Canadian dollars unless otherwise
noted
VANCOUVER, Jan. 17, 2019 /CNW/ - Atlantic Gold
Corporation (TSX-V: AGB) ("Atlantic" or the "Company") is
pleased to announce that Atlantic has entered into an agreement
(the "Agreement") to invest $9,000,000 by way of a non-brokered private
placement financing (the "Financing") as a strategic
investment in Velocity Minerals Ltd. (TSX-V: VLC)
("Velocity").
With this investment Atlantic will hold 39.2% on a partially
diluted basis in Velocity and looks forward to working 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 Preliminary Economic Assessment ("PEA") on the
Rozino Project completed on September 17,
2018), namely the potential for:
- AISC in the range of ~USD$550-650/oz, in the lower decile of industry
costs
- Low initial capex
- Low strip ratio deposits with a 1.51 g/t Life of Mine
("LOM") 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
Bulgaria is a country with a
long mining history and has been proven in recent years to be a
jurisdiction where Canadian mining companies can successfully
operate and develop gold mining operations. Velocity also brings a
significant additional advantage through its local partner, with
which it has agreement to process mineralized material through its
currently operating CIL process facility located near the Rozino
deposit.
The above AISC and gold grades are based off disclosure in
Velocity's PEA on the Rozino Project (see Velocity's news release
dated September 17, 2018). 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 Financing comprises the following:
- An investment of $3,906,000 to
acquire 18,600,000 units (the "Units") of Velocity (the
"Equity Financing") at a price of $0.21 per Unit. Each Unit will consist of one
common share in the capital of Velocity (each, a
"Share") and one-half of one common share purchase warrant
("Warrant"), with each whole Warrant entitling the holder
thereof to purchase one common share in the capital of Velocity at
a price of $0.25 per share for a
period of 36 months from the closing of the Financing.
- The remaining investment to be made in exchange for the
issuance of convertible debentures of Velocity in the principal
amount of $5,094,000 (the
"Debenture Financing"), which will earn interest at a rate
of 8.5% per annum over a 60-month term (the "Term"), payable
semi-annually in cash or common shares of Velocity at the
discretion of Velocity. The principal amount of the convertible
debentures will be convertible to common shares of Velocity during
the Term at the election of Atlantic at a conversion price of
$0.25. The convertible debentures
issued under the Debenture Financing will be secured with a first
ranking charge at any time by way of general security agreement and
guarantees from each material subsidiary of Velocity.
Velocity intends to use the proceeds of the Financing to advance
its 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 in Bulgaria where
Velocity has negotiated option rights.
Steven Dean, Chairman and CEO
commented "Atlantic is pleased to enter into a strategic
partnership with the Velocity management team with the shared
objective of advancing its Bulgarian exploration assets through to
feasibility stage and beyond.
Through our understanding of the Bulgarian mineral properties
to date, Atlantic sees many of the hallmarks we recognised only 4
years ago in our Moose River Consolidated mine which has led to its
successful construction, commissioning and operation as the lowest
cost producer in the sector with significant production growth in
the near future.
We look forward to completing the Financing in short order
and working collaboratively with Velocity in 2019."
Other key terms of the Agreement include the
following:
- Atlantic to have the right to appoint one individual to serve
as a director of Velocity provided Atlantic owns at least 15% of
the common shares of Velocity, with the number of nominees
increasing to 2 out of five directors when Atlantic's share
ownership of Velocity exceeds 30%
- Atlantic's voting rights in Velocity to be limited to 35% of
Velocity's outstanding shares, other than, among other things, in
the context of a change of control of Velocity, if Velocity is in
default under the agreements related to the Financing, or with
approval of Velocity
- Atlantic and Velocity will enter into a separate agreement
whereby Atlantic provides certain commercial and technical services
from time to time as agreed by the parties
- Other rights customary for a strategic investor including but
not limited to anti-dilution rights, standstill periods on further
acquisitions and/or dispositions of shares, and minority
shareholder protections
All securities issued in connection with the Financing will be
subject to a hold period of four-months and one day in
Canada. The Financing is subject to acceptance for filing by
the TSX Venture Exchange, Atlantic being satisfied with its due
diligence regarding Velocity, and the delivery of certain closing
documents. Velocity has obtained the approval of the shareholders
of Velocity for Atlantic becoming a control person of Velocity as
required under the policies of the TSX Venture Exchange by consent
resolution. Atlantic has also entered into voting support
agreements with the directors and officers of Velocity, holding in
aggregate 36.7% of the issued and outstanding common shares of
Velocity.
Atlantic does not currently own or have control or direction
over any securities of Velocity. Following closing of the
Financing, Atlantic will beneficially own and have control and
direction over an aggregate of 18,600,000 common shares of Velocity
representing approximately 19.9% of the issued and outstanding
Common Shares of Velocity. Assuming conversion of both the
convertible debenture and the exercise of the Warrants offered to
Atlantic pursuant to the Financing, Atlantic would own and/or
control, directly and indirectly, 48,276,000 common shares,
representing 39.2% of the issued and outstanding common shares of
Velocity on a partially diluted basis.
About Velocity
Velocity is an exploration and development company with a
medium-term strategy to move towards gold production in
Bulgaria. A Preliminary Economic Assessment has been completed
on the Rozino gold project and Velocity is focused on expansion and
exploration drilling as part of feasibility-level work. Six
additional near surface gold projects provide additional potential
for resource growth.
Velocity envisions staged open pit mining of satellite deposits
and processing in a central CIL plant. An existing, operating
processing plant is available through an Exploration and Mining
Alliance with its established Bulgarian operating
partner. Velocity's strategy is to build a production profile
of more than 100,000 ounces of gold per year for over 10 years.
Rozino PEA (excerpts taken from Velocity's news release dated
September 17, 2018)
On September 17, 2018, Velocity
announced the results of an independent PEA on its Rozino gold
project ("Rozino" or the "Project") located in
southeast Bulgaria. 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 flotation plant
("Flotation Plant") and further processing in an existing
operating carbon-in-leach plant ("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
internal rate of return ("IRR") of 33.1%.
Rozino 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.
("Gorubso"). 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 (COG),
attractive strip ratio of 2.5 and 1.51 g/t LOM 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
- 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
|
(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.
Updated Mineral Resource Estimate - Rozino
An updated mineral resource estimate using all of the relevant
drill hole information to date was reported for a range of cut-off
grades returning an Inferred mineral resource of 13Mt @ 1.37g/t
gold at a 0.6 g/t gold cut-off grade, for total contained gold of
573,000 ounces. The estimates are based on 2m down-hole composited gold assay grades from
angled diamond drilling.
Velocity has received results from approximately 9,050m of diamond drilling to date. Relative to
the dataset available for the previous March
2018 estimates, the current sampling database contains assay
results for an additional 12 holes for 1,580m of drilling.
1
|
Effective date
September 10, 2018
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2
|
Mineral resources are
not mineral reserves and do not have demonstrated economic
viability.
|
3
|
The mineral resource
disclosed herein 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)
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4
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Any known legal,
political, environmental, or other risks that could materially
affect the potential development of
the mineral resource are detailed below in the section entitled
"Cautionary Statement Regarding Forward-Looking
Information"
|
Please see Velocity's news release dated September 17, 2018 for additional information
regarding the PEA and updated resource estimate.
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 Velocity's Vice President Exploration. Mr.
Mills is independent of the Company.
Further updates will be provided in due course.
On behalf of the Board of Directors,
Steven Dean
Chairman and Chief Executive Officer
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
About Atlantic:
Atlantic 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 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 gold production to + 200,000
ounces per year at industry lowest quartile cash and
all-in-sustaining-costs (as stated in the Company's news releases
dated January 16, 2019 and
January 29, 2018).
Atlantic 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.
Forward-Looking Statements:
This release contains certain "forward looking statements"
and certain "forward-looking information" as defined under
applicable Canadian and U.S. securities laws. Forward-looking
statements and information can generally be identified by the use
of forward-looking terminology such as "may", "will", "expect",
"intend", "estimate", "anticipate", "believe", "continue", "plans"
or similar terminology. Forward-looking statements and information
are not historical facts, are made as of the date of this press
release, and include, but are not limited to, statements regarding
the Financing, including the ability to close the Financing, the
benefits of the Financing, the timing of the Financing and
approvals related thereto; Velocity's properties, including plans
and expectations of Velocity and Atlantic related to the
properties; statements related to Atlantic's proposed exploration
and development programs, grade and tonnage of material and
resource estimates; discussions of future plans, guidance,
projections, objectives, estimates and forecasts and statements as
to management's expectations with respect to, among other things,
the activities contemplated in this news release and the timing and
receipt of requisite approvals in respect thereof. Forward
looking information, including future oriented financial
information (such as guidance) provides investors an improved
ability to evaluate the underlying performance of the
Company. These forward looking statements involve numerous
risks and uncertainties and actual results may vary. Important
factors that may cause actual results to vary include without
limitation, the ability to close the Financing, timing and receipt
of certain approvals, changes in commodity and power prices,
changes in interest and currency exchange rates, risks inherent in
exploration estimates and results, timing and success, inaccurate
geological and metallurgical assumptions (including with respect to
the size, grade and recoverability of mineral reserves and
resources), changes in development or mining plans due to changes
in logistical, technical or other factors, unanticipated
operational difficulties (including failure of plant, equipment or
processes to operate in accordance with specifications, cost
escalation, unavailability of materials, equipment and third party
contractors, delays in the receipt of government approvals,
industrial disturbances or other job action, and unanticipated
events related to health, safety and environmental matters),
political risk, social unrest, and changes in general economic
conditions or conditions in the financial markets. In making the
forward-looking statements in this press release, the Company has
applied several material assumptions, including without limitation,
the assumptions that: (1) market fundamentals will result in
sustained gold demand and prices; (2) the receipt of any necessary
approvals and consents in connection with the development of any
properties; (3) the availability of financing on suitable terms for
the development, construction and continued operation of any
mineral properties; and (4) sustained commodity prices such that
any properties put into operation remain economically viable.
Information concerning mineral reserve and mineral resource
estimates also may be considered forward-looking statements, as
such information constitutes a prediction of what mineralization
might be found to be present if and when a project is actually
developed. Certain of the risks and assumptions are described in
more detail in the Company's audited financial statements and
MD&A for the year ended December 31,
2017 and for the quarter ended September 30, 2018 on the Company's SEDAR profile
at www.sedar.com. The actual results or performance by the Company
could differ materially from those expressed in, or implied by, any
forward-looking statements relating to those matters. Accordingly,
no assurances can be given that any of the events anticipated by
the forward-looking statements will transpire or occur, or if any
of them do so, what impact they will have on the results of
operations or financial condition of the Company. Except as
required by law, the Company is under no obligation, and expressly
disclaim any obligation, to update, alter or otherwise revise any
forward-looking statement, whether written or oral, that may be
made from time to time, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws.
SOURCE Atlantic Gold Corporation