Velocity Announces C$9M Strategic Investment by Atlantic Gold
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NR-19-02 January 17, 2019
Velocity Announces C$9M Strategic Investment by Atlantic Gold
NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Vancouver, B.C – January 17, 2019 – Velocity Minerals Ltd. (TSXV: VLC) (“Velocity” or the “Company”) is
pleased to announce that it has entered into an investment agreement, dated January 1 6, 2019 (the
“Agreement”) with mid-tier producer Atlantic Gold Corporation (TSXV: AGB) (“Atlantic Gold”) for a C$9.0
million strategic investment (the “ Strategic Investment”). In connection with the Strategic Investment,
Atlantic Gold has agreed to purchase 18,600,000 units of Velocity in a private placement at a price of
C$0.21 per unit for total gross proceeds of approximately C$3.9 million (the “ Equity Placement”). In
addition, Velocity has agreed to issue and sell to Atlantic Gold approximately C$5.1 million principal
amount of secured convertible debentures of Velocity (the “Convertible Placement”). Upon closing of the
Strategic Investment, Atlantic Gold will own 19.9% of the outstanding common shares of Velocity on a
non-diluted basis and 39.2% on a partially-diluted basis.
“We are delighted to welcome Atlantic Gold as a strategic investor in the Company . Atlantic’s
development expertise in Nova Scotia complements our exploration success in Bulgaria. Our corporate
strategies are aligned , with Velocity’s development objectives mirroring Atlantic’s successful ‘hub and
spoke’ approach of satellite deposits feeding a centralized processing plant ,” stated Keith Henderson,
President & CEO of Velocity. “The proceeds from the financing will allow for the progression of our PEA-
stage Ro zino gold project to ward feasibility and for exploration and resource definition of several
additional projects. We believe that 2019 will be a transformative year for Velocity.”
Steven Dean, Chairman and CEO of Atlantic Gold, commented “ We are pleased to enter into a strategic
partnership with the Velocity management team with the shared objective of advancing its Bulgarian
exploration and development assets through to feasibility stage and beyond. Through our understanding
of the Bulgarian mineral properties to date, Atlantic Gold sees many of the hallmarks we recognized only
4 years ago in our Moose River Consolidated mine which has led to its successful construction,
commissioning and operation with significant production growth in the near f uture. We look forward to
completing the Strategic Investment in short order and working collaboratively with Velocity in 2019.”
Transaction Details
In connection with the Equity Placement, Atlantic Gold will acquire 18,60 0,000 units (the “ Units”) of
Velocity at a price per Unit of C$0.21 for total gross proceeds of C$3,906,000. Each Unit will consist of one
common share of the Company and one -half of one common share purchase warrant, with each whole
warrant (a “ Warrant”) entitling Atlantic Gold to ac quire one common share at a price of C$0.25 per
common share for a period of 36 months following the closing of the Equity Placement.
The Convertible Placement will consist of C$5,09 4,000 principal amount of secured convertible
debentures (the “ Convertible Debentures”) issued by the Company to Atlantic Gold. The Convertible
Debentures will carry an 8.5% coupon over a five year term and will be secured by general security
agreement of the Company. Velocity can elect to pay any interest due in cash or shares at its sole election.
NR-19-02 Continued January 17, 2019
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Atlantic Gold can, at its option, convert the Convertible Debentures into common shares of Velocity at a
conversion price of C$0.25 per share.
In addition, pursuant to the terms of the Agreement, Atlantic Gold will be granted:
• the right to appoint one director to Velocity’s Board of Directors upon the closing of the Equity
Placement, and increasing to two out of five directors upon Atlantic Gold holding over 30% of the
issued and outstanding shares of Velocity;
• the right to participate in any future equity issuances by Velocity in order to allow Atlantic Gold
to maintain its pro rata fully-diluted ownership in Velocity;
Upon closing of the Strategic Investment, Atlantic Gold will be subject to a one-year standstill limiting it
from acquiring additional common shares of Velocity. Furthermore, Atlantic Gold has agreed to vote with
Velocity management and not to sell any of its Velocity securities for a one-year period.
The securities issued under the Strategic Investment will be subject to a four-month hold period from the
date of closing. The c losing of the Strategic Investment is subject to customary items including, among
other things, acceptance from the TSX Venture Exchange and the delivery of certain closing documents.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities
in the United States. The securities have not been and will not be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be
offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act
and applicable state securities laws or an exemption from such registration is available.
Shareholder Approval
Shareholder approval of the Strategic Investment was obtained through the written consent of Velocity
shareholders holding an aggregate of 39,455,098 shares of the Company, representing 52.7% of the
current outstanding shares of Velocity. Additionally, voting support agreements have been entered into
by directors and officers of Velocity representing 36.7%.
Use of Proceeds
Proceeds from the Strategic Investment will be used to fund the advancement of the Rozino gold project
(the “Rozino Project”) towards feasibility and permitting, including resource expansion and definition
drilling, engineering studies, and environmental monitoring and assessment. In addition , Velocity will
proceed with exploration and assessment of satellite deposits where Velo city has negotiated option
rights.
Advisors
Haywood Securities Inc. is acting as financial advisor to Velocity. Lotz and Company and McCarthy Tétrault
LLP are acting as Canadian legal counsel to Velocity and Blake, Cassels & Graydon LLP is acting as legal
counsel to Atlantic Gold.
Qualified Person
The technical content of this release has been approved for disclosure by Stuart A. Mills, BSc, MSc, CGeol,
a Qualified Person as defined by National Instrument 43 -101 and the Company’s Vice President
Exploration. Mr. Mills is not independent of the Company.
About Velocity Minerals Ltd.
Velocity is a gold exploration and development company focused on eastern Europe. The Company
envisions staged open pit mining of satellite deposits and processing in a central, currently operating
carbon-in-leach (“ CIL”) plant. The Company’s management and board includes mining industry
professionals with combined experience spanning Europe, Asia, and the Americas as employees of major
NR-19-02 Continued January 17, 2019
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mining companies as well as founders and senior executives of junior to mid -tier public companies. The
team's experience includes all aspects of mineral exploration, resource definition, feasibility, finance,
mine construction and mine operation as well as a track record in managing publicly listed companies.
About Atlantic Gold Corporation
Atlantic Gold is a well- financed, growth-oriented gold development group with a long- term strategy to
build a mid-tier gold production company focused on manageable, executable projects in mining friendly
jurisdictions. Atlantic Gold is focused on growing gold production in Nova Scotia beginning with its MRC
phase one open pit gold mine which declared commercial production in March 2018, and its phase two
Life of Mine Expansion which will ramp up g old production to + 200,000 ounces per year ( NI 43 -101
Technical Report on Moose River Consolidated Phase 1 and Phase 2 Expansion, effective date 24 January,
2018). Atlantic Gold is committed to the highest standards of environmental and social responsibility and
continually invests in people and technology to manage risks, maximize outcomes and returns to all
stakeholders.
About Rozino
The Rozino Project is one of s ix exploration projects located within an Exploration and Mining Alliance
with Bulgarian operating partner Gorubso -Kardzhali AD. Velocity began exploring and drilling at Rozino
in August 2017 and completed a Preliminary Economic Assessment in September 2018. The PEA provides
a base case assessment of developing Rozino by open pit mining and on-site crushing, milling and simple
flotation to produce a 30 g/t gold concentrate. The concentrate would then be trucked 85km on existing
roads to the currently operating CIL plant where saleable gold doré would be produced. Mineralization
remains open for expansion. Having delivered the PEA, the Company has exercised its option for a 70%
interest in the project and will move forward in joint venture with Gorubso-Kardzhali AD.
Rozino PEA
On September 17, 2018, Velocity announced the results of an independent PEA on the Rozino Project. The
PEA provides a base case assessment of developing the project by open pit mining and gold recovery by a
combination of on -site preconcentration in a flotat ion plant and further processing in an existing
operating CIL Plant located in Kardzhali, 85km by road from Rozino. Saleable gold doré will be produced
at Kardzhali. The PEA financial model returns an after-tax NPV5% of $129 million and an after-tax IRR of
33.1%.
Rozino Project is located within the Tintyava prospecting license, an exploration property in which Velocity
had an exclusive right to acquire a 70% interest by delivering the PEA report to the underlying property
owner, Gorubso Kardzhali A.D. With the delivery of the PEA in Q4 2018, Velocity is deemed to have earned
a 70% interest in the Tintyava Property and to be in Joint Venture with Gorubso for the further
development of the Property.
PEA1 Highlights
• After-Tax Financials: After-tax NPV5% of $129 million and after-tax IRR of 33%
• Cash Cost: All-in sustaining cost2 of US$543 per ounce
• Annual Gold Production: Steady state3 annual production of 65,000 ounces, peak annual
production of 78,000 ounces
• Capital Costs: Total estimated capital costs of $97.6 million (includes contingency)
• Sustaining Capital: Low estimated sustaining capital of $6.3 million
• Mining: Open pit with 0.6 g/t gold Cut-Off Grade, attractive strip ratio of 2.5 and 1.51 g/t Life of
Mine gold grade
• Processing: On-site flotation producing gold bearing pyrite concentrate assaying 30 g/t and
transportation to the CIL Plant (located 85 km from the Project) for processing
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• ROCE: Return on capital expenditure of 3.3
(1) Base case parameters assume a gold price of US$1,250/ounce and an exchange rate (CAD$ to US$) of
0.75. All amounts are reported in Canadian dollars unless otherwise specified. Financial results on 100%
equity basis.
(2) All In Sustaining Cost (AISC) is defined as all cash costs related to mining and processing to final
product. It includes on- mine and off -mine costs (direct and indirect). Sustaining capital costs related to
continuing the business including exploration, development and equipment required to sustain production
are included. Taxes, working capital, M&A, disposals and acquisitions as well as new mine development
capital costs are excluded. “AISC” is an industry financial measure that has no definition under Canadi an
GAAP. As a result AISC cannot be compared between companies or individual operations.
(3) Steady state refers to the long-term average over time where processing throughput is maintained at
nameplate capacity.
The PEA is preliminary in nature and includes Inferred mineral resources that are considered too
speculative geologically to have the economic considerations applied to them that would enable them to
be categorized as mineral reserves. There is no certainty that the PEA results will be realized. Mineral
resources are not mineral reserves and do not have demonstrated economic viability.
The PEA was prepared by CSA Global, an international mining consultancy with experience in Bulgaria, in
accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects.
Please see news release dated September 17, 2018 for additional information regarding the PEA.
About Bulgaria
Bulgaria is a member of NATO (2004) and a member of the European Union (2007). The local currency
(BGN) has been tied to the Euro since 1999 (1.956 BGN/EUR). The country is served by modern European
infrastructure including an extensive network of paved r oads. Bulgaria boasts an exceptionally low
corporate tax rate of only 10%. The country’s education system is excellent with good availability of
experienced mining professionals in a favourable cost environment. Foreign mining companies are
successfully operating in Bulgaria. The country’s mining law was established in 1999 and updated in
2011. Mining royalties are low and compare favourably with more established mining countries.
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]
Web: www.velocityminerals.com
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 statements” under applicable Canadian securities legislation.
Forward-looking statements include, but are not limited to, statements with respect to: the closing of the Strategic
Investment and the conversion by Atlantic Gold of all or some of the Convertible Debentures, the use of funds from
the Strategic Investment, the appointment by Atlantic Gold of a nominee or nominees to the Board of Directors of
the Company, and the future business and operations of Velocity. Often, but not always, forward looking statements
NR-19-02 Continued January 17, 2019
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can be identified by words such as “pro forma”, “plans”, “expects”, “may”, “should”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intends”, “anticipates”, “believes”, “potential” or vari ations of such words including
negative variations thereof, and phrases that refer to certain actions, events or results that may, could, would, might
or will occur or be taken or achieved. Forward looking information involves known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or achievements of the Company to differ
materially from any future results, performance or achievements expressed or implied by the forward -looking
information. Such risks and o ther factors include, among others, operating and technical difficulties in connection
with mineral exploration and development and mine development activities for the Rozino Project and the
Company’s projects generally, including the geological mapping, p rospecting and sampling programs for the
projects, the fact that the Company’s interests in the Tintyava property is only an option and there is no guarantee
that the interest, if earned, will be certain, actual results of exploration activities, including the program, estimation
or realization of mineral reserves and mineral resources, the timing and amount of estimated future production,
costs of production, capital expenditures, the costs and timing of the development of new deposits, the availability
of a sufficient supply of water and other materials, requirements for additional capital to fund the Company's
business plan, future prices of precious metals, changes in general economic conditions, changes in the financial
markets and in the demand and mar ket price for commodities, possible variations in ore grade or recovery rates,
possible failures of plants, equipment or processes to operate as anticipated, accidents, labour disputes and other
risks of the mining industry, delays in obtaining governmental and regulatory approvals (including of the TSX Venture
Exchange in respect of the Strategic Investment ), the failure of Atlantic Gold to proceed with the Strategic
Investment as a result of the inability of the Company to meet the conditions precedent to the closing of the Strategic
Investment, issues rising from Atlantic Gold’s due diligence or otherwise, permits or financing or in the completion
of development or construction activities, changes in laws, regulations and policies affecting mining operati ons,
hedging practices, currency fluctuations, title disputes or claims limitations on insurance coverage and the timing
and possible outcome of pending litigation, environmental issues and liabilities, risks related to joint venture
operations, and risks related to the integration of acquisitions, as well as those factors discussed under the heading.
"Risk Factors" in the Company's annual management's discussion and analysis and other filings of the Company with
the Canadian Securities Authorities, copies of which can be found under the Company's profile on the SEDAR website
at www.sedar.com.
Readers are cautioned not to place undue reliance on forward looking information. The Company undertakes no
obligation to update any of the forward -looking informati on in this news release or incorporated by reference
herein, except as otherwise required by law.
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