,353, which, upon closing of the amended term loan, would result in additional gross proceeds to the company of $5-million.

Brokered private placement

The company entered into an engagement letter with Cormark Securities Inc., on behalf of BMO Capital Markets, as co-lead agent, and a syndicate of agents to be formed in respect of the offering. Under the offering, the company will issue 11,765,000 common shares at a price of $1.20 per common share for aggregate gross proceeds of approximately $14.1-million.

It is anticipated that EdgePoint Investment Group Inc., or an entity (or entities) managed by EdgePoint, will exercise its participation right in respect of the offering and subscribe for common shares in accordance with its existing ownership interest in the company. EdgePoint was granted the participation right pursuant to the terms of a subscription agreement between the company and EdgePoint dated June 28, 2023.

Subject to compliance with applicable regulatory requirements and in accordance with National Instrument 45-106 (Prospectus Exemptions), the common shares will be offered for sale on a private placement basis: (i) in each of the provinces and territories of Canada, other than Quebec, in reliance on the listed issuer financing exemption from the prospectus requirements available under Part 5A of NI 45-106 for aggregate gross proceeds of up to approximately $10-million (or up to approximately 8,333,333 common shares); and (ii) (A) in each of the provinces and territories of Canada pursuant to available exemptions from the prospectus requirements under NI 45-106 (other than the life exemption), (B) in the United States pursuant to available exemptions from the registration requirements of the U.S. Securities Act of 1933, as amended, and applicable U.S. state securities laws; and (C) in such other jurisdictions provided it is understood that no prospectus filing or comparable obligation, continuing reporting requirements, or requisite regulatory or governmental approval arises in such other jurisdictions. The common shares issued pursuant to the life exemption to Canadian resident subscribers under the offering will not be subject to a hold period pursuant to applicable Canadian securities laws. The common shares issued to Canadian resident subscribers pursuant to prospectus exemptions under NI 45-106 other than the life exemption will be subject to a hold period expiring four months and one day after the closing of the offering.

The offer and sale of common shares in reliance on the life exemption will be conditional on the company completing the offering and amended term loan for such amount that will provide the company with sufficient available funds to meet its business objectives and liquidity requirements for a period of 12 months following closing of the offering.

There is an offering document related to the offering that can be viewed on SEDAR+ under the company's profile and on the company's website. Prospective investors should read the offering document before making an investment decision.

The offering is expected to close on or about Dec. 14, 2023, or such other date as the company and the agents may agree, and remains subject to the receipt of all necessary approvals, including the approval of the TSX Venture Exchange.

Amended term loan

The company and Cymbria have entered into a second amended and restated commitment letter to amend the terms of their existing term loan to, inter alia, increase the principal amount of the loan by $5,882,353 from $15-million to $20,882,353. The additional principal amount will be subject to an original issue discount of approximately 15 per cent and will be made available by the lender to the company as a single advance in an amount equal to $5-million on closing of the amended term loan.

The additional principal amount will form part of the term loan and, except as otherwise set out in the second A&R commitment letter, will be on the same terms and conditions applicable to the term loan. For certainty, the additional principal amount will bear interest at a rate of 10 per cent per annum calculated and payable quarterly in arrears, and will mature and be payable on June 28, 2026, which, in each case, is consistent with the terms and conditions applicable to the term loan. As consideration for entering into the term loan amendment, on closing of the amended term loan, the company will issue an additional 700,000 common share purchase warrants to the lender, with each additional warrant entitling the lender to acquire one common share at a price of $1.4375 per common share until June 28, 2026. The closing of the amended term loan, including the issuance of the additional warrants, is expected to occur concurrently with closing of the offering on or about Dec. 14, 2023, or such other date as the company and the lender may agree, and remains subject to: (i) completion of the offering; and (ii) the satisfaction of certain customary closing conditions, including the receipt of all necessary approvals, including the approval of the TSX Venture Exchange.

The net proceeds of the offering and the amended term loan will be used by the company to advance the exploration and development of its mineral assets in Botswana and for general corporate and working capital purposes.

Multilateral Instrument 61-101 disclosure

EdgePoint is: (i) a related party of the company by virtue of having beneficial ownership of, or control or direction over, directly or indirectly, common shares carrying more than 10 per cent of the voting rights attached to all of the company's voting securities; and (ii) an affiliated entity of Cymbria and, as such, the amended term loan, including the issuance of the additional warrants, are considered to be a related-party transaction of the company for purposes of Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions). In addition, the offering (including EdgePoint's participation in the offering by exercising its participation right) may be considered a connected transaction to the amended term loan for purposes of MI 61-101.

The company may, however, complete the offering and the amended term loan in reliance on exemptions available under MI 61-101 from the formal valuation and minority approval requirements of MI 61-101. The transactions are exempt from the formal valuation requirement in Section 5.4 of MI 61-101 in reliance on Section 5.5(b) of MI 61-101 as the company is not listed on a specified market under MI 61-101. Additionally, the transactions are exempt from the minority approval requirement in Section 5.6 of MI 61-101 in reliance on Section 5.7(1)(a) of MI 61-101 insofar as neither the fair market value of the subject matter, nor the fair market value of the consideration for, the transactions, insofar as it involves (or is expected to involve) interested parties, exceeds 25 per cent of the company's market capitalization.

We seek Safe Harbor.