NOVEMBER 23, 2020, Toronto, ON – Star Royalties Ltd. (the “Company” or “Star Royalties”) and Kerr Mines Inc.(TSX: KER, OTC: KERMF) (“Kerr”) are very pleased to jointly announce the closing of the first instalment of their previously announced US$18,000,000 gold purchase and sale agreement (the “Streaming Agreement”) which will be used to finance the restart of underground operations and gold production at the Copperstone Gold Mine (“Copperstone”) in Arizona, USA.

Giulio T. Bonifacio, Chief Executive Officer of Kerr, stated: “We are excited to enter this new chapter for Kerr Mines with the closing of this first instalment of the Copperstone stream financing. We look forward to working with Star Royalties to expeditiously restart operations at our flagship asset. Our focus now shifts to securing long term lead items, finalizing the process facilities to accommodate our whole ore leach approach, and sourcing underground contractors and equipment.”

Alex Pernin, Chief Executive Officer of Star Royalties, commented: “Following our comprehensive due diligence process, we have great confidence in both Copperstone’s potential and Kerr’s ability to execute a successful restart of operations. We look forward to working closely with their team as we transition Copperstone into Arizona’s next producing gold mine.”

The US$18 million advance payment under the Streaming Agreement will be provided in three equal installments, with the first US$6 million installment having now been advanced. The remaining two tranches will be advanced at the request of Kerr as it incurs expenditures for the restart of Copperstone, with a further US$6 million payable on or before February 28, 2021 and the final US$6 million payable on or before April 30, 2021.

Summary of Transaction Terms

• Star Royalties will purchase from Kerr an amount of refined gold equal to 9.9% of gold produced at Copperstone until a cumulative 21,000 ounces of refined gold are delivered, then 3.3% of gold produced until a cumulative 27,200 ounces are delivered, and 1.2% of gold produced thereafter for the remaining life of mine.
• In addition to the US$18 million advance payment, Star Royalties will provide a cash payment to Kerr for each ounce of gold delivered equal to 25% of the average London Bullion Market Association gold spot price (PM) for the five consecutive trading days prior to delivery. Kerr has granted security over all of its assets to the Company to secure the obligations of Kerr to the Company under the Streaming Agreement.
• In connection with the advance of the first tranche of US$6 million, Kerr repaid in full the US$2 million convertible promissory note held by Sprott Private Resource Lending (Collector) LP (“Sprott”). This repayment resulted in Sprott not exercising its conversion rights at CAD$0.13 for US$500,000 and CAD$0.16 for US$1.5 million, avoiding dilution to Kerr shareholders.

In connection with the entering into the Streaming Agreement, Kerr, Trans Oceanic Minerals Company Ltd. (“TOMCL”) and Braydon Capital Corporation (“Braydon”) amended certain terms and conditions of the outstanding debt held by TOMCL and Braydon (the “Note Amendments”). In particular, the parties agreed as follows:

• The maturity dates of outstanding promissory notes held by Braydon and TOMCL in the aggregate principal amount of approximately US$9.3 million were extended from August 22, 2021 to December 31, 2023;
• The rate of interest payable on the principal of the notes was increased from 8% to 10%, with interest payable quarterly starting on the commencement of commercial production;
• Two C$1 million unconvertible promissory notes, one held by each of Braydon and TOCML, were amended to include a conversion feature providing that the principal amount of the notes can be converted into common shares of Kerr at any time prior to maturity at a price of C$0.16 per share, subject to Kerr having a right of early conversion in the event the volume-weighted average trading price of the common shares exceeds C$0.30 for twenty consecutive trading days; and
• Kerr also agreed to make prepayments against the principal of the notes by way of preferential payments, in certain circumstances.