Closing of Acquisition of Mineral Property Interests IN Bulgaria
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NEWS RELEASE
CLOSING OF ACQUISITION OF MINERAL PROPERTY INTERESTS IN BULGARIA
Not for distribution to United States newswire services or for release, publication,
distribution or dissemination directly, or indirectly, in whole or in part, in or into the United States.
July 21, 2017 - Vancouver, British Columbia – Velocity Minerals Ltd. (TSXV: VLC.H) (“Velocity”) is
pleased to announce that it has closed its Share Pu rchase and Sale Agreement with 1077076 B.C. Ltd.,
(“TargetCo”), and the shareholders of TargetCo, such that Velocity has acquired all of the outstanding
shares of TargetCo in exchange for 18,000,000 common sh ares of Velocity, with the effect that TargetCo
is now a wholly-owned subsidiary of Velocity (the “Acquisition”). Velocity now holds (through TargetCo)
options to acquire interests in th e Tintyava propert y and the Ekuzya property located in south-eastern
Bulgaria. See Velocity’s news releases of Februa ry 6, 2017 and June 1, 2017 for full details of the
Acquisition and the related mineral property interests. In connection with the closing of the Acquisition,
Velocity’s common shares will resume trading on the TSV Venture Exchange under the symbol “VLC” on
July 25, 2017.
The following material changes also occurred in conjunction with closing of the Acquisition:
1. The 18,000,000 common shares of Velocity issued to the four shareholders of TargetCo (the
“Vendors”) are subject to a Surplus Escrow Agreement (within the meaning of applicable TSXV policies)
to be released as to 5% upon closing, 5% upon six months after closing, an additional 10% upon 12 and 18
months following closing, an additional 15% upon 24 and 30 months following closing, and the balance of
40% upon 36 months following closing. In addition, 600,000 shares of Velocity were issued to Henk van
Alphen as a finder’s fee for arranging the Acquisition.
2. The concurrent private placement of Velocity units at $0.25 per unit has been closed, and an
aggregate of 8,857,000 units were issued fo r total gross proceeds of $2,214,250 (the “ Financing”). Each
unit consists of one common share and one-half of one common share purchase warrant, with each whole
warrant exercisable for 12 months at $0.40 per share, provided that in the event the closing price of
Velocity’s shares on the TSX Venture Exchange is e qual to or greater than $0.60 per share for ten
consecutive trading days at any time following four months after the date of Closing, Velocity may reduce
the remaining exercise period of the Warrants to not less than 30 days following the date of such notice.
Aggregate finders’ fees of $94,448 and 377,790 finders’ warrants were paid by Velocity. Each finder’s
warrant entitles the holder to acquire one share of Velocity at $0.25 over 24 months.
3. A total of 14,000,000 previously issued warra nts were transferred by the holders to the four
Vendors, for no additional consideration. All of the 14,000,000 warrants have been exercised by the
Vendors (at $0.075) such that Velocity received exerci se proceeds of $1,050,000. Subsequently a total of
5,000,000 of such shares were sold at market value. The remaining 9,000,000 shares are held in escrow
pursuant to the terms of a Value Security Escrow Agre ement to be released as to 10% on closing, and an
additional 15% every six months thereafter over 36 months.
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4. The existing holders of 7,500,000 previously i ssued common shares of Velocity entered into lock-
up agreements with Velocity, wher eby those shares will be held in escrow and released as to one-third
(2,500,000 shares) on each of the sixth, twelfth and eighteenth months following closing.
5. All of the directors of Velocity have resigne d (except for Joseph Martin), and have been replaced
by: Keith Henderson, Gord Doerksen, Mark Cruise, and Daniel Marinov. In addition, each of the officers
of Velocity has resigned and have been replaced with Keith Henderson as CEO and President, Stuart Mills
as Vice President – Exploration, and Blaine Bailey as CFO. Please refer to Velocity’s news release of
February 6, 2017 for details of each of the new officers and directors.
Ekuzya Property
Velocity (through a Bulgarian subsidiary of TargetCo ) holds an option to acquire an undivided 50% legal
and beneficial interest in the Ekuzya property free and clear of all liens and encumbrances in consideration
for incurring US$1 million in exploration expenditures over a two year period, as to US$500,000 in the first
year and US$500,000 in the second year; provided that if after Velocity has incurred the expenditures and
there is a delay of more than 180 days in effecting th e transfer of the earned interest in the property to
Velocity or if at any time prior thereto Velocity elects not to exercise the option, then Velocity’s interest in
the Property will be limited to the obligation of Gorobso to pay Velocity a 5% gross value commission on
all metals discovered on the property as a result of Velocity’s exploration activities thereon.
Velocity has filed on SEDAR a technical report prepared under National Instrument 43-101 on the Ekuzya
property (the “Technical Report”). The Technical Re port is authored by James Hogg of Addison Mining
Services Ltd. The Ekuzya property has an area of 2.13 km 2 and is located within the Chala Mining
Concession (the “Concession”) held by Gorubso Kharzh ali A.D. (“Gorubso”), and located in southeast
Bulgaria, about 230km by road, east-southeast of the capita l Sofia. The Ekuzya property is situated south
and adjacent to the currently operating Chala gold mi ne (the “Chala Mine”), operated by Gorubso.
Gorubso’s processing plant including a cyanide tank leach plant and tailings management facility is located
at the town of Kardzhali, 35km by road from the Chala Mine. The mining concession is valid until 2031.
Ekuzya can be accessed year-round by four-wheel driv e vehicle via a collection of existing forestry and
historical drill roads. The Chala mine office is located in the small village of Gorno Bryastovo where mine
staff totalling 210 employees operates three shifts per day, year-round operation. The Chala mine site
contains basic ore handling infrastructure, an underground explosives magazine and various workshops for
routine maintenance and repair. Run of mine ore is transported by trucks to Kardzhali for processing at
Gorubso’s processing plant prior to crushing, milling, gravity concentration and on-site cyanide in leach
(CIL) extraction, elution and production of gravity concentrate and dore.
To date, neither Velocity nor TargetCo has not comp leted any exploration on the Ekuzya property, other
than activities related to due diligence, data compilati on and site visits. All the results described below
result from work completed by previous operators.
TargetCo has compiled all of the exploration data av ailable within the Ekuzya property and has digitally
captured the most significant information into a proj ect database stored within a Micromine exploration
and mining software system. Historical explorati on within the Ekuzya prope rty includes 79 base metal
diamond core drill holes for 64,350m with no gold analysis and 17 gold diamond core drill holes for
15,095m.
The mineralisation at the Ekuzya property is an Intermediate Sulphidation Epithermal vein type gold – base
metal deposit. Previous Soviet-style exploration appears to have been vigorous, systematic and based on a
solid understanding of economic geology. The digital capture of these large data sets (more than 200 large
format maps scanned and digitised) has enabled TargetCo to produce a reasonable model of mineralisation
within the Ekuzya property with the result that the structural control on mineralisation has become apparent.
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TargetCo has identified three target areas named Zone 5, Zone 5a, and Ekuzyata, where previous operators
have reported significant gold results. The highest pr iority target is the potentially open pittable,
stratabound epithermal vein and dissemination target at Ekuzyata. Previous trenching has identified a
shallow dipping zone over a strike length of 500m a nd a down dip extent of at least 250m. Previous
trenching returned multiple significant intercepts across the strike extent with 3.5m @ 6.0g/t in the west,
10.8m @ 2.2g/t in the centre of the target and 3.1m @ 3.6g/t in the east. True thicknesses at Ekuzyata are
at present difficult to ascertain with the current leve l of available data. The stratabound mineralisation is
present at multiple horizons and the potential for stack ed mineralisation is considered to be good. Due
diligence check sampling performed by the author of the Technical Report from re-opened trenches
confirmed the occurrence, approximate location and association of mineralisation at the at Ekuzyata target.
The target was partially drill tested by a previous operator of the property, Asenovgrad Geoengineering
EAD, with four wide-spaced shallow diamond drill holes, confirming the sporadic nature of the mineralised
zone at least 250m down dip.
Exploration recommendations set out in the Technical Report for the first year of exploration include
acquisition of satellite imagery and topographic data, DGPS survey of hi storic exploration collars and
trenches, soil sampling over the Ekuzyata target, syst ematic trenching of soil geochemistry anomalies,
twinning of one drill hole, up to 8 drill holes at target Zone 5, and if appropriate, drill testing of Ekuzyata
soil and trench anomalies.
The recommended budget for the first year of exploration of US$510,000 includes 1,000m of diamond core
drilling after the completion of soil sampling and trenching.
Tintyava Property
Velocity (through a Bulgarian subsidiary of TargetCo ) holds an option to acquire an undivided 70% legal
and beneficial interest in the Tintyava property free and clear of all liens and encumbrances granted by
Gorubso in consideration for the payment of the $325,000 tender fee to the Ministry of Energy of the
Republic of Bulgaria for an exploration and prospecting licence for Tintyava property. The option is
exercisable for a period of six years by Velocity preparing (at its own cost) a preliminary economic
assessment within the meaning of National Instrument 43-101 on the Tintyava property.
James Hogg, MSc, BSc, MAIG, is the author of the Technical Report and an independent qualified person
within the meaning of National Instrument 43-101. Mr. Hogg has reviewed the scientific and technical
information from the Technical Report that forms th e basis of this news release and has approved the
disclosure herein.
On Behalf of the Board of Directors
"Keith Henderson"
President & CEO
For further information, please contact:
Keith Henderson
Phone: +1-604-484-1233
E-mail: [email protected]
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION : This news release
includes certain “forward-looking statem ents” under applicable Canadian securities legislation. Forward-looking
statements include, but are not limited to, statements with respect to: future exploration and testing carried out on the
Ekuzya and Tintyava properties; use of funds; and the future business and operations of Velocity. Forward-looking
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statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are
subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future
events to differ materially from those expressed or implied by such forward-looking statements. Such factors include,
but are not limited to: general business, economic, comp etitive, political and social uncertainties; operating and
technical difficulties in connection with mineral exploration and development activities, actual results of exploration
activities; lack of investor interest in the Financing; re quirements for additional capita l; future prices of gold and
precious metals; changes in general economic conditions; accidents, delays or the failure to receive board, shareholder
or regulatory approvals, including the required permits; resu lts of current exploration and testing; changes in laws,
regulations and policies affecting mining operations; title disputes; and the fact that Velocity’s interest in the Ekuzya
and Tintyava properties is only an option and there is no guar antee that the interest if earned will be certain. There
can be no assurance that such statemen ts will prove to be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly, read ers should not place undue reliance on
forward-looking statements. Velocity disclaims any inten tion or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, except as required by law.
This news release does not constitute an offer of sale of any of the foregoing securities in the United States. None of the foregoing securities have
been and will not be registered under the U.S. Securities Act of 1933, as amended (the “1933 Act”) or any applicable state securities laws and may
not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S u nder the 1933 Act) or
persons in the United States absent registration or an applicable exemption from such registration requirements. This news rel ease does not
constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of the foregoing securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful.