Fortune Minerals Ltd T.FT

IMPORTANT To REMEMBER That SECURED Creditors HOLD FT Shares

[ztransforms173]

11. DEBTS

[a] On August 12, 2022 the Company and the holders of the 2015 Debentures entered into new secured term debentures (the “Amended Debentures”) to replace the original December 31, 2022 and 2021 unsecured 2015 Debentures which matured on August 12, 2022. The Amended Debentures had an aggregate principal amount of $12,363,518 (being equal to the aggregate principal and accrued interest of the 2015 Debentures on August 12, 2022), matured on November 30, 2022, bearing interest at a rate of 10% per annum, compounded monthly in arrears for the extension period between August 12, 2022 and November 30, 2022, and were secured by all of the assets of the Company, including the NICO Project.

As additional consideration for the extension of the maturity date of the 2015 Debentures, the Company paid to the holders of the Amended Debentures an extension fee of an aggregate of $350,000 upon issuance of the Amended Debentures. This extension fee was satisfied by the issuance of an aggregate of 3,500,000 common shares of the Company (the “Extension Shares”) to the holders of the Amended Debentures at a deemed price of $0.10 per Extension Share. The fair value of the shares issued was $350,000 and has been included in borrowing costs, which will be amortized to interest expense over the term of the Amended Debentures. Total borrowing costs of $408,420 was incurred to extend the debentures.

On November 30, 2022 the Company reached agreements with the holders of the Amended Debentures to settle the outstanding amounts. One of the holders agreed to retire its debt totaling $7,280,173 including principal and interest as at November 30, 2022. A cash payment of $1,250,000 was paid to the holder and the remaining debt was settled through the issuance of common shares [see note 5i.[d]].

The second holder of the Amended Debentures totaling $5,461,376 including principal and interest as at November 30, 2022 agreed to extend the maturity date to December 31, 2023.

^^^

5. SHARE CAPITAL AND RESERVES

[d] On November 30, 2022, the Company entered into an agreement with one of the holders of the 2015 Debentures to retire its debt for a cash payment of $1,250,000 and the remainder in common shares. An aggregate of 73,500,000 common shares of the Company was issued, on December 2, 2022, at a deemed price of approximately $0.082 per share to settle the balance of $6,030,173. The fair value of the shares issued was $5,145,000 based on the share price on the TSX as at close of trading on November 30, 2022. The difference of $885,173 was allocated to a gain on extinguishment of debt on the Consolidated Statements of Loss and Comprehensive Loss. Share issuance costs of $17,059 were incurred to complete this share issuance. See Note 11 for additional disclosure related to the debt settlement.

https://s1.q4cdn.com/337451660/files/doc_financials/2022/ar/230519-annual-report-2022.pdf

***

z173