Cabral Gold Inc. (CBR.V): Announces up to $5 million Public Offering of Units

Vancouver, British Columbia–(Newsfile Corp. – May 25, 2022) – Cabral Gold Inc. (TSXV: CBR) (OTC Pink: CBGZF) (“Cabral” or the “Company“) is pleased to announce that it has entered into an agreement with Paradigm Capital Inc. on behalf of a syndicate of investment dealers including Cormark Securities Inc., Research Capital Corporation, and Roth Canada Inc. (collectively, the “Agents“) pursuant to which the Agents have agreed to offer for sale on a “best efforts” marketed basis, an aggregate of up to 16,130,000 units (the “Units“) from the treasury of the Company, at a price of $0.31 per Unit for total gross proceeds to the Company of up to approximately $5 million (the “Offering“).

Each Unit will consist of one common share of the Company (a “Common Share“) and one-half of one common share purchase warrant of the Company (each whole warrant, a “Warrant“). Each Warrant will entitle the holder thereof to acquire one Common Share from the Company at a price of $0.50 per Common Share for a period of 24 months after the closing of the Offering (the “Closing“).

In addition, the Company has granted the Agents an option (the “Over-Allotment Option“) to purchase up to an additional 15% of the Units of the Offering on the same terms exercisable at any time up to 30 days following Closing, for market stabilization purposes and to cover over-allotments, if any.

The net proceeds from the Offering shall be primarily used for exploration and development activities, and general working capital purposes.

The Agents will be paid by the Company on Closing a cash commission equal to 6.0% of the gross proceeds of the Offering (including on any exercise of the Over-Allotment Option), subject to a reduced cash commission equal to 3.0% in respect of any sales of Units to purchasers on a president’s list provided by the Company to the Agents. The Company shall also issue to the Agents that number of compensation options (the “Compensation Options“) as is equal to 6.0% of the Units issued under the Offering (including on any exercise of the Over-Allotment Option), subject to a reduced number of Compensation Options equal to 3.0% in respect of any sales of Units to purchasers on a president’s list provided by the Company to the Agents, each exercisable for one Common Share at $0.31 for a period of 24 months after Closing.

Closing is expected to occur on or about June 15, 2022 and is subject to certain conditions including, but not limited to, the receipt of all necessary corporate and regulatory approvals, including the approval of the TSX Venture Exchange and the applicable securities regulatory authorities.

The Units to be issued under the Offering will be offered by way of a short form prospectus in the provinces of British Columbia, Alberta, Manitoba and Ontario, and may be offered in the United States on a private placement basis pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended (the “U.S. Securities Act“), and applicable state securities laws, and in jurisdictions outside of Canada and the United States, in each case in accordance with all applicable laws provided that no prospectus, registration statement or similar document is required to be filed in such jurisdiction.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. This press release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will they be, registered under the U.S. Securities Act, and such securities may not be offered or sold within the United States absent registration under U.S. federal and state securities laws or an applicable exemption from such U.S. registration requirements.

Term Loan

The Company also announces that it has entered into an agreement for a term loan with Alan Carter, President and Chief Executive Officer of the Company, pursuant to which Dr. Carter will provide short-term financing to the Company by way of an unsecured term loan of up to $1,500,000 (the “Term Loan“). The Term Loan will be advanced to the Company as required and will bear interest at a rate of 10% per annum. The parties intend that interest on the Term Loan be repayable in Common Shares subject to TSX Venture Exchange approval. A total of $250,000 of the Term Loan will be repayable within 90 days following advance of funds and the balance plus applicable interest will be repayable on or before December 31, 2022. If the Company repays the $250,000 contemplated above plus an additional $250,000 prior to December 31, 2022, the maturity date of the Term Loan may be extended from December 31, 2022 until March 31, 2023 at the option of the Company. If the maturity date is so extended, the interest rate will increase to 12.5% retroactively to the date of initial advance on any amount not repaid by December 31, 2022. The proceeds received from the Term Loan will be used for advancement of the Company’s Cuiú Cuiú project and for working capital and general corporate purposes.

Related Party Transaction Disclosure

The Term Loan involves a related party (as such term is defined under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101“)), specifically a director and senior officer of the Company, and constitutes a related party transaction under MI 61-101. This Term Loan has been determined to be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 pursuant to sections 5.5(b) and 5.7(1)(a) of MI 61-101, as the Company is not listed or quoted on any of the stock exchanges or markets listed in subsection 5.5(b) of MI 61-101, and the maximum value of the Term Loan is under 25% of the Company’s market capitalization.

Revised Resource Estimate

The Company plans to release a NI 43-101 technical report for the Cuiú Cuiú property in Q4 2022. This would incorporate drill holes completed up to the end of Q3 2022. The NI 43-101 report is expected to include; a revised resource estimate for the MG gold deposit, maiden resource estimates for the MG and PDM gold-in-oxide blankets, and a maiden resource estimate for the Machichie gold target. Additionally, the current Central resource estimate, which includes both oxide and basement resources, is expected to be updated using revised gold prices and cost estimates, as well as some revisions to existing wireframe models based on recent drilling. The drilling program at Central will not be sufficiently advanced by the end of Q3 2022 to justify a fulsome new wireframe resource model. That is not expected until mid-2023.

The Company also plans to complete a Preliminary Economic Assessment (PEA) focussed on exploitation of the unconformable gold-in-oxide blankets and oxidized saprolite basement at MG, PDM and Central, utilizing revised and maiden resources. The PEA work is expected to commence immediately following the completion of the Q4 2022 technical report.

The Company has retained SLR Consulting (Canada) Ltd. (SLR) of Toronto. SLR will prepare the Q4 2022 NI 43-101 technical report and both the new and revised resource estimates. It will also oversee the forthcoming PEA process.

Heap-leach metallurgical test work on oxide material is nearly completed at Kappes Cassiday & Associates in Reno, Nevada. The final report is expected to be available in June, 2022.

In light of the current market, management has elected to temporarily suspend the Company’s regional reconnaissance drilling program and focus its efforts and resources on advancing the Company’s short- to medium-term objectives of updating the resource estimate, and demonstrating the economic potential of the gold-in-oxide mineralization at Cuiú Cuiú. As a result, the number of rigs on site will be reduced from five to three, with a corresponding reduction in staffing.

About Cabral Gold Inc.

The Company is a junior resource company engaged in the identification, exploration and development of mineral properties, with a primary focus on gold properties located in Brazil. The Company has a 100% interest in the Cuiú Cuiú gold district located in the Tapajós Region, within the state of Pará in northern Brazil. Two gold deposits have so far been defined at Cuiú Cuiú and contain 43-101 compliant Indicated resources of 5.9Mt @ 0.90 g/t (200,000 oz) and Inferred resources of 19.5Mt @ 1.24 g/t (800,000 oz).

The Tapajós Gold Province is the site of the largest gold rush in Brazil’s history producing an estimated 30 to 50 million ounces of placer gold between 1978 and 1995. Cuiú Cuiú was the largest area of placer workings in the Tapajós and produced an estimated 2Moz of placer gold historically.

FOR FURTHER INFORMATION PLEASE CONTACT:

“Alan Carter”

President and Chief Executive Officer
Cabral Gold Inc.

Tel: 604.676.5660

Neither the TSX Venture Exchange nor its Regulation Services Provider (as such term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-looking Statements

This news release contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation (collectively “forward-looking statements”). The use of the words “will”, “expected” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such forward-looking statements should not be unduly relied upon. This news release contains forward-looking statements and assumptions pertaining to the following: strategic plans and future operations, and results of exploration. Actual results achieved may vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. The Company believes the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct.

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