Newstrike Capital Enters C$2,000,000 Loan Agreement With Shareholders

Newstrike Capital Inc. (TSXV:NES) reported that it has entered into a C$2,000,000 loan agreement with Zebra Holdings and Investments S.à.r.l. and Lorito Holdings S.à.r.l., both shareholders of the Company.

As quoted in the press release:

Newstrike Capital Inc. (TSX-V:NES) (“Newstrike” or the “Company”) announces that it has entered into a loan agreement (the “Debenture”) in the principal amount of up to C$2,000,000 (the “Principal Amount”) with two shareholders of the Company, Zebra Holdings and Investments S.à.r.l. (“Zebra”) and Lorito Holdings S.à.r.l. (“Lorito”, collectively with Zebra, the “Lenders”). The Company intends to use the proceeds from the loan for general corporate purposes.

The Debenture will mature on the date that is the earlier of: (i) the closing of the arrangement (the “Arrangement”) contemplated by the Arrangement Agreement (the “Arrangement Agreement”) dated February 16, 2015 between the Company and Timmins Gold Corp. (“Timmins”); and (ii) August 31, 2015 (the “Maturity Date”). The Debenture will bear interest at a rate of 5.0% per annum commencing on the Maturity Date or upon the occurrence of an Event of Default (as defined in the Debenture). Interest at such rate shall accrue and be calculated daily and shall be payable to the Lenders semi-annually.

As consideration for the loan, the Company will issue to the Lenders, subject to TSX Venture Exchange (“TSXV”) approval: (i) an aggregate of 50,000 common shares (the “Commitment Shares”), immediately upon approval of the TSXV; and (ii) 250 common shares per month for each C$100,000 of the Principal Amount outstanding under the Debenture up to the Maturity Date (the “Additional Shares”, and collectively with the Commitment Shares, the “Commission Shares”). The Commission Shares will be subject to a statutory hold period expiring four months following their issuance.

The Lenders are “insiders” (as defined in applicable securities laws) of the Company. Pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions, the issuance of the Debenture is considered a “related party transaction”. The issuance of the Debenture is exempt from the requirements to obtain a formal valuation or minority shareholder approval as the fair market value of the loan represents less than 25% of the Company’s market capitalization.

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