VLC.V · 2018-02-22 12:00:00

Velocity Enters Exploration and Mining Alliance with Bulgarian Partner, Gorubso Kardzhali A.D. Secures Access to Central CIL Gold Processing Plant for all Future Projects within 10,000km2 Alliance Area Agrees to Option Terms for 50% Interest in

Mine Development & Operations Metallurgy & Processing

LC098989-1 1

NR‐18‐04 February 22, 2018

Velocity Enters Exploration and Mining Alliance with

Bulgarian Partner, Gorubso Kardzhali A.D.

Secures Access to Central CIL Gold Processing Plant

for all Future Projects within 10,000km2 Alliance Area

Agrees to Option Terms for 50% Interest in

Producing Chala Gold Mine

Initiates Due Diligence on Six Gorubso Projects

Vancouver, British Columbia – Velocity Minerals Ltd. (TSXV: VLC) (“ Velocity” o r t h e “Company”)

announces that it has entered into a binding letter agreement ( the "Agreement") with current partner

Gorubso Kardzhali A.D. (“ Gorubso”) to substantially expand the sc ope of its relationship with G orubso.

The Agreement sets out the terms by which Velocity and Gorubso will form an exploration and mining

alliance (the “ Alliance”) covering all existing and future Gorubso and Velocity projec ts (the “ Projects”)

within an area of 10,400km 2(the “Alliance Area”) (Figure 1) covering the prospective Eastern Rhodope

Gold Mining District in southeastern Bulgaria.

Highlights include:

 EXPLORATION AND MINING ALLIANCE ‐‐ The Agreement contemplates t he exploration,

development, and mining, as applicable, of the Projects and pro vides for an option/joint venture

mechanism by which Velocity and Gorubso will partner to maximize value for both parties.

 ACCESS TO GOLD PROCESSING PLANT ‐‐ Gorubso will make its central gold processing plant

available to all Projects to process all future mined material as necessary. Securing use of the

processing plant provides Velocity and the Alliance with reduced project risk, as well as potential

capital and time savings.

 OPTION FOR 50% INTEREST AT OPERATING CHALA MINE ‐‐ Upon reaching $1 million in exploration

expenditures at Gorubso's Chala gold mine (the " Chala Mine"), Velocity will have an option to

acquire a 50% beneficial interest in the Chala Mine and to form a joint venture with Gorubso for

the further development and expansion of the mine.

 EXCLUSIVITY ON OTHER GORUBSO PROPERTIES ‐‐ Velocity will have a n opportunity to complete

option agreements on all Gorubso Projects, whereby it can earn a 70% interest in the Projects on

similar terms to the current option for the advanced Rozino gold project.

“The primary objective of the Alliance is the expansion and development of existing precious metals

deposits with the Alliance Area. The ultimate goal is for Velo city to manage and operate all exploration

and mining activities on optioned properties in the district, a nd for Gorubso to manage and operate all

aspects of upstream processing and gold marketing,” stated Keith Henderson, President & CEO of Velocity.

NR18‐04 Continued February 22, 2018

“The Alliance is designed to move us towards those common objectives. It allows us to exploit our

technical strengths, while maximizing value for the shareholders of both companies.”

“Gorubso has been partnered with Velocity over the past seven months and the rate of progress at Rozino

has been impressive, with Veloc ity completing over 7,500 meters of drilling so far and moving towards

completion of a PEA,” stated Jivka Kovacheva, CEO of Gorubso Kardzhali A.D. “It was important for us as

a mining company to choose a partner capable of executing on deliverables and we believe we have found

that partner in Velocity.”

Figure 1: Map illustrating the Exploration and Mining Alliance Boundary and the exploration and mining projects

currently located within it. Projects immediately impacted by the Alliance are

Velocity Projects shown in blue and Gorubso Projects shown in green.

GORUBSO GOLD PROCESSING PLANT

Gorubso owns and operates a modern gold processing plant (the “Plant”), which provides crushing,

grinding, gravity, carbon‐in‐leach, elution, electro‐winning an d gold dore production facilities. The Plant

is centrally located within the Alliance Area. Under the terms of the Agreement, Gorubso will make the

Plant available for the processing of mineralized material from current and future Projects. Material

processed by the Alliance at the Plant will be processed on a cost‐plus basis.

Securing the use of the Plant provides significant technical and financial risk reduction, as well as potential

capital and time savings. Most importantly, securing the use of the processing facility significantly reduces

NR18‐04 Continued February 22, 2018

permitting risk and time that mi ght otherwise arise if a proces sing plant had to be permitted and built

prior to mine construction.

The use of the Plant is being considered as one option for the preliminary economic assessment (the

“PEA”) being completed for Velocity’s Rozino project where the Company intends to assess the possibility

of producing a low‐volume concentrate through flash‐flotation o n site and transporting a concentrate to

the Plant for vat leaching and gold recovery. There are no ass urances that such assessment will produce

positive economic results or that such results, even if possible, will be included in the final PEA.

CHALA MINE OPTION

The Agreement commits Velocity to incurring $0.5 million in exp loration expenditures at the Chala Mine

within an initial 12‐month period. Thereafter, if Velocity inc urs an additional $0.5 million in exploration

expenditures at the Chala Mine, Velocity will have the exclusive option (the "Chala Option") to:

 acquire an initial 50% undivided beneficial interest in the Cha la Mine, in which case Velocity will

form a joint venture with Gorubso for the further development and expansion of the mine, or

 elect to receive a 5% gross smelter royalty on resources discov ered directly or indirectly through

Velocity’s exploration efforts.

The Chala Option will be governed by a separate option agreemen t, which is expected to be negotiated

by the parties in the coming weeks.

Historical resources at the Chala Mine are reported as 1.5Mt @ 9.83 g/t gold (450,000oz). The historical

resources were published by Kestebekov C, 1998, in “Chala gold‐polymetallic deposit, Spahievo ore field.

Results of 1983‐1997 geological exploration with estimated resources of gold and gold‐polymetallic ores

as of 01/01/1998”. Total historical production at the Chala Mine is estimated to be approximately 120,000

oz. The historical resource estimate was produced using the Bu lgarian classification scheme, based on

manual polygonal methods of resource classification. A qualifi ed person has not done sufficient work to

classify the historical estimate as current mineral resources o r mineral reserves. In order to verify the

potential existence of additional unmined mineralization at the Chala Mine, significant drilling will be

required.

The Company is not treating the historical resources as current mineral resources or mineral reserves.

Historical resources are not consistent with the standards of d isclosure defined by National Instrument

43‐101 Standards of Disclosure for Mineral Projects (“NI 43‐101”) and may not necessarily be consistent

with CIM (Canadian Institute of Mining, Metallurgy and Petroleum) best practice with respect to reporting

mineral resources and reserves. Historical resources are inclu ded because they are considered relevant

by the Company as they provide additional support for the potential exploration drilling at the Chala Mine

by Velocity. The inclusion of historical resource estimations provides information as to the potential size

and nature of the immediate exploration targets in the vicinity of the Chala Mine. There are no more

recent, published historical resources available for the Chala Mine.

Over the past 10 months, Velocity has completed extensive due d iligence and resource targeting at the

Chala Mine and has identified multiple high‐priority targets ad jacent to or below existing mine

infrastructure. Velocity has digitally captured all available paper datasets at Chala, including, 20,798m of

surface trenching, 55 historical surface drill holes, all exist ing underground development and production

stopes including details of underground sampling within 31,664m of exploration and mine development

and face sampling within 657 mining stopes.

The resulting data set allowed Velocity to build a comprehensiv e 3D geological model (Figure 2), which

was then used to generate priority drill targets. Velocity has hired a mining engineer with extensive gold

mining experience in Bulgaria and Russia, having over 10 years’ experience at Dundee Precious Metals’

NR18‐04 Continued February 22, 2018

Chelopech gold mine in Bulgaria and most recently at Kinross’ K upol gold mine in Russia, where he was

responsible for both short and long‐term mine planning.

Figure 2: 3D View of the Chala Gold Mine Exploration Model, viewing northeast. Development in blue, with

stope sampling shown in red. Vein wireframes are represented in transparent colours.

GORUBSO PROPERTIES OPTION

Under the terms of the Agreement and subject to any applicable regulatory and stock exchange approvals,

Velocity will have the exclusive option to earn an undivided 70% interest in all existing and future Gorubso

properties (the “ Gorubso Properties”) located within the Alliance Area, with the exception of the Chala

Mine which is dealt with separately. The existing Gorubso Prop erties are summarized in Table 1 below.

Depending on how advanced the particular property is, the associated option is exercisable by Velocity by

the delivery of either a mineral resource estimate (for grass ro o t s p r o p e r t i e s ) , a P E A ( f o r a d v a n c e d

exploration properties) or a feasibility study (for properties with a mining concession).

Velocity is currently earning‐in on its option to acquire a 70% interest in the Tintyava prospecting licence,

and is completing extensive diamond drilling at the advanced Rozino gold deposit located on the Tintyava

prospecting licence area. Before electing to option any additi onal Gorubso Properties, the Company will

complete extensive due diligence. This process is underway and is close to completion at the Sedefche

gold deposit, where Velocity has completed internal resource es timation and pit optimization in

preparation for exploration drill planning.

NR18‐04 Continued February 22, 2018

Project Tenure

Distance to

Processing

Plant (km)

Historical Gold

Resources

Velocity Option

Deliverable for 70%

Interest

Tintyava

(Rozino) Prospecting Licence 51

7.7Mt @ 1.24g/t gold

(307,000 oz) at 0.6g/t

cut‐off. (Note 1)

Preliminary Economic

Assessment

Sedefche Mining Concession 28 101,000 oz Resource.

(Note 2) Feasibility Study

Enyovche Mining Concession 29 N/A Resource Estimate

Makedontsi Prospecting Licence 6 290,000 oz Resource.

(Note 3)

Preliminary Economic

Assessment

Kitnitsa Prospecting Licence 13 N/A Preliminary Economic

Assessment

Obichnik Prospecting Licence 22 N/A Resource Estimate

Kaleto Prospecting Licence 23 N/A Resource Estimate

Table 1: Summary of Gorubso Properties, including the Rozino deposit,

which Velocity is currently drilling. Project locations are illustrated on Figure 1.

Note 1: Historical resources at Rozino are unconstrained Invers e Distance Squared resources published

by Hereward Resources Ltd. (Hereward Resources news release, 20 05). Velocity has completed 7,000m

of diamond drilling (2017) and intends to complete an additiona l 5,000m of drilling prior to producing a

PEA (2018).

Note 2: Historical resources at Sedefche were calculated by Go rubso using the Bulgarian classification

scheme, based on manual polygonal methods of resource estimatio n. Resources were submitted to and

accepted by the Bulgarian government, Dragiev, H, 2006, “Momchi l Prospecting License, Report at the

‘Zvezdel ‐ Pcheloyad Ore Field’, Geological Report with Resource And Reserve Recalculation of ‘Au‐Ag

Ores’ at the Sedefche Deposit”.

I n or d e r t o ve r i f y t h e p ote n t i al ex i st e nc e of ad d i ti on al u n m in ed mineralization at Sedefche, significant

drilling will be required.

Note 3: Historical resources at Makedontsi were calculated by Gorubso using the Bulgarian classification

scheme, based on manual polygonal methods of resource classific ation. Resources were submitted to

and accepted by the Bulgarian go vernment, Dragiev H, 2013 "Mlec hino Prospecting License, Geological

Report at the Nadezhda Prospect, with Resource and Reserve Reca lculations of ‘Au Ores’ at the

Makedontsi, Dangovo and Kalina deposits”.

In order to verify the potential existence of additional unmine d mineralization at Makedontsi, significant

drilling will be required.

The Company is not treating the historical resources referenced in Table 1, Note 1, Note 2, and Note 3 as

current mineral resources or mineral reserves. Historical resources are not consistent with the standards

of disclosure defined by NI 43‐101 and may not necessarily be c onsistent with CIM best practice with

respect to reporting mineral reso urces and reserves. Historica l resources are included because they are

considered relevant by the Company as they form additional supp ort for the potential optioning of the

Gorubso Properties by Velocity. At Rozino, resources were later completed by Maine Reserves Associates

(USA) on behalf of Caracal. These resources are calculated ass uming underground mining methods and

are not considered relevant to Velocity’s potentially surface mi n e a b l e t a r g e t s . A d d i t i o n a l d e t a i l s o n

historical estimates at Rozino are detailed in “National Instrument 43‐101 Technical report for the Rozino

NR18‐04 Continued February 22, 2018

Project, Republic of Bulgaria” (2017). A qualified person has not done sufficient work to classify the

historical estimate as current mineral resources or mineral res erves. The inclusion of historical resource

estimations provides information as to the potential size and nature of the immediate exploration targets

within the Gorubso Properties and the Alliance Area in general.

Qualified Person

The technical content of this news release has been approved fo r disclosure by Stuart A. Mills, BSc, MSc,

CGeol, a Qualified Person as defined by NI 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’s

management and board includes mining industry professionals wit h over 100 years of 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 well as a track record in managing publicly listed companies.

The Company’s portfolio of advanced gold exploration assets is currently in Bulgaria, which is a member

of the European Union (2007) and an attractive destination for mining investment. 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 like Canada, Peru and Chile. Bulgaria also boasts a corporate tax rate

of only 10% and the country’s education system has yielded a go od availability of experienced mining

professionals in a favourable cost environment. Foreign mining companies are successfully operating in

Bulgaria.

Velocity Minerals has entered into an Exploration and Mining Alliance (“Alliance”) with Gorubso Kardzhali

A.D. ("Gorubso'), an established and respected mining company i n Bulgaria. Gorubso currently operates

the underground Chala Gold Mine (2006) and the Kardzhali Carbon In Leach (CIL) processing plant (2011),

which produces gold dore. The Alliance outlines the scope of a broad partnership that includes an option

to earn a 50% beneficial interest in the Chala Mine, access to Gorubso’s gold processing plant in Kardzhali,

and the ability for Velocity to option any or all of Gorubso’s exploration properties.

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.

NR18‐04 Continued February 22, 2018

CAUTIONARY STATEMENT REGARDING FORWARD‐LOOKING INFORMATION: This news release contains forward‐

looking statements and forward‐looking information (collectivel y, “forward‐looking statements”) within the

meaning of applicable C anadian and U.S. securities legislation, including the United States Private Securities

Litigation Reform Act of 1995 . All statements, other than sta tements of historical fact, in cluded herein including,

without limitation, statements re garding the negotiation and ex ercise of an option agreement for the Chala Mine

and the other Gorubso Properties, the exercise of the Company’s option for the Tintyava prospecting licence, the

anticipated content, commencement, timing and costs of the reco mmended exploration program on the Gorubso

Projects and the Tintyava/Rozino project and exploration progra m results from same, the Company’s expectation

that it will be able to enter into agreements to acquire interests in additional mineral properties, the discovery and

delineation of mineral deposits/resources/reserves on the Gorubso Projects (including the Chala Mine) and the

Tintyava/Rozino project, and the anticipated business plans and t i m i n g o f f u t u r e a c t i v i t i e s o f t h e C o m p a n y , a r e

forward‐looking statements. Alt hough the Company believes that such statements are reasonable, it can give no

assurance that such expectatio ns will prove to be correct. For ward‐looking statements are typically identified by

words such as: “believe”, “expect”, “anticipate”, “intend”, “es timate”, “postulate” and similar expressions, or are

t h o s e , w h i c h , b y t h e i r n a t u r e , r e f e r t o f u t u r e e v e n t s . T h e C o mpany cautions investors that any forward‐looking

statements by the Company are not guarantees of future results or performance, and that actual results may differ

materially from those in forward‐looking statements as a result of various factors, including, operating and technical

difficulties in connection with mineral exploration and development activities, actual results of exploration activities,

the estimation or realization of mineral reserves and mineral resources, the timing and amount of estimated future

production, the costs of production, capital expenditures, the costs and timing of the development of new deposits,

requirements for additional capital, future prices of gold and precious metals, changes in general economic

conditions, changes in the financial markets and in the demand and market price for commodities, accidents, labour

disputes and other risks of the mining industry, delays in obtaining governmental approvals, permits or financing or

in the completion of development or construction activities, changes in laws, regulations and policies affecting

mining operations, title disputes, the inability of the Company to obtain any necessary permits, consents, approvals

or authorizations, TSX Venture Exchange acceptance of any current or future property acquisitions or financings and

other planned activities, the timing and possible outcome of any pending litigation, environmental issues and

liabilities, and risks related to joint venture operations, and other risks and uncertainties disclosed in the Company’s

latest Management’s Discussion a nd Analysis and filed with cert ain securities commissions in Canada. All of the

Company’s Canadian public disclosure filings may be accessed via www.sedar.com and readers are urged to review

these materials, including the technical reports filed with respect to the Company’s mineral properties.

Readers are cautioned not to place undue reliance on forward‐lo oking statements. The Company undertakes no

obligation to update any of the forward‐looking statements in this news release or incorporated by reference herein,

except as otherwise required by law.

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