New Found Gold Corp. entered into a binding letter agreement to acquire Mexican Gold Corp. (TSXV:MEX) in a reverse merger transaction for CAD 7.9 million on January 26, 2020. Under the terms of the letter agreement, New Found Gold is required to complete a minimum CAD 10 million financing and post-Transaction, Mexican Gold Corp. will have a minimum of approximately CAD 19 million in working capital. Mexican Gold Corp. will complete 10:1 share consolidation and then amalgamate a newly formed wholly owned subsidiary with New Found Gold Corp. on a share for share basis. Following the share consolidation, Mexican Gold Corp. will issue 78.9 million shares to New Found Gold Corp. shareholders, along with incentive stock options and warrants entitling New Found Gold Corp. shareholders to acquire a further 23.5 million post-consolidated shares (7.5 million options plus 16 million warrants). Upon closing, existing shareholders of Mexican Gold Corp. will hold 11.6% of the issued and outstanding post-consolidation shares of the resulting issuer (14.5% of the post-consolidation shares on a fully diluted basis). Former shareholders of New Found Gold Corp. will hold 88.4% of the issued and outstanding post-consolidation shares of the resulting issuer (85.5% of the post-consolidation shares of the resulting issuer on a fully diluted basis). At closing, the Company's name will be changed to Bonanza King Mining Corp., or such other name that is acceptable to regulatory authorities.

The Board of Directors of the resulting issuer following the transaction is expected to consist of current Mexican Gold Corp.'s directors Philip O'Neill and John Anderson as well as New Found Gold Corp.'s Chief Executive Officer, Denis Laviolette, current Executive Chairman Collin Kettell and current Director Craig Roberts. Denis Laviolette will assume the position of Chief Executive Officer of the resulting issuer and Collin Kettell will assume the position of Executive Chairman. Greg Matheson will take position as Chief Operating Officer, Ken Rattee as VP of Exploration, and Michael Kanevsky as Chief Financial Officer. The transaction is subject to completion of definitive documentation, TSXV approval, approval of the shareholders of New Found Gold Corp. and Mexican Gold Corp., a spinout of New Found Gold Corp.'s non-Newfoundland mining assets and completion of an equity financing of not less than CAD 10 million. The transaction is expected to be completed on or before April 30, 2020.