Lincoln Gold's Costly Lifeline: Director's Loan Raises Control Questions

VANCOUVER, BC – December 18, 2025 – Lincoln Gold Mining Inc. announced this week it has closed a pair of financing deals to bolster its treasury, including a significant CDN$850,000 private placement with its own chairman. While the capital injection is earmarked for advancing the company's Nevada gold projects, the terms of the deal—notably a high interest rate and a major potential shift in corporate control—are drawing scrutiny.

The Vancouver-based junior miner (TSXV: LMG) confirmed the closing of the placement of convertible note units with director and Chairman Ian Rogers, alongside a smaller CDN$101,000 shares-for-debt settlement with an arm's length creditor. The proceeds are intended to fund its mining operations, pay outstanding expenses, and serve as general working capital as it pursues its goal of becoming a mid-tier gold producer.

The High Cost of Capital

The financing from Rogers, structured as convertible note units, comes at a steep price. The unsecured notes carry an 18% annual interest rate, payable at maturity in 36 months. This rate is significantly higher than typical corporate debt, suggesting Lincoln Gold may have faced challenges securing capital from more traditional, lower-cost sources.

Financial records provide context for the company's need for capital. As of mid-2023, Lincoln Gold was operating with a working capital deficiency exceeding $2.3 million, a situation that underscores its reliance on financing to sustain operations and fund its ambitious development plans. The high-yield nature of the convertible notes may reflect the inherent risks associated with pre-production mining companies and the tight capital markets they often face.

The note units also include 4,250,000 common share purchase warrants, providing Rogers with further upside potential. The notes themselves can be converted into common shares at a price of CDN$0.20 per share. This structure provides immediate funds for Lincoln Gold but introduces significant potential dilution for existing shareholders down the line.

A Question of Control

Beyond the financial terms, the deal sets the stage for a dramatic shift in the company's ownership structure. Ian Rogers, already a significant shareholder with approximately 20.13% of the company's common shares, stands to increase his stake substantially.

If Rogers were to fully convert his new notes and exercise all associated warrants, his beneficial ownership and control could surge to approximately 44.06% of the issued and outstanding shares. This would firmly establish him as a "Control Person" under the policies of the TSX Venture Exchange, a designation triggered when an entity holds over 20% of voting shares.

This move constitutes a "related party transaction" and is subject to specific regulatory safeguards designed to protect minority shareholders, primarily Multilateral Instrument 61-101. To proceed, the creation of a new Control Person requires "disinterested shareholder approval," meaning a majority of shareholders, excluding Rogers, must vote in favor of the potential change in control.

Interestingly, the TSX Venture Exchange has provided exemptive relief allowing the deal to close before this crucial vote is held. However, this comes with a critical restriction: Rogers is contractually barred from converting his notes or exercising his warrants if doing so would push his ownership above the 19.99% threshold. That blocker will remain in place unless and until he receives approval from both disinterested shareholders and the exchange.

This arrangement highlights a delicate balance. The company secures its much-needed capital immediately, while the ultimate decision on corporate control is deferred to a future shareholder meeting. The outcome of that vote is not guaranteed, particularly as some shareholder groups have previously organized to voice concerns over company governance, signaling a potentially challenging path to securing approval.

Fueling Nevada Gold Ambitions

The nearly one million dollars in new funding is critical for Lincoln Gold's two key assets in Nevada's highly prospective Walker Lane mineral belt. The company has stated the proceeds will directly support these projects.

Primary among them is the Bell Mountain gold-silver property, which the company describes as fully permitted and ready to advance toward production. Having completed the acquisition of the project in early 2025, Lincoln is now focused on arranging construction financing. Once built, the open-pit, heap-leach mine is projected to produce approximately 25,000 ounces of gold equivalent per year. This new capital will help bridge the gap as the company works to secure the larger funding package needed for construction.

The second asset, the Pine Grove gold property, is in the final stages of permitting. It boasts a high-grade gold resource and is positioned as the company's next growth project. The long-term strategy is for cash flow from a producing Bell Mountain mine to fund the full development of Pine Grove.

This financing, though relatively modest in the context of mine construction costs, represents a vital step in maintaining momentum. It allows Lincoln to cover immediate obligations and continue the pre-development work necessary to attract larger-scale investment.

Navigating a Challenging Landscape

The financing arrives at a pivotal and complex time for Lincoln Gold. Just last week, the company's stock dipped after it disclosed it had been served with a statement of claim seeking approximately CDN$877,000 related to alleged unpaid promissory notes. While the company stated it disputes the claims, the legal challenge adds another layer of financial pressure.

This context makes the private placement with its chairman both a strategic necessity and a point of contention. It solves an immediate cash-flow problem and allows development to continue, but it does so by concentrating potential power in the hands of a single insider at a high cost. With the funds now secured, Lincoln Gold's management must now navigate the delicate process of securing shareholder consent for the new balance of power while simultaneously pushing its ambitious Nevada mining plans toward the finish line.