JANUARY 2019 Gold in Bulgaria

Transcription

1 JANUARY 2019 Gold in Bulgaria

2 Forward Looking & Cautionary Statements Forward Looking and Cautionary Statements This presentation contains forward-looking statements and forward-looking information (collectively, forward-looking statements ) within the meaning of applicable Canadian and U.S. securities legislation, including the United States Private Securities Litigation Reform Act of 1995 concerning the business, operations and financial performance and condition of Velocity Minerals Ltd. (the "Company"). All statements, other than statements of historical fact, included herein including, without limitation, statements regarding future capital expenditures and financings (including the amount and nature thereof), anticipated content, commencement, and cost of exploration programs in respect of the Company's projects and mineral properties, anticipated exploration program results from exploration activities, the discovery and delineation of mineral deposits, resources and/or reserves on the Company's projects and mineral properties, and the anticipated business plans and timing of future activities of the Company, are forward-looking statements. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Often, but not always, forward looking information can be identified by words such as pro forma, plans, expects, may, 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, 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 other factors include, among others, the ability of the Company to obtain sufficient financing to fund its business activities and plans, operating and technical difficulties in connection with mineral exploration and development and mine development activities for Company's projects generally, including the geological mapping, prospecting and sampling programs for the Company's projects, actual results of exploration activities, including the 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, future prices of precious metals, tantalum and lithium, changes in general economic conditions, changes 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 and regulatory approvals (including of the TSX Venture Exchange), permits 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 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 most recent 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 Readers are cautioned not to place undue reliance on forward-looking statements. The Company undertakes no obligation to update any of the forward looking information in this presentation or incorporated by reference herein, except as otherwise required by law. National Instrument Stuart Mills, the Vice President Exploration for the Company, and a Qualified Person as defined by National Instrument , has approved the scientific and technical information concerning the Company discussed in this presentation. Mr. Mills is not independent of the Company as he is an officer, a shareholder and holds incentive stock options. Preliminary Economic Assessment (September 2018) Cautionary Note Base case parameters assume a gold price of US$1,250/ounce and an exchange rate (CAD$ to US$) of All amounts are reported in Canadian dollars unless otherwise specified. Financial results on 100% equity basis. The PEA is preliminary in nature and includes Inferred mineral resources (effective date September 10, 2018) that are too speculative geologically to have 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 Standards of Disclosure for Mineral Projects ( NI ). A technical report prepared pursuant to NI on the Project is filed on the SEDAR website at and the Company s website at Cautionary Note to United States Investors As a Canadian issuer, the Company is permitted to prepare its public disclosures and this presentation in accordance with Canadian securities laws, which differ in certain respects from U.S. securities laws. In particular, this presentation uses the terms mineral resource, measured mineral resource, indicated mineral resource and inferred mineral resource. While these terms are recognized and required by Canadian securities laws, they are not recognized by the United States Securities and Exchange Commission ( SEC ) and are not normally permitted to be disclosed in SEC filings by U.S. companies. U.S. investors are cautioned not to assume that any part of a mineral resource, measured mineral resource, indicated mineral resource or an inferred mineral resource will ever be converted into a reserve. In addition, reserves reported by the Company under Canadian standards may not qualify as reserves under SEC standards. Under SEC standards, mineralization may not be classified as a reserve unless the mineralization can be economically and legally extracted or produced at the time the reserve determination is made. Accordingly, information contained or referenced in this presentation containing descriptions of the Company s mineral deposits may not be compatible to similar information made public by U.S. companies subject to the reporting and disclosure requirements of U.S. federal securities laws, rules and regulations. Inferred mineral resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Historical results or feasibility models presented herein are not guarantees or expectations of future performance. Currency All amounts in this presentation are expressed in Canadian dollars, unless otherwise stated. THIS PRESENTATION IS NOT INTENDED AS, AND DOES NOT CONSTITUTE, AN OFFER TO SELL SECURITIES OF THE COMPANY. The TSX Venture Exchange has not reviewed and do not accept responsibility for the accuracy or adequacy of this presentation, which has been prepared by the Company. 2

3 VELOCITY MINERALS Building a Multi-Asset Gold Production Profile Focus Gold in Bulgaria Strong Rozino project PEA results (September 2018) with expansion potential After-tax NPV 5% of $129 million and after-tax IRR of 33% Six additional exploration projects with near surface growth potential Strategic investment of $9 million from mid-tier gold producer Atlantic Gold (TSX.V: AGB) announced January 17, 2019 Exploration and Mining Alliance with established operating Bulgarian partner Exploration programs planned at Rozino and several additional projects Strategy to build a production profile of >100,000 ounces per year over 10 years ENVISION OPEN PIT MINING OF SATELLITE DEPOSITS & PROCESSING IN CENTRAL PLANT 3

4 VELOCITY MINERALS Atlantic Gold to Invest $9 Million in Velocity* Atlantic to work closely with Velocity management to further advance Velocity s Rozino project through feasibility study and ultimately construction and commissioning Atlantic recognizes many of the key characteristics of its Moose River Consolidated Mine in Velocity s properties (as derived from Velocity s NI Preliminary Economic Assessment on the Rozino Project completed on September 17, 2018), namely the potential for: AISC^ in the range of ~USD$ /oz Low initial capex Low strip ratio deposits with a 1.51 g/t life of mine gold grade Resource extension potential at existing deposits Simple metallurgy and conventional processing methods Potential for multiple open pits which could be treated through a central milling facility An under-explored gold belt, with little if any modern gold exploration *Announced by Atlantic Gold on January 17, 2019 ^ AISC is an industry financial measure that has no definition under Canadian GAAP. As a result AISC cannot be compared between companies or individual operations 4

5 VELOCITY MINERALS $9 Million Strategic Investment by Atlantic Gold $9 million strategic investment with Atlantic Gold (TSX.V: AGB) announced January 17, 2019, including: $3.9 million equity placement Atlantic will acquire 18,600,000 units of Velocity at a price per unit of $0.21 for total gross proceeds of $3,906,000. Each unit will consist of one common share of Velocity and one-half of one common share purchase warrant, with each whole warrant entitling Atlantic Gold to acquire one common share at a price of $0.25 per common share for a period of 36 months following the closing of the equity placement. $5.1 million convertible placement Velocity has agreed to issue and sell to Atlantic Gold $5,094,000 principal amount of secured convertible debentures of Velocity. The convertible debentures will carry a 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. Atlantic Gold can, at its option, convert the convertible debentures into common shares of Velocity at a conversion price of $0.25 per share. Upon closing, Atlantic Gold will own 19.9% of the outstanding common shares of Velocity on a non-diluted basis and 39.2% on a partiallydiluted basis Proceeds from the strategic investment will be used to fund the advancement of the Rozino gold 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 Velocity has negotiated option rights. Closing 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. 5

6 BULGARIA Mining Investment in Bulgaria EU member since 2007, NATO since % corporate tax rate Mining law established 1999, updated 2011 Mining royalties (0.8 to 4.0%) compare favourably to established mining jurisdictions like Canada, Chile and Peru Experienced mining professionals Low cost operating environment 6

7 GORUBSO MINING A PRIVATE BULGARIAN MINING COMPANY Established Local Operating Partner EXPLORATION & MINING ALLIANCE FORMED IN FEBRUARY 2018 Existing CIL Plant CIL processing plant operating since 2011 First (and only) company in Bulgaria to secure a carbonin-leach operating permit Existing Underground Gold Mine Chala gold mine operating since 2006 Mine Staff Technical Expertise Abundant experience with all aspects of permitting and operation in Bulgaria Relationships Strong working relationships with municipalities, national governments and regulatory departments CIL Plant Secure Gold Room 7

8 VELOCITY MINERALS Multiple Near Surface Projects & Central Processing Plant 8

9 All-In Sustaining Cost (US$/oz) ROZINO PEA RESULTS PEA Highlights After-Tax Financials After-tax NPV 5% of $129 million an after-tax IRR of 33% Capital Cost Total estimated capital costs of $97.6 million Operating Cost All-in sustaining cost (AISC)^ of US$543 per ounce gold Annual Gold Production Steady state average annual production of 65,000 ounces (peak 78,000 ounces) Gold Price Initial economics positive at $1,250/oz gold price The Rozino PEA (September 2018) was prepared by CSA Global, an international mining consultancy with experience in Bulgaria, in accordance with National Instrument Standards of Disclosure for Mineral Projects ( NI ). $2,500 $2,000 $1,500 $1,000 $500 Rozino US$543 1 st Quartile 2 nd Quartile 3 rd Quartile Source: S&P Market Intelligence Gold AISC Curve, Primary Gold Mines Only All In Sustaining Cost (AISC)^ is defined as all cash costs related to mining and processing to final product. It includes onmine 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 Canadian GAAP. As a result AISC cannot be compared between companies or individual operations. 9

10 ROZINO PEA RESULTS Conventional Mining and Processing Open Pit Mining Conventional surface mining operation High LOM gold grade of 1.51g/t at 0.6g/t COG (approx. x 2.5) LOM mined gold of 461,000 ounces Strip ratio 2.5 Processing On-site flotation to produce ~30g/t gold concentrate Further processing in existing operating carbon-in-leach plant & doré production (located 85km by road from Rozino) LOM gold production of 365,000 ounces over six years Significant Potential for Resource Expansion Inferred mineral resource estimate contains 573,000 ounces gold at 0.6g/t COG gold) (1) Effective date September 10, (2) Mineral resources are not mineral reserves and do not have demonstrated economic viability. (3) The mineral resource has been estimated in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum CIM Definition Standards for Mineral Resources and Mineral Reserves (CIM, 2014). Isometric view of Rozino PEA pit outline at 0.6g/t gold cut-off grade Cautionary Note The PEA is preliminary in nature and includes Inferred mineral resources that are too speculative geologically to have 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. 10

11 ROZINO PEA RESULTS Processing & Potential Optimizations Jaw Crusher SAG Mill Ball Mill ON-SITE FLOTATION PLANT Rougher Flotation Scavenger Flotation Tailings Screening Host rock to mineralization contains unmineralized clasts / cobbles Possibility to screen out during initial crushing using high-impact crusher test work required EXISTING OPERATING CIL PLANT Cleaner Flotation 30g/t Gold Concentrate 85km Haul Carbon In Leach Elution/ Electrowinning Gold Doré Product Flotation Initial flotation testing used head grade of 1.2g/t gold PEA results indicate higher LOM average grade of 1.5g/t gold Potential to increase overall recoveries as highergrade ores performed better in testing to date Electrowinning Conservative 99% recovery assumed for PEA Potential to improve on 1% losses through testing Tailings 11

12 ROZINO EXPANSION DRILLING Mineralized Envelope Expanded Adjacent to Pit Mineralization is open with targets contiguous with PEA pit outlines Post-PEA expansion drilling commenced December 2018 Near surface mineralization intersected has to potential to expand mineralized envelope 29.7m from surface grading 1.17 g/t gold Feasibility-level drill program planned for 2019 Q soil sampling revealed additional drill targets for potential resource expansion 12

13 ROZINO ADDITIONAL DRILL TARGETS Five Regional Priority Drill Targets Target 1 Rozino PEA & Resource Expansion 5 priority targets within prospecting licence (total area 160km 2 ) Discoveries could utilize future Rozino floatation plant & infrastructure Target 2 Soil anomalies only present where mineralization comes to surface (useful tool but not a screening tool) Target 4 Target 3 Targets 1 & 2 within 2km of proposed Rozino flotation plant site Target 5 13

14 VELOCITY MINERALS Work Programs Planned Advancement of the Rozino gold project towards feasibility and permitting including: Resource expansion and definition drilling Engineering studies Environmental monitoring and assessment Exploration and assessment of satellite deposits where Velocity has negotiated option rights Building a multi-asset gold production profile 14

15 VELOCITY MINERALS Management & Board Experience MANAGEMENT Keith Henderson M.Sc. Director, President, CEO; Vancouver Stuart Mills M.Sc. Vice President Exploration; Bulgaria Valentin Buhov M.Sc. Exploration Manager; Bulgaria Plamen Nedyalkov Mining Engineer; Bulgaria Joyce Musial (Hons) B.Sc. Vice President Corporate Communications; Vancouver BOARD OF DIRECTORS Keith Henderson M.Sc. Director, President, CEO Dr. Mark Cruise Director; Vancouver CEO, Trevali Mining Daniel Marinov M.Sc. Director; Bulgarian National VP Exploration, Trevali Mining Gord Doerksen B.Sc. Director; Vancouver Principal Executive, JDS Mining Blaine Bailey CGA Chief Financial Officer; Vancouver 15

16 TRACK RECORD Management Highlights Keith Henderson (CEO, Director) CEO at Centenera Mining (TSX-V: CT) focused on project acquisition and exploration in Argentina Previously VP Exploration at Cardero Resource Corp. with critical role in sale of iron deposit for $100M cash and various other acquisitions and dispositions Former CEO at Dorato Resources and Senior Geologist at Anglo American Stuart Mills (VP Exploration) Previously country manager for Orca Gold in Sudan with discovery of 2.5Moz Galat Sufar gold deposit Exploration Manager for Red Back Mining prior to take out by Kinross Technical responsibility for Lundin Mining s two largest investments (Siberia and DRC) Senior positions in Anglo as Principle Geologist Asia Pacific and Country Manager in Ireland. Prior experience with Minorco in Turkey & Bulgaria Valentin Buhov (Exploration Manager) Previously Kinross Gold Chief Geologist at Kupol gold mine, Russia Exploration Manager for Lundin Mining, Ozernoe lead zinc project, Siberia Chief Geologist for Hereward Ventures, in charge of Rozino gold project Senior Geologist for Dundee Precious Metals, RC drill out of Ada Tepe Geologist for Anglo American in India, Yemen, Russia and Bulgaria Plamen Nedyalkov (Mining Engineer) Previously Kinross Gold Mining Engineer, responsible for short & long term planning at Kupol gold mine, Russia Mining Engineer for Dundee Precious Petals, Chelopech copper gold mine, Bulgaria Mark Cruise (Director) CEO and founder at Trevali Mining (TSX: TV) ($600M mkt cap) Managed development projects in Peru and Canada through resource definition, mine design, finance and mine construction raising $800 million Founder of International Tower Hill Mines, peak $800 million mkt cap (2010) Previously VP at Cardero Resource Corp. & Anglo American Exploration Manager, North America & Lisheen Mine, Ireland Daniel Marinov (Director) VP Exploration at Trevali Mining (TSX: TV) Previously for Anglo American, Project Manager for Michiquillay porphyry copper-gold-moly deposit, Peru Senior geologist with global experience at Anglo American and Rio Tinto Bulgarian national Gordon Doerksen (Director) Principle at JDS Energy and Mining. 25 years experience of operational and mine engineering in North America and Africa. Experience includes mine planning, project engineering and senior management at various mines for Anglo American, Sandvic, FMC Corporation and Giant Yellowknife Mines. More than 12 years consulting experience with SRK Consulting and JDS Joyce Musial (VP Corporate Communications) Over 30 years experience with junior and senior companies in the resource sector VP Corporate Affairs at InZinc Mining (TSX-V: IZN) Previous investor relations and corporate communications roles with Placer Dome, Cumberland Resources, Teck Resources, Lundin Group, Hunter Dickinson Group, Viceroy Resources and Batero Gold 16

17 VELOCITY MINERALS Capital Structure Issued & Outstanding 74,886, Warrants $0.30, expire Apr 30/19 $0.20, expire Apr 30/19 $0.20, expire Oct 12/21 $0.20, expire Oct 12/21 7,147, Options 7,100, Fully Diluted (Jan 14, 2019) 89,134, Share Price (Jan 14, 2019) Market Capitalization $0.185 $13 M Management & Board 37% 0 July 27, 2017 September 19, 2017 November 4, 2017 December 27, 2017 February 15, 2018 April 9, 2018 August 2, 2018 October 3, 2018 December 12,

18 Velocity Minerals Ltd West Hastings Street Vancouver BC, V6E 2K3 Phone:

19 ROZINO PEA RESULTS Financial Results & Sensitivities After-Tax Financials After-tax NPV 5% of $129 million an after-tax IRR of 33% Capital Total estimated capital costs of $97.6 million PEA is benchmarked against North American capital estimates Prefeasibility will include studies to demonstrate local cost-saving opportunities Operating Costs All-in sustaining cost (AISC)^ of US$543 per ounce gold PEA operating costs are benchmarked against North American contract mining estimates Bulgaria labour costs are lower than anywhere else in EU Prefeasibility labour studies will feed into economic model Gold Price Initial economics positive at $1,250/oz Base case parameters assume a gold price of US$1,250/ounce and an exchange rate (CAD$ to US$) of All amounts are reported in Canadian dollars unless otherwise specified. Financial results on 100% equity basis. Gold Price Sensitivity US$1,000/oz US$1,250/oz US$1,500/oz Project NPV5% $51M $129M $207M Cash $1M $1M $1M Net Asset Value (NAV) $52M $130M $208M NAV per share $0.76 $1.91 $3.05 ^ AISC is an industry financial measure that has no definition under Canadian GAAP. As a result AISC cannot be compared between companies or individual operations. 19

20 ROZINO PEA RESULTS Mining and Processing Conventional surface mining operation High LOM gold grade of 1.51g/t at 0.6g/t COG (approx. x 2.5) On-site preconcentration by flotation to produce ~30g/t gold concentrate Further processing in existing operating carbon-in-leach plant & doré production (located 85km by road from Rozino) 20

21 All-In Sustaining Cost (US$/oz) ROZINO PEA RESULTS Capital and Operating Costs $2,500 $2,000 $1,500 $1,000 $500 Rozino US$543 1 st Quartile 2 nd Quartile 3 rd Quartile Source: S&P Market Intelligence Gold AISC Curve, Primary Gold Mines Only 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 Canadian GAAP. As a result AISC cannot be compared between companies or individual operations. 21