California Gold Provides Company Update and Completes

TORONTO, November 06, 2020 (GLOBE NEWSWIRE) – California Gold Mining Inc. (CSE: CGM) (“California Gold“or the”Company”) Announces today a strategic review in a special committee and the completion of a subordinated debt financing.

Special committee

Following the announcement of September 30, 2020 regarding the appointment of Mr. Scott Rasenberg as Chairman of the Board to replace Mr. Patrick Cronin and Mr. Larry Phillips as Interim President and Chief Executive Officer, at the following the termination of Mr. Vishal Gupta’s employment, the board of directors (the “advice”) And the new management team have concluded an initial review of the operations and financial condition of the Company, including an assessment of the short-term cash requirements for the orderly pursuit of the Company’s operations.

The Council established a special committee, composed of Scott Rasenberg, Larry Phillips and William Tomlinson (the “”Special committee‘), To conduct a review process to explore, examine and assess a wide range of potential alternatives focused on maximizing shareholder value, including a potential sale or merger of the Company. Company, a divestiture of mineral exploration assets held by the Company and a general review of the hemp business. The special committee will also consider the financing alternatives available to the company due to the limited capital resources and, as explained in more detail below, the inability to earn income from the isolated stocks held under of hemp activity. There can be no assurance that this process will result in a transaction.

The Company has not made any decisions regarding the strategic alternatives regarding the Company’s mining assets at this time, and there can be no assurance that the evaluation of the alternatives will result in a transaction or change in strategy. The Company does not intend to disclose further developments regarding this process unless and until the Board has approved a specific course of action or the Company has determined that further disclosure is appropriate or necessary.

Financing of subordinated loans

Regarding the financial position of the Company, the Company has entered into a secured subordinated credit facility (the “Subordinated secured loan“) with RW Tomlinson Limited on the following main conditions: a principal amount of up to $ 1,000,000, advanced in two installments of $ 500,000, the first immediately and the second if certain conditions are met at the beginning of January 2021, interest run at 14% per annum and is paid at maturity (i.e. April 2021). Warrants will also be issued to the subordinate lender to purchase 300,000 common shares at an exercise price equal to the higher by $ 0.15 and the closing market price on November 6, 2020 (“Mandates“). The first tranche of the subordinated secured loan has been received by the Company, the proceeds of which, together with the availability of the second tranche, are expected to finance the operating costs of the Company until the second quarter of 2021. As stated above , the Special Committee will continue to review and assess the funding alternatives available to the Company.

Since RW Tomlinson is an insider of the Company, the subordinated secured loan and related warrants constitute a “related party transaction” within the meaning of Multilateral Instrument 61-101. – Protection of holders of minority securities in special transactions (“MI 61-101), Which requires the Company to obtain minority approval and a valuation of the related party transaction, unless there is an exemption from these requirements. The Company avails itself of the exemptions provided for in sections 5.5 (b) and 5.7 (1) (a) of Regulation 61-101 on the basis that the Company’s securities are listed on the Canadian Securities Exchange (“CST”) And that the fair market value of the related party transaction is less than 25% of the Company’s market capitalization.

In connection with the above financing, Romspen Investment Corporation (“Romspen“), the Company’s existing senior lender, has agreed to the new financing and has agreed to forbear from any execution in connection with the missed interest payments under the senior facility for September, October and November 2020 and add these unpaid amounts to the amounts to be repaid on the due date in exchange for the issuance of warrants to purchase 300,000 common shares at an exercise price equal to the greater of $ 0.15 and the market closing price on November 6, 2020.

Hemp business

Since December 2019, the Company’s industrial hemp activity (“Hemp business”) Has been affected by external factors, including a decrease in demand and competition among supply chain players, regulatory uncertainties regarding the characterization of the CBD isolate and the impact of COVID-19 on general economic conditions, leading to significant pressure on prices.

Due to the evolution of these developments, the Company did not plant any crops on the Grove Road farm in 2020 and, in September 2020, put the property up for sale. The proceeds of any sale will be used to reduce the Company’s senior credit facility with Romspen. The Special Commission is no longer considering the purchase of successive batches of biomass from other farmers.

The Company’s revenue from the sale of the first tranche of CBD Isolate announced on August 17, 2020 has been applied to the outstanding liabilities related to the purchase of biomass and processing by Isolera. The sale was made by Isolera, and the Isolate form of CBD required additional processing costs that were not originally considered. Therefore, no proceeds from the sale were received by the Company.

The company’s current inventory of bulk hemp-CBD products is located at the Isolera facility in North Carolina. Based on Isolera’s unaudited statements, the inventory equates to over 31 kilograms of CBD isolate, 520 liters of full spectrum distillate, 833 liters of crude oil and 754 liters of Mothers Liquor – 754 liters. The special committee undertook a review of the hemp activity as well as an assessment of the fair valuation of the inventory. The view of the Special Committee, at present, is that the value of the inventory is, without further processing (which would result in significant additional expense), insufficient to pay for all associated costs and expenses and accrued liabilities. of the hemp business. .

Larry Phillips added that “It has been a difficult year for California Gold due to factors such as the COVID-19 pandemic and developments in the CBD isolates market. The Company also saw changes in its board of directors and senior management following the AGM. Since taking on the role of Interim President and CEO at the end of September, I have worked closely with the CFO and other members of the Special Committee to carefully and carefully review the activities and Company operations. While we are still in the midst of the Special Committee’s review, we have already determined that it is in the best interests of the shareholders that the hemp business be liquidated in an orderly manner in order to preserve overall value for all shareholders. . “

About California Gold Mining Inc.

California Gold Mining Inc. is focused on the continued development of a high quality gold resource on its 100% owned Fremont property in Mariposa County, California. The Fremont property consists of a set of fully private and patented lands totaling 3,351 acres of historically producing gold mines, with a national road, a PG&E electrical substation and abundant water present on the property itself. . The Fremont property is located in California’s prolific Mother Lode gold belt which has produced over 50 million ounces of gold. The Company purchased the Fremont property in March 2013.

The Company’s technical report with respect to the Fremont property prepared in accordance with National Instrument 43-101 is available on SEDAR at www.sedar.com and on the Company’s website at www.caligold.ca.

ATTENTION REGARDING FORWARD-LOOKING INFORMATION

This California Gold press release contains statements that constitute “forward-looking statements”. Forward-looking statements are statements which are not historical facts and include, but are not limited to, the disclosure of possible events, which are based on assumptions and action plans, and in some cases may be identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “the potential” and similar expressions, or that events or conditions “will”, “would”, “could”, “could” “or” should “occur, or the negative forms of any of these words and other similar expressions. Forward-looking statements include: the intention of the Special Committee to review and assess a wide range of potential alternatives focused on maximizing shareholder value; the Company’s intention not to disclose further developments regarding the Special Committee review process; management’s expectations as to the length of time the subordinated secured loan will finance operations; the issuance of warrants to the subordinate lender; the Company’s intention to apply the proceeds from the sale of Grove Road Farm to the Company’s senior credit facility with Romspen; and statements relating to the processing and future plans of the company’s hemp business. Forward-looking statements are based on various assumptions, including with respect to sources of funding and use of funds, results of operations, performance, business prospects and opportunities. Although the forward-looking statements contained in this press release are based on what the management of the Company considers to be reasonable assumptions as of the date of this press release, these assumptions may prove to be incorrect. Forward-looking statements involve known and unknown risks and uncertainties, they should not be interpreted as guarantees of future performance or results, and they do not necessarily constitute precise indications as to whether or not such results will be obtained. A number of factors could cause actual results, performance or achievements to differ materially from results discussed in forward-looking statements, including, but not limited to: general business, economic, competitive, political and social uncertainties; lack of available capital; the Company’s ability to sell Grove Road Farm and the expected timing and conditions of such sale; the impact of COVID-19 on the Company’s activities; and other risks detailed from time to time in the Company’s current files with securities regulatory authorities, which files can be viewed at www.sedar.com. California Gold cannot assure readers that actual results will be consistent with these forward-looking statements. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this press release. These forward-looking statements are made as of the date of this press release and California Gold disclaims any intention or obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as otherwise provided by the law.

Neither CSE nor its regulatory services provider (as that term is defined in CSE policies) accepts responsibility for the adequacy or accuracy of this release.

For more information contact:

Mr. Larry Phillips, Interim President and CEO
Phone. : 647.977.9267 | Website: www.caligold.ca

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