Marengo Mining, together with its wholly-owned subsidiaries, Marengo Mining (PNG) Ltd and Yandera Mining Company Ltd, has signed a loan conversion and debenture purchase agreement with its major shareholder, Sentient Executive GP IV, Limited for the General Partner of Sentient Global Resources Fund IV, LP.

Marengo and Sentient have agreed to a transaction pursuant to which the company will: (i) convert the unsecured interest-bearing debt facility with Sentient, in the aggregate principal amount of US$3 million dated April 29, 2014 and due on December 31, 2014, along with interest of US$55,065 thereon into 9.0% senior unsecured convertible debentures of the company in the principal amount of US$3,055,065; and (ii) issue and sell to Sentient 9% senior unsecured convertible dentures of the company up to a principal amount of US$7 million.

Marengo will also pay to Sentient an establishment fee of 2% of the amount of Investment Debentures purchased by Sentient. The debentures will mature on June 30, 2016. The debentures and interest debentures will be convertible, at the option of Sentient, into common shares or Chess Depositary Interests (CDIs) of the company at a conversion price of Can$0.015 per common share or CDI.

Sentient and its related entities currently hold about 22% of the issued and outstanding common shares of the company and would hold about 80% of the common shares of the company, assuming the conversion of all the debentures issued in connection with the transaction and the purchase by Sentient of the entire principal amount of US$7 million of investment debentures, as well as the conversion by Sentient of all debentures issued and issuable under the prior debentures financing between the company and Sentient completed earlier this year.

Marengo expects to use the funds obtained from the transaction for the development of the Yandera project, including ongoing exploration and feasibility study work, to fund its working capital requirements and for general corporate purposes.

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