Hello,
I'm new to drones and I have MM, I experience a lot of "weak signal" with it even at distances like 300-500 meters, probably because there is usually no direct line-of-sight to the drone.
So I wanted to check, what happens if I lose the signal? will it hover in place or will it initiate RTH automatically?

That depends on how you have it set.  There are three options on what to do if the drone loses signal - hover, land, and Return To Home.  There is also a setting for RTH altitude.  Those are set in the Fly app.  Sorry, although I can go right to the location in the app, I don't have my phone in front of me, and I don't want to point you in the wrong direction of where to find those settings.

Hello there Droner1107. I am sorry for the trouble this has caused and thank you for reaching out. Can you please fly your DJI Mavic Mini to a different location with less interference to see if the issue will still persist? The said DJI drone might have picked up magnetic interference on the ground, and you took off from close to a buildings with rebar concrete metal objects on it. In addition, please make sure that the antennas are pointed toward the aircraft for optimal transmission. Thank you.