Silver Bear Resources has approved entering into a facilities agreement and certain related security documents with the Company's major shareholders, Inflection Management and A.B. Aterra Investments (Aterra and together with Inflection, the Lenders).

,The deal is for providing the Company and its indirect wholly-owned Russian subsidiary, Closed Joint Stock Company "Prognoz" ("Prognoz" and together with the Company, the "Borrowers"), with financing for the final development, construction and commissioning of the Company's Mangazeisky Silver Project in Russia (the "Project").

Silver Bear's CEO, Graham Hill commented: "It is with great pleasure we announce the securing of the last element in the project financing package which ensures that the project's accelerated timeline remains on-track. I would like to extend our appreciation to our major shareholders, Inflection and Aterra, for their unwavering support during 2015 and 2016 in helping the team realize the development of this unique and robust asset. Finalizing this agreement is a significant milestone for the Company and major catalyst in providing the financial support to advance Vertikalny towards commissioning in the fourth quarter of this year."

Material Terms of the Facilities Agreement

Pursuant to the Facilities Agreement, the Lenders will make available to the Company and Prognoz secured loans in the aggregate principal amount of US$55.2 million comprising three tranches. Tranche A will consist of a term loan facility of US$43.2 million, of which Inflection will provide US$30.6 million and Aterra will provide US$12.6 million (the "Term Loan Facility"). Of the US$43.2 million total Tranche A commitment, US$33.2 million will be made available to the Company with the remaining US$10.0 million being made available to Prognoz (collectively "Tranche A"). The Lenders will also make available to Prognoz, subject to the terms and conditions of the Facilities Agreement, a Tranche B working capital facility of US$10.0 million (the "Working Capital Facility") and a Tranche C contingent facility of US$2.0 million (the "Contingent Facility", and together with the Working Capital Facility, the "Additional Facilities"). The Working Capital Facility will consist of US$7.1 million from Inflection and US$2.9 million from Aterra. The Contingent Facility will consist of US$1.42 million from Inflection and US$0.58 million from Aterra. The Term Loan Facility, together with the Additional Facilities, are collectively referred to as the "Secured Loan Funding".

Pursuant to the Facilities Agreement, a portion of the Term Loan Facility will be used by the Company to repay the principal and accrued interest on certain outstanding promissory notes previously issued by the Company to the Lenders. The Company anticipates that the Secured Loan Funding will result in net new funding to the Company and Prognoz of approximately US$22 million following the repayment of such outstanding promissory notes.

The Secured Loan Funding will accrue interest at a rate of 15% per annum, calculated and accrued quarterly, and will be payable on January 1, April 1, July 1 and October 1 in each calendar year and on the maturity date, being the date that is forty-eight months following the date on which the Term Loan Facility has been drawn in full. Pursuant to the terms of the Facilities Agreement, all interest accrued before July 1, 2017 will be capitalized and added to the principal amount of the Term Loan Facility such that the first interest payment under the Facilities Agreement would therefore be in respect of the quarterly period ending October 1, 2017.

The Secured Loan Funding will be secured and each of the Company, Prognoz and Silver Bear Holdings Limited (Barbados) ("SBR Barbados"), a direct wholly-owned subsidiary of the Company, will act as guarantors of each other's obligations under the Facilities Agreement and all related security documents.

It is anticipated that the Company, Prognoz and SBR Barbados will enter into the Facilities Agreement and related security documents once the Shareholder Approval (as described below) has been obtained.

TSX Approval and Disinterested Shareholder Approval

The Toronto Stock Exchange (the "TSX") provided its conditional approval for the Facilities Agreement, which conditional approval is subject to, among other things, receipt of the Shareholder Approval, as described below.

Because the Lenders are insiders (as such term is defined in the TSX Company Manual) of Silver Bear, the rules and policies of the TSX require that the Company obtain disinterested shareholder approval (the "Shareholder Approval") in connection with the Secured Loan Funding. As a result, Silver Bear intends to hold a special meeting of its shareholders on Friday, September 2, 2016 at which the Company's shareholders will be asked to approve the payment of interest to the Borrowers in connection with the Secured Loan Funding.

The proposed Secured Loan Funding remains subject to, among other things, the approval of the Company's minority shareholders and any other required regulatory approvals, as well as other customary terms and conditions. There can be no assurances that the Secured Loan Funding will be completed, or if completed, that the conditions to drawdown would be satisfied.

Standstill and Undertaking Agreement

Silver Bear also announces that it has obtained waivers from Inflection and Aterra in respect of the default caused by the Company's failure to repay on the March 31, 2016 maturity date the principal amounts and accrued interest on the US$3.5 million promissory notes (the "February 2015 Notes") issued to each of Inflection and Aterra on February 27, 2015. Such waivers will terminate on the earlier of September 30, 2016 and the date on which the February 2015 Notes are repaid in full. The Company, Inflection and Aterra have also entered into a standstill and undertaking agreement pursuant to which both Inflection and Aterra have undertaken that they will not take any enforcement action against the Company in the event of an occurrence of an event of default under any of the outstanding promissory notes of the Company currently held by Inflection and Aterra.