Acquisition of Shares of Otso Gold Corp. by PFL Raahe Holdings LP

TORONTO, Feb. 8, 2021 /CNW/ – This press release is being issued pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues in connection with the filing of an Early Warning Report regarding the acquisition of common shares of Otso Gold Corp. (the “Corporation“), an Alberta corporation with its securities trading on the TSX Venture Exchange under the symbol “OTSO” and having a head office located at 181 Bay Street, 27th Floor, PO Box 508, Toronto, Ontario, M5J 2S1, Canada.

On February 8, 2021, PFL Raahe Holdings LP (“PFL“), of 40 King Street West, Suite 2100, Toronto, Ontario, M5H 3C2, acquired 31,909,280 common shares of the Corporation (representing the balance of the “Top-Up Right” in respect of common shares issuable to PFL as described below).

The transaction occurred privately pursuant to a consent and agreement to pre-paid forward gold purchase agreement and maintenance loan agreement dated as of October 7, 2019, as further amended on December 13, 2020 (as amended, the “Consent and Agreement“), which further amended a previously amended pre-paid gold forward agreement dated November 10, 2017 between the Corporation (then named Nordic Gold Corp.), its wholly-owned subsidiary at such time, Nordic Mines Marknad AB, and PFL.

The transaction also occurred in connection with the closing on February 8, 2021 of the Corporation’s US$11 million financing (the “Financing“) with Brunswick Gold Ltd. (“Brunswick Gold“), pursuant to which Brunswick Gold was issued 284,944,440 units, at an issuance price equal to $0.05 per unit, with each unit comprised of one common share in the capital of the Issuer and one common share purchase warrant and with each warrant entitling Brunswick Gold to purchase one common share at an exercise price equal to $0.05 per warrant for a period of five years from the date of issuance.

Pursuant to the Consent and Agreement, the liabilities formerly associated with the original pre-paid gold forward agreement were replaced with, among other things, the following:

1. A loan of US$23M plus accrued and unpaid interest thereon to be repaid to PFL on or before December 7, 2021, bearing interest at 15% per annum; and
2. Up to US$1.56M in contingent consideration (the “Contingent Consideration“) payable in common shares of the Corporation upon the completion by the Issuer of additional equity raises (the “Top-Up Right“). Specifically, the Corporation agreed that for each equity raise completed by private placement, PFL would subscribe for a pro-rata share (not to exceed 19.9% per tranche) of any new equity raise and, in lieu of paying cash for such subscription, PFL agreed to convert a rateable portion of its Contingent Consideration as its contribution in connection with each equity raise.

Closing of the Financing represented completion by the Corporation of an equity raise under the Consent and Agreement, thereby triggering the Top-Up Right, with the issuance of the common shares described herein satisfying the Contingent Consideration.

Immediately prior to the acquisition, PFL held, directly or indirectly, or exercised control or direction over, 47,251,105 (17.52%)⁽¹⁾ common shares of the Corporation. After giving effect to the acquisition, PFL acquired control and ownership over an aggregate 79,160,385 common shares of the Corporation, representing 12.79 %⁽¹⁾ of the Corporation’s issued and outstanding common shares.

PFL acquired the securities for investment purposes. PFL may acquire or dispose of additional securities of the Corporation in the future through the market, privately, or otherwise, as circumstances or market conditions warrant.

A copy of the Early Warning Report disclosing the transaction will be filed on the Corporation’s SEDAR profile at www.sedar.com and can be obtained from PFL at 40 King Street West, Suite 2100, Toronto, Ontario, M5H 3C2 or phone: (212) 822-9780.