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Cerro Grande Mining Corporation Announces Issuance of Convertible Unsecured Debentures

November 15, 2012

TORONTO, Nov. 15, 2012 /PRNewswire/ – Cerro Grande Mining Corporation
(the “Company” or “CEG“) (TSX: CEG, OTCQX: CEGMF) announced today that it has issued unsecured
convertible debentures totalling US $1,568,423 (CDN $1,568,423) (the “Debentures“). The issuance of the Debentures has been conditionally approved by
the TSX.

Mario Hernandez, (“Hernandez“) and David Thomson, (“Thomson“) both directors and officers of the Company through their companies
Compania Minera Chanar Blanco S.A., and Compania Minera Auromin Ltda,
respectively, each acquired one Debenture convertible into common
shares of the Company (each, a “Common Share“).  Hernandez acquired a Debenture in the aggregate principal amount of
US$704,443 (CDN$704,443) which is convertible into up to 2,348,143
Common Shares. Thomson acquired a Debenture in the aggregate principal
amount of US$863,980 (CDN$863,980) which is convertible into up to
2,879,933 Common Shares.

The Debentures have been issued in payment of cash advances by Hernandez
and Thomson to the Company totalling US$1,568,423 which were used for
cash payments (in lieu of issuing common stock from the Company’s stock
bonus plan which increase was not approved at our last Annual and
Special Meeting of shareholders) totalling US $905,719 to workers at
the Company’s 100% owned Pimenton Gold/Copper mine in return for a four
year labor contract, to fund capital expenditures on Pimenton and for
working capital. The Debentures mature on November 15, 2017 and the
outstanding principal thereunder may be converted at the option of the
holder at any time into common shares of the Company on the basis of
333.33 common shares for each US$100 of outstanding principal (being a
conversion price of CDN$0.30 per share). Interest rate on the
Debentures is 6% payable on a quarterly basis. The Company may also, at
its option, accelerate the conversion (the “Acceleration Right“) of all, but not less than all, of the outstanding principal, at any
time after November 15, 2013 if the closing price of the Common Shares
on the Toronto Stock Exchange, equals or exceeds CDN$0.35 per share for
a period of 20 consecutive trading days beginning at any time after
November 15, 2013 (the “Acceleration Period“), provided that the Acceleration Right is exercised by the Company
within 20 Business Days after the end of the Acceleration Period.

The participation of Hernandez and Thomson in the private placement
constitutes a “related party transaction” under Multilateral Instrument
61-101- Protection of Minority Security Holders in Special Transactions (“MI 61-101“), but the Company was exempt from both the formal valuation and
minority shareholder approval requirements of MI 61-101 in connection
with the private placement as neither the fair market value of the
securities issued, nor the consideration for such securities, in so far
as it involves interested parties, exceeded 25% of the Company’s market
capitalization as calculated pursuant to MI 61-101.

Cerro Grande Mining Corporation is a minerals producing, exploration and
development company with properties and activities currently focused in
Chile.

SOURCE Cerro Grande Mining Corporation


Source: PR Newswire