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Patagonia Gold Proxy Solicitation & Information Statement 2025
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Proxy Solicitation & Information Statement
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PATAGONIA GOLD
MANAGEMENT INFORMATION CIRCULAR
AND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF
PATAGONIA GOLD CORP.
TO BE HELD ON MAY 20, 2025
Dated: April 15, 2025
.
PATAGONIA GOLD
PATAGONIA GOLD CORP.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that a special meeting (the "Meeting") of holders ("Shareholders") of common shares ("Shares") of Patagonia Gold Corp. ("Patagonia" or the "Company") will be held as a virtual Shareholders' meeting online via live webcast at https://meetnow.global/M67XTX7, on May 20, 2025 at 10:00 a.m. (Vancouver time).
THE CALCATREU FINANCING
At the Meeting, Shareholders will be asked to consider and vote upon a proposed financing (the "Calcatreu Financing"), pursuant to which the Company intends to issue up to 40,000,000 preferred shares of Patagonia Gold Canada Inc., a wholly-owned subsidiary of the Company, to Black River Mine Inc. ("Black River") in exchange for an aggregate investment by Black River of up to US$40 million to advance the development of the Company's Calcatreu project in Rio Negro province, Argentina, as set out in the accompanying management information circular dated April 15, 2025 (the "Information Circular"). Shareholders are reminded to review the Information Circular before voting.
BLACK RIVER
Black River is a newly formed corporation that is comprised of a consortium of investors and controlled by Carlos J. Miguens (the "Lead Investor"). The Lead Investor is a related party of the Company (as he has ownership and control over 200,717,161 Shares, representing 43.2% of the 465,051,490 Shares currently outstanding). Accordingly, the Calcatreu Financing will be a "related party transaction" under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101").
CONDITIONS
In order to become effective, the Calcatreu Financing must be approved by a simple majority of the votes cast by Shareholders present in person or represented by proxy and entitled to vote at the Meeting, excluding Shares held by any "interested party", any "related party" or any "joint actor" of the foregoing (as such terms are defined in MI 61-101). Completion of the Calcatreu Financing is also subject to receipt of certain required regulatory approvals, including the final approval of the TSX Venture Exchange (the "TSXV") and other customary closing conditions, all of which are described in more detail in the attached Information Circular.
BOARD RECOMMENDATION
The Board of Directors of Patagonia unanimously approved the Calcatreu Financing. Accordingly, the Board of Directors of Patagonia unanimously recommends that Shareholders vote FOR the Calcatreu Financing. If such approval is not obtained, the Calcatreu Financing cannot be completed.
SHAREHOLDER VOTE
The Company is not using "notice-and-access" under National Instrument 54-101 – Communications with Beneficial Owners of Securities of a Reporting Issuer and National Instrument 51-102 – Continuous Disclosure Obligations to distribute its proxy-related materials to
Shareholders. Paper copies of this Notice of Special Meeting of Shareholders, the Information Circular, a form of proxy (if you are a registered Shareholder) or a voting information form (if you are a beneficial Shareholder) (the “Meeting Materials”) will be mailed to all Shareholders via prepaid mail. The Company will send the Meeting Materials directly to non-objecting beneficial Shareholders of the shares. The Company has also elected to pay for an intermediary to deliver the Meeting Materials to objecting beneficial Shareholders.
The record date for determining the Shareholders entitled to receive notice of and vote at the Meeting is the close of business on April 9, 2025 (the “Record Date”). Only Shareholders whose names have been entered in the register of Shareholders as of the close of business on the Record Date are entitled to receive notice of and to vote at the Meeting.
Registered Shareholders and duly appointed proxyholders are entitled to attend the Meeting virtually. Registered Shareholders who are unable to attend the Meeting virtually are requested to complete, date and sign the form of proxy contained in the Meeting Materials (in the return envelope provided for that purpose), or, alternatively, to vote by telephone, or over the internet, in each case in accordance with the instructions set out in the Meeting Materials. The completed proxy form must be deposited at the office of Computershare Trust Company of Canada (“Computershare”), 100 University Avenue 8th Floor, Toronto, Ontario, M5J 2Y1 by mail, or the proxy vote must otherwise be registered in accordance with the instructions set forth in the Meeting Materials so that Computershare may provide the proxyholder with an Invite Code via email. Without an Invite Code, proxyholders will not be able to attend and vote at the Meeting.
Non-registered Shareholders who receive the Meeting Materials through their broker or other intermediary should complete and send the form of proxy or voting instruction form delivered in the Meeting Materials in accordance with the instructions provided by their broker or intermediary.
To be effective, a proxy must be received by Computershare not later than 10:00 a.m. (Vancouver time) on May 15, 2025, or in the case of any postponement or adjournment of the Meeting, not less than 48 hours, excluding Saturdays, Sundays and holidays, prior to the time of the postponed or adjourned meeting. Late proxies may be accepted or rejected by the Chairperson of the Meeting in his or her discretion. The Chairperson is under no obligation to accept or reject any particular late proxy.
The Company has made arrangements to hold the Meeting as a completely virtual meeting via live webcast where all Shareholders, regardless of geographic location and equity ownership, will have an equal opportunity to attend the Meeting. Shareholders will not be able to attend the Meeting in person. All Shareholders are strongly encouraged to vote prior to the Meeting by any of the means described on pages 2 through 5 of the accompanying Information Circular.
DATED this 15th day of April, 2025.
BY ORDER OF THE BOARD OF DIRECTORS OF PATAGONIA GOLD CORP.
(Signed) “Christopher van Tienhoven”
Christopher van Tienhoven
Director and Chief Executive Officer
ii
PATAGONIA GOLD CORP.
MANAGEMENT INFORMATION CIRCULAR
GENERAL PROXY INFORMATION
Time, Date and Place
The meeting ("Meeting") will be held as a virtual meeting of shareholders ("Shareholders") of Patagonia Gold Corp. ("Patagonia" or the "Company") online at https://meetnow.global/M67XTX7 on May 20, 2025 at 10:00 a.m. (Vancouver time).
Notice-and-Access
This solicitation is made by the management of Patagonia for use at the Meeting and any postponement or adjournment thereof for the purposes set forth in the accompanying Notice of Special Meeting of Shareholders (the "Notice of Meeting"). The Company is not using "notice-and-access" under National Instrument 54-101 – Communications with Beneficial Owners of Securities of a Reporting Issuer ("NI 54-101") and National Instrument 51-102 – Continuous Disclosure Obligations to distribute its proxy-related materials to Shareholders. Paper copies of the Notice of Meeting, the Information Circular, a form of proxy (if you are a registered Shareholder) or a voting information form (if you are a beneficial Shareholder) (the "Meeting Materials") will be mailed to all Shareholders via prepaid mail. The cost incurred in the preparation and mailing of the Meeting Materials will be borne by the Company. The Company will send the Meeting Materials directly to NOBOs (as defined below). The Company has also elected to pay for a Nominee (as defined below) to deliver the Meeting Materials and a Form 54-101F7 Request for Voting Instructions Made by Intermediary of NI 54-101 to OBOs (as defined below).
Record Date
The record date for determining the Shareholders entitled to receive notice of and to vote at the Meeting is April 9, 2025 (the "Record Date"). Only Shareholders of record as of the close of business (Vancouver time) on the Record Date are entitled to receive notice of and to vote at the Meeting.
Who can attend the Meeting?
Anyone who holds Shares as of the close of business on the Record Date fixed by the Board of Directors of the Company (the "Board"), or has been appointed proxyholder by such a Shareholder, is entitled to virtually attend the online Meeting. The Company has made arrangements to hold the Meeting as a completely virtual meeting, which will be conducted online via live webcast, providing all Shareholders regardless of geographic location and equity ownership an equal opportunity to participate, vote, or submit questions during the Meeting's live webcast. All Shareholders are strongly encouraged to vote prior to the Meeting by any of the means described on pages 2 through 5 of this Information Circular.
Attending the Meeting online
Shareholders and duly appointed proxyholders can attend the Meeting online by going to https://meetnow.global/M67XTX7.
- Registered Shareholders and duly appointed proxyholders can participate in the Meeting by clicking "Shareholder" and entering a control number or an Invite Code before the start of the Meeting.
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- Registered Shareholders: the 15-digit control number is located on the form of proxy or in the email notification you received.
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Duly appointed proxyholders: Computershare (as defined below) will provide the proxyholder with an Invite Code by email after the voting deadline has passed.
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Attending and voting at the Meeting will only be available for registered Shareholders and duly appointed proxyholders.
- Non-registered Shareholders who have not appointed themselves as proxyholders to participate and vote at the Meeting may login as a guest, by clicking on “Guest” and completing the online form; however, they will not be able to vote or submit questions.
Shareholders who wish to appoint a third-party proxyholder to represent them at the virtual Meeting must submit their form of proxy or voting instruction form (as applicable) prior to registering their proxyholder. Registering the proxyholder is an additional step once a Shareholder has submitted their form of proxy or voting instruction form. Failure to register a duly appointed proxyholder will result in the proxyholder not receiving an Invite Code to participate in the meeting.
To register a proxyholder, Shareholders MUST visit http://www.computershare.com/PatagoniaGold by 10:00 a.m. (Vancouver time) on May 15, 2025 and provide Computershare with their proxyholder’s contact information so that Computershare may provide the proxyholder with an Invite Code by email.
In order to participate in the online Meeting, registered Shareholders must have a valid 15-digit control number and proxyholders must have received an email from Computershare containing an Invite Code.
The virtual Meeting platform is fully supported across most commonly used web browsers (note: Internet Explorer is not a supported browser). We encourage you to access the Meeting prior to the start time. It is important that you are connected to the internet at all times during the Meeting in order to vote when balloting commences.
Solicitation of Proxies
This Information Circular is furnished in connection with the solicitation of proxies by the management of Patagonia for use at the Meeting and any postponement or adjournment thereof for the purposes set forth in the Notice of Meeting. It is expected that the solicitation of proxies will be made primarily by mail, but proxies may also be solicited personally, by advertisement or by telephone by directors, officers or employees of Patagonia to whom no additional compensation will be paid.
Appointment of Proxyholder
The purpose of a proxy is to designate persons who will vote the proxy on a Shareholder’s behalf in accordance with the instructions given by the Shareholder in the proxy. The persons whose
names are printed in the enclosed form of proxy are officers or directors of Patagonia (the "Management Proxyholders").
A Shareholder has the right to appoint a person other than a Management Proxyholder to represent the Shareholder at the Meeting by striking out the names of the Management Proxyholders and by inserting the desired person's name in the blank space provided or by executing a proxy in a form similar to the proxy form provided. A proxyholder need not be a Shareholder.
Shareholders who wish to appoint a third-party proxyholder to represent them at the Meeting must submit their form of proxy or voting instruction form (as applicable) prior to registering their proxyholder. Registering the proxyholder is an additional step once a Shareholder has submitted their form of proxy or voting instruction form. Failure to register a duly appointed proxyholder will result in the proxyholder not receiving an Invite Code to participate in the Meeting.
To register a proxyholder, Shareholders MUST visit http://www.computershare.com/PatagoniaGold by 10:00 a.m. (Vancouver time) on May 15, 2025 and provide Computershare with their proxyholder's contact information so that Computershare may provide the proxyholder with an Invite Code via email.
Without an Invite Code, proxyholders will not be able to attend and vote at the Meeting.
Participating in the Meeting
The Meeting will only be hosted online by way of a live webcast. Shareholders will not be able to attend the Meeting in person. A summary of how registered Shareholders and duly appointed proxyholders can attend and vote at the virtual meeting is provided below.
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Registered Shareholders and appointed proxyholders: Only those who have a 15-digit control number, along with duly appointed proxyholders who were assigned an Invite Code by Computershare (see details under the heading titled "Appointment of Proxyholder"), will be able to vote and submit questions during the Meeting. To do so, please go to https://meetnow.global/M67XTX7 prior to the start of the Meeting to login. Click on "Shareholder" and enter your 15-digit control number or click on "Invitation" and enter your Invite Code.
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United States Beneficial Shareholders: To attend and vote at the virtual Meeting, you must first obtain a valid legal proxy from your broker, bank or other agent and then register in advance to attend the Meeting. Follow the instructions from your broker or bank included with the Meeting Materials or contact your broker or bank to request a legal form of proxy. After first obtaining a valid legal proxy from your broker, bank or other agent, you must submit a copy of your legal proxy to Computershare in order to register to attend the Meeting. Requests for registration should be sent:
By Mail To: COMPUTERSHARE
100 University Avenue 8th Floor
Toronto, ON M5J 2Y1
By Email At: [email protected]
Requests for registration must be labeled as "Legal Proxy" and be received no later than May 15, 2025, 10:00 a.m. (Vancouver time). You will receive a confirmation of your registration by email after we receive your registration materials. You may attend the Meeting and vote your shares at https://meetnow.global/M67XTX7 during the Meeting. Please note that you are required to register your appointment at http://www.computershare.com/PatagoniaGold.
Voting at the Meeting
Each share entitled to be voted at the Meeting entitles the holder thereof to one vote at the Meeting in respect of the Financing Resolution (as defined below) and to one vote on any other matters to be considered at the Meeting. The Calcatreu Financing (as defined below) must be approved by a simple majority of the votes cast on the Financing Resolution by Shareholders present in person or represented by proxy at the Meeting after excluding the votes cast by persons whose votes may not be included in determining minority approval of a "related party transaction" pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The full text of the Financing Resolution is set out under the heading titled "Particulars of the Matter to be Acted Upon at the Meeting – Approval of the Calcatreu Financing".
Only registered Shareholders or duly appointed proxyholders are permitted to vote at the Meeting. To vote at the Meeting, registered Shareholders will be required to enter their control number or Invite Code provided by Computershare at https://meetnow.global/M67XTX7 prior to the start of the Meeting.
In order to vote, non-registered Shareholders who appoint themselves as a proxyholder MUST register with Computershare at http://www.computershare.com/PatagoniaGold AFTER submitting their voting instruction form in order to receive an Invite Code (see the heading titled "Appointment of Proxyholder" for details).
Shares represented by a properly executed proxy will be voted in favour of, be withheld from voting on or be vote against the matter referred to in the Notice of Meeting, as applicable, in accordance with the instructions of the Shareholder, on any ballot that may be called for, and, if the Shareholder specifies a choice with respect to any matter to be acted upon, the Shares will be voted accordingly. The person you appoint as proxyholder must attend the Meeting virtually to vote your Shares.
If a Shareholder does not specify a choice and the Shareholder has appointed one of the Management Proxyholders as proxyholder, the Management Proxyholder will vote FOR the matter specified in the Notice of Meeting and in favour of all other matters proposed by management at the Meeting.
The enclosed form of proxy also gives discretionary authority to the person named therein as proxyholder with respect to amendments or variations to the matter identified in the Notice of the Meeting and with respect to other matters which may properly come before the Meeting. At the date of this Information Circular, management of the Company knows of no such amendments, variations or other matters to come before the Meeting.
Completion and Return of Proxy
Completed forms of proxy must be deposited at the office of the Company's registrar and transfer agent, Computershare Trust Company of Canada ("Computershare"), 100 University Avenue 8th Floor, Toronto, Ontario, M5J 2Y1, not later than 10:00 a.m. (Vancouver time) on May 15, 2025 or, in the case of any postponement or adjournment of the Meeting, forty-eight (48) hours,
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excluding Saturdays, Sundays and holidays, prior to the time of the postponed or adjourned Meeting. Alternatively, you may vote by telephone at 1-866-732-VOTE (8683) (toll free within North America) or 1-312-588-4290 (outside North America), or by internet using the 15 digit control number located at the bottom of your form of proxy at www.investorvote.com. Late proxies may be accepted or rejected by the Chairperson of the Meeting, in his or her discretion. The Chairperson is under no obligation to accept or reject any late proxies. If a Shareholder who has submitted a form of proxy attends the Meeting via webcast and has accepted the terms and conditions when entering the Meeting online, any votes cast online by such Shareholder on a ballot will be counted and the votes previously submitted will be disregarded.
Non-Registered Holders
Only Shareholders whose names appear on the records of Patagonia as the registered holders of Shares or duly appointed proxyholders are permitted to vote at the Meeting. Most Shareholders of Patagonia are "non-registered" shareholders because the Shares they own are not registered in their names but instead registered in the name of a nominee such as a brokerage firm through which they purchased the Shares; bank, trust company, trustee or administrator of self-administered RRSP's, RRIF's, RESP's and similar plans; or clearing agency such as The Canadian Depository for Securities Limited (a "Nominee"). If you purchased your Shares through a broker, you are likely a non-registered holder.
The Company has distributed copies of the Meeting Materials to the Nominees for distribution to applicable non-registered holders.
Nominees are required to forward the Meeting Materials to applicable non-registered holders to seek their voting instructions in advance of the Meeting. Shares held by Nominees can only be voted in accordance with the instructions of the non-registered holder. The Nominees often have their own form of proxy and mailing procedures and provide their own return instructions. If you wish to vote by proxy, you should carefully follow the instructions from the Nominee in order that your Shares are voted at the Meeting.
If you, as a non-registered holder, wish to vote at the Meeting virtually, you should appoint yourself as proxyholder by writing your name in the space provided on the request for voting instructions or proxy and return the form in the envelope provided. Do not complete the voting section of the form as your vote will be taken at the Meeting.
Non-registered holders who have not objected to their Nominee disclosing certain ownership information about themselves to Patagonia are referred to as "non-objecting beneficial owners" ("NOBOs"). Those non-registered holders who have objected to their Nominee disclosing ownership information about themselves to Patagonia are referred to as "objecting beneficial owners" ("OBOs").
Patagonia is sending the Meeting Materials directly to NOBOs in connection with the Meeting.
Patagonia has also elected to pay for Nominees to deliver the Meeting Materials and Form 54-101F7 – Request for Voting Instructions Made by Intermediary to OBOs.
Revocability of Proxy
Any registered Shareholder who has returned a proxy may revoke it at any time before it has been exercised. In addition to revocation in any other manner permitted by law, a registered Shareholder, his or her attorney authorized in writing or, if the registered Shareholder is a corporation, a corporation under its corporate seal or by an officer or attorney thereof duly
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authorized, may revoke a proxy by instrument in writing, including a proxy bearing a later date. The instrument revoking the proxy must be deposited at the registered office of Patagonia at Suite 2200, 885 West Georgia Street, Vancouver, British Columbia, V6C 3E8, at any time up to and including the last business day preceding the date of the Meeting, or any adjournment thereof, or with the Chairperson of the Meeting on the day of the Meeting.
Quorum
A quorum at meetings of Shareholders consists of one person who is, or who represents by proxy, one or more Shareholders who, in the aggregate, hold at least 15% of the issued Shares entitled to be voted at the Meeting.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The Company is authorized to issue an unlimited number of common shares without par value (the "Shares"), of which 465,051,490 are issued and outstanding as of April 9, 2025. Holders of Shares are entitled to cast one vote per Share.
Any holder of Shares of record at the close of business on April 9, 2025, who either virtually attends the Meeting or who has completed and delivered a proxy in the manner specified, subject to the provisions described above, will be entitled to vote or to have such Shareholder's Shares voted at the Meeting.
To the knowledge of the directors and executive officers of the Company, the only persons or companies who beneficially own, control or direct, directly or indirectly, Shares carrying 10% or more of the voting rights attached to all Shares are as follows:
| Name | No. of Shares Beneficially Owned, Controlled or Directed, Directly or Indirectly (1) | Percentage of Outstanding Shares |
|---|---|---|
| Carlos J. Miguens | 200,717,161 | 43.2% |
| Tim Hunt | 98,169,202 | 21.1% |
Note:
(1) These numbers are derived from the respective Shareholders, or public filings made by this Shareholder on the System for Electronic Disclosure by Insiders (SEDI). This number does not include convertible securities held by any Shareholder.
PARTICULARS OF THE MATTER TO BE ACTED UPON AT THE MEETING
Overview of the Calcatreu Financing
The Company entered into an investment agreement (the "Investment Agreement") with Black River on April 13, 2025, pursuant to which Black River has agreed to invest up to US$40 million to support the development of Patagonia's flagship Calcatreu Project (the "Project") in Rio Negro, Argentina (the "Calcatreu Financing").
Under the terms of the Investment Agreement, Black River will acquire up to 40 million preferred shares ("Preferred Shares") of Patagonia Gold Canada Inc. ("PG Canada"), a wholly owned subsidiary that holds the Project through Minera Calcatreu SAU (the "Operator"). The Preferred Shares, being all of the then-outstanding Preferred Shares of PG Canada, will be issued at a price of US$1.00 per share, resulting in total gross proceeds of US$40 million. A copy of the Investment Agreement, including the form of shareholders' agreement that will be entered into on closing of the Calcatreu Financing and govern the affairs of PG Canada (the "Shareholders' Agreement" and together with the Investment Agreement, the "Agreements"), is available under the Company's issuer profile on SEDAR+ at www.sedarplus.ca.
Black River is a newly formed corporation comprised of a consortium of investors and controlled by Carlos J. Miguens (the "Lead Investor"). The rights of the shareholders of Black River will be set out in a shareholders' agreement to be entered into amongst themselves and Black River.
The Agreements provide Black River with certain rights, so long as it retains ownership of all of the Preferred Shares. These rights include:
(a) Board Representation: The ability to nominate one of the three directors of PG Canada.
(b) Future Investment Rights: The right to participate in new issuances of preferred shares or other equity securities by PG Canada, subject to the Agreements' terms.
In addition, Black River will be entitled to receive distributions on the Preferred Shares in the following order of priority (the "Distribution Policy"). The Distribution Policy will be set out in the Shareholders' Agreement:
(a) Preferred Distributions: Black River will receive 80% of the "Available Cash" (as defined below) until it has received an amount equal to US$40 million (the "Preferred Distribution Amount"), with the Company receiving the remaining 20%.
(b) Catch-Up Distributions: After Black River has received the Preferred Distribution Amount, the Company will receive 100% of the Available Cash until it has received an amount equal to US$60 million (the "Catch-Up Distribution Amount"), with Black River not receiving any of the Available Cash.
(c) Pro Rata Distributions: After the Company has received the Catch-Up Distribution Amount, the Company will receive 60% of the Available Cash and Black River will receive the remaining 40% of the Available Cash.
Accordingly, the resulting interests held by each of the Company and Black River in the Project's revenues, respectively, will follow the Pro Rata Distribution percentages above.
For purposes of the Distribution Policy, "Available Cash" is the Distributable Cash (as defined below) that is available for distribution to the shareholders of PG Canada in accordance with the Distribution Policy, after payment of all expenses of PG Canada. The Operator will distribute to PG Canada all of the Operator's cash that is available for distribution after payment of all expenses of the Operator, including the servicing and repayment of the loan that the Operator expects to receive in order to fund the development of the Project (with the proceeds of the Calcatreu Financing being used as security for such loan), less limited reserves for sustaining capital (the "Distributable Cash").
Proceeds from the Calcatreu Financing will be used solely for funding the development of the Project and to pay fees and expenses incurred by the Company in connection with the Calcatreu Financing. This summary does not purport to be complete and is qualified in its entirety by reference to the Agreements, which have been filed by the Company under its profile on SEDAR+ at www.sedarplus.ca.
Unless otherwise directed, it is management's intention to vote FOR the Calcatreu Financing Resolution. If you do not specify how you want your Shares voted, the persons named as proxyholders will cast the votes represented by your proxy at the Meeting FOR the Calcatreu Financing Resolution.
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If the Calcatreu Financing is approved at the Meeting and the applicable conditions to the completion of the Calcatreu Financing are satisfied or waived, the Company expects to complete such financing on the date which is on or around three business days following the Meeting (which is expected to be on May 23, 2025).
Preferred Shares
The Preferred Shares (i) will not have any voting rights except as provided under applicable corporate law, and (ii) are not be transferable without the prior written consent of the Board of Directors of PG Canada and subject to prior acceptance by the TSXV.
The Preferred Shares will rank:
(a) senior in all respects to all existing and future Shares of PG Canada and any future preferred shares of PG Canada; and
(b) junior in all respects to all existing and future indebtedness of PG Canada.
As the holder of the Preferred Shares, Black River will be entitled to receive distributions on the Preferred Shares in accordance with the Distribution Policy. Upon a liquidation event (being the voluntary or involuntary bankruptcy, liquidation, winding-up or insolvency of the Issuer), the holder of the Preferred Shares will be entitled to receive a cash payment equal to the difference between the Investment Amount and the amount of the Preferred Distribution Amount that the holder of the Preferred Shares had received as of the date of such liquidation event, provided that if the holder of the Preferred Shares has received the Preferred Distribution Amount as of the date of such liquidation event, any remaining cash would be distributed in accordance with the Distribution Policy.
In the event of a change of control of PG Canada (whether by spin-out or other sale of PG Canada):
(a) if the holder of the Preferred Shares has not received the Preferred Distribution Amount as of the date of such change of control, such holder shall have the option to require PG Canada to redeem all of the outstanding Preferred Shares for a cash payment equal to the difference between the Investment Amount and the amount of the Preferred Distribution Amount that that the holder had received as of the date of the change of control; and
(b) if the holder of the Preferred Shares has received the Preferred Distribution Amount, the proceeds of such change of control shall be distributed to the holder of the Preferred Shares and the holder of the common shares of PG Canada in accordance with the Distribution Policy (as determined by the Board of Directors of PG Canada).
Background of the Calcatreu Financing
In December 2017, the Company announced that it had entered into a definitive agreement with Pan American Silver Corp. ("Pan American Silver") to acquire the Project for total consideration of US$15 million. On May 18, 2018, the Company (through a wholly owned subsidiary) acquired Minera Aquiline Argentina SA, which owned 100% of the Project. Since acquiring the Project and in particular over the past seven years, the Company has focused on securing the necessary social license and obtaining the requisite permits to advance development and construction of the Project towards production.
In 2020, the Company engaged several consultants to conduct work on various aspects of the development of the Project, primarily related to mining, processes and sources of water. The work on the Project that was conducted during 2020 was used by the Company to apply for an Environmental Impacts Assessment (the "EIA") and the Company submitted the EIA to the relevant authorities in August 2021.
As announced on November 7, 2024, on November 6, 2024, following consultation and positive review of the EIA, the Company received its formal permit to advance with development and construction of the Project.
Given current market conditions and taking into consideration the current Share price, the Company reviewed several options to finance the capital cost of advancing development of the Project towards production. The review of such options (as further detailed under the heading "MI 61-101") confirmed the Board's view that a financing at the Company level would be excessively dilutive to Shareholders. In order to limit such dilution, management thereafter considered options to finance development of the Project at the asset level.
In connection with such review, the Company engaged in conversations with the Lead Investor, pursuant to which the Lead Investor, alongside a consortium of investors known to and organized by the Lead Investor, submitted an indicative offer to enter into the Calcatreu Financing.
The indicative terms of the Calcatreu Financing were considered and approved by the Board at a meeting held on December 30, 2024. Following the receipt of such approval, management of the Company engaged with its legal counsel to settle the terms of the Calcatreu Financing and ensure that such terms would be acceptable to the TSXV.
On March 14, 2025, the Company announced the proposed Calcatreu Financing. Following such announcement, the Company advanced the preparation and negotiation of the definitive Agreements and prepared for the Meeting.
On April 11, 2025, the Board held a meeting at which it approved the Calcatreu Financing and related matters.
The Investment Agreement was finalized and signed by the parties thereto on April 13, 2025 and the Company issued a press release pre-market on April 14, 2025 announcing the Investment Agreement.
Details of the Project
The Project is the Company's flagship project located on the southern border of Rio Negro, approximately 85 kilometres south of the town of Ing Jacobacci. The Company acquired the Project from Pan American Silver in 2018 and since then has been dedicated to obtaining the permits to advance the Project to production. In November 2024, the Company was notified by the local Provincial authorities that the final permit to proceed with construction of the Project had been granted. The Project has approximately 746,000 contained AuEq (gold equivalent) ounces of measured and indicated mineral resource category and 390,000 contained AuEq ounces of Inferred Mineral Resources as disclosed in the technical report prepared in accordance with National Instrument 43-101, entitled "NI 43-101 Technical Report, Mineral Resource Estimate, Calcatreu Gold-Silver Project, Rio Negro Province, Argentina," dated effective December 31, 2018, which is available under the Company's profile on SEDAR+ at www.sedarplus.ca.
MI 61-101
MI 61-101 regulates certain transactions to ensure equality of treatment among securityholders, generally requiring, among other things, enhanced disclosure and approval by a majority of securityholders excluding "interested parties" or "related parties", and independent valuations. The protections of MI 61-101 generally apply to "related party transactions" (as defined in MI 61-101), given the potential for conflicts of interest because the transaction involves one or more non-arm's length parties. MI 61-101 provides that, in certain circumstances, where a "related party" of an issuer (as defined in MI 61-101 and including directors, executive officers and shareholders holding over 10% of issued and outstanding shares of the issuer) is party to a transaction (such as the Calcatreu Financing), such transaction may be considered a "related party transaction" for the purposes of MI 61-101 and subject to valuation and minority approval requirements and the related party will be an "interested party" (as defined in MI 61-101).
The Lead Investor is a related party of the Company (as he has ownership and control over 200,717,161 Shares, representing 43.2% of the 465,051,490 Shares of the Company currently outstanding) and he is expected to be the controlling shareholder of Black River. Accordingly, the Calcatreu Financing will be a "related party transaction" under MI 61-101. Since the Lead Investor's participation in the Calcatreu Financing will exceed 25% of the Company's market capitalization (calculated in accordance with MI 61-101), the Company is seeking shareholder approval at the Meeting in accordance with MI 61-101, as outlined below.
The Company has not received any bona fide prior offer that relates to the subject matter of or is otherwise relevant to the Calcatreu Financing during the 24 months before the date of Investment Agreement.
To the knowledge of the Company and any of the directors and officers of the Company, after reasonable inquiry, there have been no "prior valuations" (as defined in MI 61-101) in respect of the Company (or which are otherwise relevant to the Calcatreu Financing) prepared within the 24 months before the date of this Information Circular.
In the opinion of management and the Board, the Calcatreu Financing represents the best financing option available to the Company at this time. The Board has undertaken an extensive review process of the material terms and agreements with respect to the Calcatreu Financing, considering a number of potential risk factors in its deliberation. The Board determined that any possible adverse effects or risks were more than outweighed by the potential benefits of the Calcatreu Financing. It was determined that the constitution of a special committee was not necessary for review of the Calcatreu Financing, as the Board was adequately empowered to engage in discussion of the material terms of the proposed transaction, review key agreements and ultimately pass unanimous consent resolutions approving the same. There were no materially contrary views or abstentions of a Company director in approving the Calcatreu Financing.
Trading in Securities to be Acquired
The Preferred Shares will not be listed for trading on the TSXV or any other stock exchange.
Ownership of Securities of the Company
The following table sets forth, as of the date of this Information Circular, the number and percentage of securities of the Company beneficially owned or over which control or direction is exercised:
(a) by each director and officer of the Company; and
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(b) after reasonable inquiry, by: (i) each associate or affiliate of an insider of the Company; (ii) each associate or affiliate of the Company; (iii) an insider of the Company, other than a director or officer; and (iv) each person acting jointly or in concert with the Company.
| Name | Company Position Held | Number of Securities (Percentage) |
|---|---|---|
| Christopher van Tienhoven | Chief Executive Officer and Director | 800,822 Shares (0.17%) |
| 8,500,000 Options (1.92%) | ||
| Tim Hunt | Director | 98,169,202 Shares (21.11%) |
| 1,000,000 Options (20.43%) | ||
| Alexander (Sandy) Harper | Director | 2,248,122 Shares (0.51%) |
| 1,000,000 Options (0.7%) | ||
| Cristian Lopez Saubidet | Chief Financial Officer | 2,369,529 Shares (0.51%) |
| 4,500,000 Options (1.42%) | ||
| Matias F. Argarate | Legal Affairs Manager | 1,100,000 Options (0.23%) |
| Carlos J. Miguens | Insider | 200,717,161 Shares (43.16%) |
Commitments to Acquire Securities of the Company
Other than in respect of the Calcatreu Financing, there are no agreements, commitments or understandings made by the Company to, or to the knowledge of the Company, by any person referred to in the table above under the heading "Ownership of Securities of the Company" to acquire securities of the Company, and the terms and conditions of those agreements, commitments or understandings.
Material Changes in the Affairs of the Company
As of the date of this Information Circular, except in respect of the Calcatreu Financing, the Company does not have any plans or proposals for material changes in the affairs of the Company, including any material contracts or agreements under negotiation, any proposal to liquidate the Company, to sell, lease or exchange all or a substantial part of its assets, to amalgamate or make any material changes to the Company's business, corporate structure, management or personnel.
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Previous Purchases and Sales
The following securities of the Company were purchased or sold by the Company during the preceding 12 months:
| Description of Security | Number of Securities | Purchase or Sale Price | Date and Purpose of Transaction |
|---|---|---|---|
| Shares | 1,631,000 | Average of $0.024 | Pursuant to Company's normal course issuer bid |
Dividend Policy
The Company has not declared or paid any dividends or distributions on its Shares or other securities in the two years preceding the date of this Information Circular, and it is not contemplated that any dividends will be paid in the immediate or foreseeable future.
Expenses of the Calcatreu Financing
It is estimated that the expenses incurred by the Company in connection with the Calcatreu Financing will be approximately $200,000.
Minority Approval Requirements
As a result of the foregoing analysis under the heading "MI 61-101", the minority approval requirements of MI 61-101 will apply in connection with the Calcatreu Financing and therefore approval will be sought from a simple majority of the votes cast by the Shareholders present in person or represented by proxy and entitled to vote at the Meeting, excluding the votes of the "interested parties" whose votes may not be included in determining minority approval of a "related party transaction" under MI 61-101.
The table below sets forth the votes of interested parties (or related parties of interested parties) excluded for purposes of determining minority approval in accordance with MI 61-101:
| Name | Number of Patagonia Shares to be Excluded | Percentage of Outstanding Shares |
|---|---|---|
| Carlos J. Miguens | 200,717,161 | 43.2% |
Valuation Requirements
The Company is not required to obtain a formal valuation in connection with the Lead Investor's participation in the Calcatreu Financing in reliance of Section 5.5(b) of MI 61-101, as the Shares are listed on the TSXV and not listed or quoted on a "specified market" as set out in MI 61-101.
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Recommendation of the Board
The Board unanimously approved the Calcatreu Financing. Accordingly, the Board unanimously recommends that Shareholders vote FOR the Calcatreu Financing. If such approval is not obtained, the Calcatreu Financing cannot be completed.
Approval of the Calcatreu Financing
At the Meeting, the Shareholders will be asked to approve the Financing Resolution, the full text of which is set out below. In order to become effective, the Calcatreu Financing Resolution must be approved by an affirmative vote of a simple majority of the votes cast by Shareholders present in person or represented by proxy and entitled to vote at the Meeting, excluding Shares held by any "interested party", any "related party" of an "interested party" or any "joint actor" of the foregoing (as such terms are defined in MI 61-101).
"BE IT RESOLVED, as an ordinary resolution of the Shareholders, that:
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The financing of Patagonia Gold Corp.'s ("Patagonia") Calcatreu gold and silver project (the "Calcatreu Financing"), as more particularly described and set forth in the management information circular (the "Information Circular") of Patagonia dated April 15, 2025 accompanying the notice of this meeting, is hereby authorized, approved and adopted;
-
The investment agreement (the "Investment Agreement") between Patagonia Gold Canada Inc. and Black River Mine Inc., dated April 13, 2025, the actions of the directors of Patagonia in approving the Calcatreu Financing and the actions of the officers of Patagonia in executing and delivering the Investment Agreement and any minor amendments thereto, subject to any future shareholder approval of such amendments as may be required by the TSXV, are hereby ratified and approved; and
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Any officer or director of Patagonia is hereby authorized and directed for and on behalf of Patagonia to execute and deliver, whether under corporate seal of Patagonia or not, all such agreements, forms waivers, notices, certificates, confirmations and other documents and instruments and to do or cause to be done all such other acts and things as in the opinion of such director or officer may be necessary, desirable or useful for the purpose of giving effect to these resolutions, the Investment Agreement and the completion of the Calcatreu in accordance with the terms of the Investment Agreement, including:
(a) all actions required to be taken by or on behalf of Patagonia, and all necessary filings and obtaining the necessary approvals, consents and acceptances of appropriate regulatory authorities; and
(b) the signing of the certificates, consents and other documents or declarations required under the Investment Agreement or otherwise to be entered into by Patagonia,
such determination to be conclusively evidenced by the execution and delivery of such document, agreement or instrument or the doing of any such act or thing,
(collectively, the "Financing Resolution")."
The Board has approved the terms of the Investment Agreement and the Calcatreu Financing and unanimously recommends that the Shareholders vote FOR the Financing Resolution.
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INTERESTS OF CERTAIN PERSONS IN THE MATTER TO BE ACTED UPON
Except as otherwise disclosed herein, none of:
(a) the directors or senior officers of the Company at any time since January 1, 2024; or
(b) any associate or affiliate of the foregoing persons,
has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in the matter to be acted upon at the Meeting.
INTERESTS OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
For purposes of the following discussion, "Informed Person" means (a) a director or executive officer of the Company; (b) a director or executive officer of a person or company that is itself an Informed Person or a subsidiary of the Company; (c) any person or company who beneficially owns, directly or indirectly, voting securities of the Company or who exercises control or direction over voting securities of the Company or a combination of both carrying more than 10% of the voting rights attached to all outstanding voting securities of the Company, other than the voting securities held by the person or company as underwriter in the course of a distribution; and (d) the Company itself if it has purchased, redeemed or otherwise acquired any of its securities, for so long as it holds any of its securities.
Except as disclosed in the heading titled "Particulars of the Matter to be Acted Upon at the Meeting – Approval of the Calcatreu Financing", none of:
(a) the Informed Persons of the Company; or
(b) any associate or affiliate of the foregoing persons,
has any material interest, direct or indirect, in any transaction since January 1, 2024 or in a proposed transaction which has materially affected or would materially affect the Company.
ADDITIONAL INFORMATION
Additional information relating to the Company may be found under the Company's profile on SEDAR+ at www.sedarplus.ca. Additional financial information is provided in the Company's comparative annual financial statements and management's discussion and analysis for the financial year ended December 31, 2023, which can be found under the Company's profile on SEDAR+ at www.sedarplus.ca. Shareholders may also request these documents from the Company by calling +1(866) 223-5297 or by e-mail at [email protected].
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PATAGONIA DIRECTORS' APPROVAL
The contents and the sending of this Information Circular have been approved by Board of Patagonia.
DATED this 15th day of April, 2025.
BY ORDER OF THE BOARD OF DIRECTORS OF PATAGONIA GOLD CORP.
(Signed) "Christopher van Tienhoven"
Christopher van Tienhoven
Director and Chief Executive Officer
.