Velocity Announces Closing of C$9M Strategic Investment by Atlantic Gold
LC154606‐2
NR‐19‐05 March 14, 2019
Velocity Announces Closing of
C$9M Strategic Investment by Atlantic Gold
Vancouver, B.C. – March 14, 2019 – Velocity Minerals Ltd. (TSXV: VLC) (“ Velocity” or the “Company”) is
pleased to announce that it has closed a C$9.0 million strategi c investment (the “Strategic Investment”)
with Atlantic Gold Corporation (TSXV: AGB) (“ Atlantic Gold ”) and its wholly‐owned subsidiary,
1193490 B.C. Ltd. (the “ Investor”). The Strategic Investment was comprised of a private placem ent of
18,600,000 units (each, a “Unit”) for total gross proceeds of approximately C$3.9 million (the “ Equity
Placement” ) a n d a c o n v e r t i b l e d e b e n t u r e i n t h e a g g r e g a t e p r i n c i p a l a m o u nt of approximately
C$5.1 million (the “Convertible Placement”). As a result of the completion of the Strategic Investment,
Atlantic Gold now owns 19.80% of the outstanding common shares of Velocity on a non‐diluted basis and
39.05% on a partially‐diluted basis.
“We are very pleased to welcome Atlantic Gold as a shareholder of Velocity,” stated Keith Henderson,
President & CEO of Velocity. “Since announcing the strategic i nvestment, existing shareholders and new
investors alike have expressed support for the transaction. With Atlantic Gold’s recent operational
achievements in Nova Scotia, Velocity will benefit from their mine building expertise and shared corporate
strategy of implementing a hub and spoke model of development.”
Use of Proceeds
Net proceeds from the Strategic Investment will be used to fund the advancement of the Rozino gold
project located in southeast Bulgaria (“Rozino”) towards feasibility and permitting, including resource
expansion and definition drilling, engineering studies, environmental monitoring and assessment, and for
general working capital. In addition, Velocity will proceed to option and explore additional satellite
deposits in the region.
Planned Exploration
The 2019 drill program at Rozino is now fully permitted and a t otal of 12,000m to 14,000m of drilling is
planned. The drill program at Rozino is intended to include exploration drilling and infill drilling aimed at
increasing the existing mineral resource base (see news release dated October 29, 2018) and improving
resource definition.
The drill program is also expected to support additional metallurgical and comminution studies, as well as
hydrogeological and geotechnical work. Environmental data collection is ongoing and will continue.
An additional 1,000m of drilling is planned outside of Rozino. These regional targets are located in
favorable structural settings with surface geochemical support. It is anticipated that new discoveries
within several kilometres of the Rozino deposit could potential ly add value by utilizing common
infrastructure.
The Company also expects to initiate exploration activities within the larger Exploration and Mining
Alliance area held with Bulgarian operating partner Gorubso‐Kar dzhali AD (“ Gorubso”). Descriptions of
these projects together with planned exploration activities will be disclosed in future news releases.
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A key objective of the Company over the next year will be to evaluate multiple near‐surface gold deposits
that may have the potential to feed mineralized material to the operating carbon‐in‐leach (“CIL”) plant in
Kardzhali, Bulgaria.
Transaction Details
In connection with the Equity Placement, Atlantic Gold has acquired 18,600,000 Units of Velocity at a price
per Unit of C$0.21 for total gross proceeds of C$3,906,000. Ea ch Unit consists of one common share of
the Company and one‐half of one common share purchase warrant, with each whole warrant (each, a
“Warrant”) entitling Atlantic Gold to acquire one common share at a pri ce of C$0.25 per common share
for a period of 36 months.
The Convertible Placement consisted of C$5,094,000 principal amount of secured convertible debentures
(the “Convertible Debentures”) i ssu e d b y th e Comp an y t o At l an t i c G ol d. Th e Con ve r t i b le De bentures
c a r r y a n 8 . 5 % c o u p o n o v e r a f i v e ‐ y e a r t e r m a n d a r e s e c u r e d b y general security agreement of the
Company. Velocity can elect to pay any interest due in cash or shares at its sole election. Atlantic Gold
can, at its option, convert the Convertible Debentures into com mon shares of Velocity at a conversion
price of C$0.25 per share.
Pursuant to the terms of the Agreement, Atlantic Gold has been granted:
the right to appoint one director to Velocity’s Board of Directors, and increasing to two directors
upon Atlantic Gold holding over 30% of the issued and outstandi ng common shares of Velocity;
and
the right to participate in any future equity issuances by Velo city in order to allow Atlantic Gold
to maintain its pro rata fully‐diluted ownership in Velocity.
Atlantic Gold is subject to a one‐year standstill limiting it f rom 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.
In connection with the Strategic Investment, the Company paid an advisory fee to Haywood Securities Inc.
consisting of C$382,500 cash and 459,418 common shares in the c apital of Velocity (the “ Advisory Fee
Shares”).
The securities issued under the Strategic Investment, including the Advisory Fee Shares, are subject to a
four‐month and one day hold period in accordance with applicabl e securities legislation. Atlantic Gold
holds its securities in the capital of Velocity through its wholly‐owned subsidiary, the Investor.
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 Atlantic Gold Corporation
Atlantic Gold is a well‐financed, growth‐oriented gold developm ent 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 Moose River
Consolidated phase one open‐pit gold mine which declared commer cial production in March 2018, and
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its phase two Life of Mine Expansion at industry lowest decile cash and all‐in‐sustaining‐costs (as stated
in Atlantic Gold’s news releases dated January 16, 2019 and January 29, 2018). Atlantic Gold is committed
to the highest standards of environmental and social responsibi lity and continually invests in people and
technology to manage risks, maximize outcomes and returns to all stakeholders.
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 proc essing in a central, currently operating CIL
plant owned by its Bulgarian operating partner Gorubso. The Company’s management and board includes
mining industry professionals with combined experience spanning Europe, Asia, and the Americas as
employees of major 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 w ell as a track record in managing publicly
listed companies.
Velocity’s Rozino gold project is located within the Tintyava property and is located within an Exploration
and Mining Alliance area with Bulgarian operating partner Gorub so (see news release dated
February 22, 2018). Velocity be gan exploring and drilling at t he Rozino gold project in August 2017 and
completed a Preliminary Economic Assessment (“PEA”) in September 2018. The PEA provides a base case
assessment of developing the Rozino gold project by open pit mi ning and on‐site crushing, milling and
simple flotation to produce a 30 g/t gold concentrate. The con centrate would then be trucked 85km on
existing roads to the currently operating CIL plant where salea ble gold doré would be produced.
Mineralization remains open for expansion. Having delivered th e PEA, the Company exercised its option
for a 70% interest in the project and formed a joint venture wi th Gorubso in March 2019. Velocity now
holds a 70% interest in the Tintyava property, with Gorubso holding the remaining 30%.
About Bulgaria
Bulgaria is a member of NATO (2004) and a member of the Europea n 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 roads. 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 favorable cost environmen t. 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 favorably 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:
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This news release includes certain “forward‐looking statements” under applicable Canadian securities legislation.
Forward‐looking statements include, but are not limited to, sta tements with respect to the conversion by Atlantic
Gold of all or some of the Convertible Debentures or Warrants, the use of funds from the Strategic Investment, the
appointment by Atlantic Gold of a nominee to the Board of Direc tors of the Company, and the future business and
operations of Velocity. Often, but not always, forward looking statements can be identified by words such as “pro
forma”, “plans”, “expects”, “may”, “will”, “should”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”,
“anticipates”, “believes”, “potential” or variations of such words including negative variations thereof, and phrases
that refer to certain actions, events or results that may, coul d, would, might or will occur or be taken or achieved.
In making the forward‐looking statements in this news release, the Company has applied several material
assumptions, including without limitation, that market fundamentals will result in sustained gold demand and prices,
the receipt of any necessary permits, licenses and regulatory approvals in connection with the future development
of the Company’s Bulgarian projects, the availability of financing on suitable terms for the development, construction
and continued operation of the Company’s projects, and the Company’s ability to comply with environmental, health
and safety laws. Forward looking information involves known an d unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements o f t h e C o m p a n y t o d i f f e r m a t e r i a l l y f r o m a n y
future results, performance or achievements expressed or implie d by the forward‐looking information. Such risks
and other 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, prospecting and sampling programs for the projects, the fact that the Company’s
interests in certain properties are only options and there is no guarantee that such interests, if earned, will be certain,
actual results of exploration activities, including the Bulgari an drill programs, 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, change s in the financial markets and in the demand and
market 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 a n d r e g u l a t o r y a p p r o v a l s , p e r mits or financing or in the completion of
development or construction activities, changes in laws, regulations and policies affecting mining operations,
hedging practices, currency fluctuations, title disputes or cla ims 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 lo oking information. The Company undertakes no
obligation to update any of the forward‐looking information in this news release or incorporated by reference
herein, except as otherwise required by law.