may 2020 gold in bulgaria · 04/05/2020 · simple metallurgy and conventional processing methods...

Gold in BulgariaMay 2020

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, includingthe 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 hereinincluding, 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 mineralproperties, 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 futureactivities 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 beidentified 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 tocertain 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 achievementsof 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 fundits 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 programsfor 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 andtiming 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 thefinancial 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, hedgingpractices, 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 ofacquisitions, 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 foundunder the Company's profile on the SEDAR website at www.sedar.com. 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 thispresentation or incorporated by reference herein, except as otherwise required by law.

National Instrument 43-101 Stuart Mills, the Vice President Exploration for the Company, and a Qualified Person as defined by National Instrument 43-101, has approved the scientific and technical information concerning the Company discussed in thispresentation. 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 0.75. 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 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). A technical report prepared pursuant to NI 43-101 on the Project is filed on the SEDAR website at www.sedar.com and the Company’s website at www.velocityminerals.com.

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.

http://www.sedar.com/

http://www.sedar.com/

http://www.velocityminerals.com/

3

VELOCITY MINERALS

Gold in Bulgaria

Multiple Advanced Gold Projects – Numerous Drill TargetsNear surface deposits within under-explored gold belt

‘Hub & Spoke’ Development StrategyEnvision open pit mining of satellite deposits & processing in a central plant

Rozino JV – 70%Advancing to Rozino to prefeasibility and exploration drilling new nearby targets

Obichnik, Makedontsi & Sedefche Projects – Option for 70%Drilling towards resource definition

Existing Gold Processing PlantLocal Operating Partner

Management and BoardProven team of explorers and developers

Well FinancedFully-funded to PFS at Rozino and key milestones at option properties

Near Surface Project

‘Hub & Spoke’Development

Model

4

VELOCITY MINERALS

‘Hub & Spoke’ Development Strategy

• Staged open pit mining of satellite deposits

• On-site flotation plant to produce concentrate

• Trucking of concentrate on existing roads

• Further processing in existing CIL plant

• Gold doré production at plant site

STRATEGY: OPEN PIT MINING OF SATELLITE DEPOSITS & PROCESSING IN A CENTRAL PLANT

EXISTING PROCESSING PLANT WITH POTENTIAL TO PRODUCE >200,000 OUNCES GOLD PER YEAR

5

VELOCITY MINERALS

‘Hub & Spoke’ Model Comparison

VELOCITY MINERALSST. BARBARA

Project Stage Distance to Plant Project Stage Distance to Plant

Flagship Asset TOUQUOY (63.5%) Production 0km ROZINO (JV 70%) Prefeasibility 85km

Satellite Project FIFTEEN MILE (100%) Advanced Exploration 57km OBICHNIK (70% Option) Exploration Drilling 25km

Satellite Project BEAVER DAM (100%) Permitting 37km MAKEDONTSI (70% Option) Exploration Drilling 10km

Satellite Project COCHRANE HILL (100%) Permitting 80km SEDEFCHE (70% Option) Exploration Drilling 35km

Regional Potential Regional Exploration Targets Exploration & Mining Alliance (10,400km2 area)

6

BULGARIAN PARTNER – GORUBSO

Central Processing Plant

Existing Gold Processing Plant• Operated by Bulgarian operating partner Gorubso-Kardzhali AD• Only company in Bulgaria to secure a CIL operating permit• Carbon-in-leach processing plant operating since 2011• Certified under the International Cyanide Management Code (ICMI)• 2019 National award for environmental excellence in Bulgaria

Gorubso Processing Plant

EXISTING PROCESSING PLANT WITH POTENTIAL TO PRODUCE

>200,000 OUNCES GOLD PER YEAR

7

BULGARIAN PARTNER – GORUBSO

Permitting & Operating Expertise

Expertise and Relationships

• Strong working relationships with municipalities, national governments and regulatory departments

• Abundant experience with all aspects of permitting and plant operation

Background

• Established 1939 to mine and process lead-zinc ore• Ownership transferred to the Bulgarian government in 1953• Privatized in 1999 by senior managers of the company• Gorubso transitioned to gold mining & processing gold in 2004

Historical Gorubso Base Metal Flotation Plant

Modern-Day Gorubso Gold Processing Plant

8

VELOCITY MINERALS

Multiple Projects –Positive Common Features

POTENTIAL COMMON FEATURES & BENEFITS

✓ AISC^ in the range of ~USD$550-650/oz

✓ Low initial capex

✓ Low strip ratio deposit with a 1.2 g/t to 1.5 g/t life

of mine gold grade

✓ Proven resource expansion potential at existing deposits

✓ Simple metallurgy and conventional processing methods

✓ An under-explored gold belt, with little if any modern

gold exploration

^ “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

ROZINO PROJECT OBICHNIK PROJECT MAKEDONTSI PROJECT

$2,500

$2,000

$1,500

$1,000

$500

All

-In

Su

stai

nin

g C

ost

(U

S$/o

z)

1st Quartile 2nd Quartile 3rd Quartile

Rozino PEAUS$543

Source: S&P Market Intelligence. 2017 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 comparedbetween companies or individual operations.

SEDEFCHE PROJECT

9

PROJECTS

Rozino Gold Project

(1) Effective date September 10, 2018. (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).

OWNERSHIP • 70:30 Joint Venture with Gorubso

LOCATION • Truckable to modern gold processing plant

DEPOSIT TYPE • Near surface, low sulphidation epithermal gold deposit

PEA MINERAL RESOURCES • 573,000oz contained; 13Mt inferred resource grading 1.37 g/t gold at a 0.6 g/t gold cut-off grade1,2,3.

Mineralization remains open.

SEPTEMBER 2018 PEA • After-tax NPV5% of $129 million an after-tax IRR of 33%, assumes $1,250 gold1

EXPLORATION • Drilled approximately 23,000m to date• Advancing through prefeasibility study for late Q2 2020 completion• Continuing environmental monitoring and baseline assessment• 9,000m drilling budgeted for 2020

2020 OBJECTIVE • Advance Rozino deposit through prefeasibility and permitting• Drilling of new exploration targets

10

ROZINO

2018 Preliminary Economic Assessment


PEAHighlights(Sept 2018)

Financials• After-tax NPV5% of $129 million an after-tax IRR of 33%1

• Total estimated capital cost of $97.6 million1

• All-in sustaining cost (AISC)^ of US$543 per ounce gold1

Inferred Resource • Historical resource doubled in PEA – 90% of resources within 100m of surface• Inferred mineral resource estimate contains 573,000 ounces gold at 0.6g/t COG (13Mt

@1.37g/t gold) 1,2,3

Open Pit Mining• LOM mined gold of 461,000 ounces

Processing• On-site flotation to produce ~30g/t gold concentrate• Further processing in existing operating CIL plant & doré production• LOM gold production average 65,000 ounces per annum

(1) Effective date September 10, 2018.(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).

All In Sustaining Cost (AISC)^ is defined as all cash costs related to mining and processing to final product. It includes on-mine andoff-mine costs (direct and indirect). Sustaining capital costs related to continuing the business including exploration, developmentand equipment required to sustain production are included. Taxes, working capital, M&A, disposals and acquisitions as well as newmine development capital costs are excluded.^“AISC” is an industry financial measure that has no definition under Canadian GAAP. As a result AISC cannot be comparedbetween companies or individual operations.

11

ROZINO

Pre-Feasibility Study – In Progress

Mining• Potential to consolidate PEA design pits• Reduce cut-off grade from 0.6g/t used in PEA• Use local costs to adjust mining OPEX

Geotechnical• Geotechnical drilling to confirm pit slopes• Site investigation drill holes, penetration tests and pits• Laboratory rock strength analysis

Hydrogeological• Hydrogeological testing & monitoring holes• Expected low ABA and metal leaching• Define LOM water balance• Water exploration

Metallurgical & Processing• Whole core comminution test work • Flotation, gravity and leach test work• Ongoing test work for gravity / flotation upside• Potential intensive leach of gravity concentrate

Infrastructure• Planned footprint reduction and increased efficiencies• Site investigations for plant, waste dumps, tailings and raw

water dam• Power line planning and capital• Competitive power costs

Resource Update• Detailed specific gravity though mineral sub-categories and

domains• Extensive umpire analysis program – excellent QAQC• Resource update incorporating 2019 drilling (12,000m)• Upgrade resource from inferred to indicated • Excellent exploration upside within Rozino pull-apart basin and

within Ivaylovgrad corridor

Trade-Off Studies• Various engineering and trade-off studies to investigate

potential haul road routes, electrical transmission supply and routing, on-site infrastructure footprint, project water balance, and process engineering options.

12

ROZINO

Exploration Upside

• All targets located within 8km of proposed Rozinoprocessing plant, targets generally within 4km

• 3,000m of drilling immediately outboard of Rozinodeposit and in Rozino South target area, scheduled for Q2 2020

• An additional 6,000m budgeted contingent on exploration results

Exploration targets within the 160km2 Tintyava Prospecting & Exploration Licence

and proximity to the advanced Rozino gold deposit

13

PROJECTS

Obichnik Gold Project


A

OWNERSHIP • Option agreement to acquire 70% interest from Gorubso by delivering 43-101 mineral estimate and an environmental assessment report

LOCATION • Truckable to gold processing plant

DEPOSIT TYPE • Near surface epithermal gold depositIntrusive related bulk tonnage potential

HISTORICAL ESTIMATES • The estimate which is registered with the Ministry of Energy in Bulgaria is based on historical exploration, including approximately 32 drill holes (4,800m) and 137 trenches completed by Geoengineering Ltd. and Gorubso.

EXPLORATION • Soil geochemistry, ground magnetic surveys & 4,000m of drilling completed in 2019

• 4,200m of drilling completed in Q1 2020 & deep-penetrating geophysics planned for Q2

• Additional 4,000m of drilling budget contingent on success

2020 OBJECTIVE • Establish 43-101 resource estimate• Environmental assessment report

14

OBICHNIK – RECENT WORK PROGRAM

Obichnik Targets

Potential for two types of mineralization:• High grade epithermal gold • Potential bulk tonnage intrusion related mineralization

Gold-in-soil anomaly gridded, drill holes and section line locations on next slide.

Durusu Tepe Target• Initial drill testing 2019 – positive results• 2020 drill – continued step-outs and infill drilling• 300m strike length tested to date• Still open in multiple directions and at depth

Sivri Tepe Target• Potential continuation of Durusu mineralization• No drill testing to date – slated for H1 2020

Targets at Depth• Deeper testing for intrusion-related mineralization

ODD-001ReplacementZone8.90 g/t gold(55m depth)

DURUSU TEPETARGET

SIVRI TEPETARGET

15

OBICHNIK – RECENT WORK PROGRAM

Obichnik Drilling Results

Durusu Target Drilling Highlights

• Cross Section 1: 43.4m at 3.89g/t gold,

including 19.9m at 7.87g/t gold in drill hole ODD-001


including 2.8m @ 11.03g/t gold in drill hole ODD-025


including 5.9m at 6.95g/t gold in drill hole ODD-006

Cross-Section 1

Cross-Section 2

Cross-Section 3

16

PROJECTS

Makedontsi Gold Project

Near Surface ProjectOWNERSHIP • Option agreement to acquire 70% interest

from Gorubso by delivering a 43-101 mineral estimate and an environmental assessment report


DEPOSIT TYPE • Near surface, low sulphidation epithermal gold deposit

HISTORICAL ESTIMATES • The estimate which is registered with the Ministry of Energy in Bulgaria is based on historical exploration, including approximately 250 drill holes (11,500m) and 5,000m of trenching completed by Gorubso.

EXPLORATION • Initial geophysical data collection in 2020• Additional mapping & target generation planned for Q3 2020• 2,500m of drilling budgeted contingent on success

2020 OBJECTIVE • Establish 43-101 resource estimate• Environmental assessment report

17

MAKEDONTSI – RECENT WORK PROGRAM

Makedontsi Planned Drilling

• Mineralization outcrops but elsewhere prospective host is covered by a thin veneer of limestone

• Limited historical drilling indicates that mineralization exists below the cover sequence

• Geophysical and geochemical surveys planned to help locate prospective silicified zones below limestone cover

Historical drilling and planned heel-to-toe drilling at the Makedontsi project. Highlighted drill intersections are subject to verification by planned drilling and are not true thickness.

18

PROJECTS

Sedefche Gold Project

Near Surface ProjectOWNERSHIP • Option agreement to acquire 70% interest

from Gorubso by drilling 5,000m• Existing, permitted mine design plan completed

by Gorubso


DEPOSIT TYPE • Near surface epithermal gold deposit

HISTORICAL ESTIMATES • The estimate is registered with the Ministry of Energyin Bulgaria. Explored through 45 trenches, 41 shafts and pits, 122 diamond drill holes, 3 mega trenches, and a metallurgical bulk sample excavated and processed at Gorubso’s gold processing plant.

EXPLORATION • More than 5,000m of drilling completed to date, including 4,400m in Q1 2020

• Completing a range of due diligence activities including detailed metallurgical testing & review of mine plan

• Additional 3,000m of drilling budgeted

2020 OBJECTIVE • Establish 43-101 resource estimate

19

PROJECTS – RECENT WORK PROGRAM

Sedefche Drilling Results


Planned

Drill Hole

Trial Pit

Cross Section 1 Through the Sedefche Deposit

Cross Section 2 Through the Sedefche Deposit.

Sedefche Drilling Highlights – Cross Section 1

• 12.9m at 3.80 g/t gold and 38.68 g/t silver in drill hole SDD-002



Sedefche Drilling Highlights – Cross Section 2


Sedefche Trial Pit

20

PROJECTS

Summary of Activities

Project Exploration 2020 Objective

Rozino JV• Drilled ~23,000m since mid 2017 & published positive PEA• Advancing to prefeasibility study for late Q2 2020 completion• Continued environmental monitoring and baseline assessment

Advance through prefeasibility and permitting

JV Exploration Upside• Drilling of new exploration targets in Tintyava JV area• 3,000m exploration drilling planned• Additional 6,000m contingent drilling budget

Discovery of satellite deposits

Obichnik Option• 4,000m of drilling completed in 2019• 4,200m drilling completed in Q1 2020, geophysics plan for Q2• Additional 4,000m contingent drilling budget

Establish 43-101 resource estimate

Makedontsi Option• Initial geophysical data collection in 2020• Additional mapping & target generation planned for Q3 2020• 2,500m contingent drilling budget


Sedefche Option• More than 5,000m of drilling completed to date• Completing a range of due diligence activities including metallurgical

testing & review of mine plan• Additional 3,000m contingent drilling budget


21

VELOCITY MINERALS

Management & Board

Keith Henderson (CEO, Director)• CEO at Latin Metals (TSX-V: LMS) (formerly Centenera Mining) focused on project

acquisition and exploration in South America• 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

Darren Morgans (CFO)• Canadian CPA, CA with almost 20 years experience working with Canadian and

Australian publicly listed resource companies• CFO of Midas Gold. Previously Controller and Secretary for Terrane Metals

prior to its acquisition by Thompson Creek Metals• Career began with PwC after obtaining a Bachelor of Commerce from the

University of Queensland

Steven Dean (Director)• Currently Chairman and CEO of Artemis Gold and former Chairman, CEO and founder

of Atlantic Gold• Previous experience at Teck Cominco (now Teck Resources), Normandy Poseidon

Group (became Normandy Mining), PacMin Mining and Amerigo Resources• Currently Chairman of Oceanic Iron Ore and a director of Sierra Metals and St. Barbara

Limited

Mark Cruise (Director)• Career in mineral exploration and mine development spans 25 years• Worked for Anglo American, Pasminco and various junior TSX-listed companies• Director and Co-founder at Trevali Mining (TSX: TV) where he built the 10th largest

global zinc producer attaining a +$1B market capitalization under his stewardship• Currently COO at New Pacific Metals Corp

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 • Previous investor relations and corporate communications roles with Placer

Dome, Cumberland Resources, Teck Resources, Lundin Group, Hunter Dickinson Group, Viceroy Resources and Batero Gold

Daniel Marinov (VP Operations, Director)• Previously VP Exploration at Trevali Mining (TSX: TV)• At 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

22

Capital Structure

ISSUED & OUTSTANDING

WarrantsWeighted average exercise price $0.35

OptionsWeighted average exercise price $0.31

Convertible Debentures$5,094,000 @ $0.25, 5-year term, 8.5% coupon

FULLY DILUTED(May 1, 2020)

114,377,100

20,024,312

9,275,000

20,376,000

164,052,412

$0.345

$0.58 - $0.21

$39 M

$5.78 M

Share Price

52 Week High - Low

Market Capitalization(May 1, 2020)

Last Private Placement (closed Feb 12, 2020)

ISSUED & OUTSTANDING

FULLY DILUTED

ANALYST COVERAGE

WATCHLIST / NOTES

Management24%

Artemis22%

HNW16%

Float38%

Management20%

Artemis35%

HNW12%

Float33%

23

SUMMARY

Positive Investment Criteria

Multiple advanced gold assets

Experienced management and directors

Well-financed company

Discovery track record

Value <$10/oz discovery cost

Access to operating gold processing plant

Hub ‘n’ spoke development model

EU jurisdiction

Alliance with local Bulgarian miner

Strong technical partner

Excellent results to date

Near term catalysts throughout 2020

€

24

Appendix

Bulgaria BackgroundRozino PEA Results

25

BULGARIA

Mining Investment in Bulgaria

• EU member since 2007, member of NATO since 2004

• 10% corporate tax rate

• Mining law established 1999, updated 2011, draft 2019

• Mining royalties (0.8 to 4.0%) compare favourably to established mining jurisdictions like Canada, Chile and Peru

• Mining industry form up to 5% of the country’s GDP*

• Mining industry provides direct employment to ~25,000 people and through related industries to ~120,000*

• Experienced mining professionals

• Low cost operating environment

* The Canadian Trade Commissioner Service, PDAC 2019.

26

BULGARIA

Mining Industry in Bulgaria

• Bulgaria has a leading position in the European extraction of mineral resources, ranking 4th in gold extraction*

• About 80% of the mining activities in the country are conducted through open pit mining*

• Bulgarian Ministry of Energy is the licencing and permitting body for mineral resources

• Bulgaria issued a 2015-2030 National Strategy for the Development of the Mining Industry, with the aim to create a sustainable development of the Bulgarian mining industry*

• TSX-listed company operating two gold mines (Dundee Precious Metals)• Chelopech underground mine• Krumovgrad open pit development project (Ada Tepe deposit)

* The Canadian Trade Commissioner Service, PDAC 2019.

Mining Projects in Bulgaria & Region

27

ROZINO PEA

PEA Highlights

After-Tax Financials• After-tax NPV5% 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

$2,500

$2,000

$1,500

$1,000

$500

All

-In

Su

stai

nin

g C

ost

(U

S$/o

z)


RozinoUS$543


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 includingexploration, 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 comparedbetween companies or individual operations.

The Rozino PEA (September 2018) 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 (“NI 43-101”).

28

ROZINO PEA RESULTS

Financial Results & Sensitivities

After-Tax Financials • After-tax NPV5% 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

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

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.

^“AISC” is an industry financial measure that has no definition under Canadian GAAP. As a result AISC cannot becompared between companies or individual operations.

29

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)

30

ROZINO PEA RESULTS

Capital and Operating Costs

$2,500

$2,000

$1,500

$1,000

$500

All

-In

Su

stai

nin

g C

ost

(U

S$/o

z)


RozinoUS$543


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.

31

ROZINO PEA

Inferred Resource

Inferred Resource • Historical resource doubled in PEA• Compact, coherent geometry• 90% of resources within 100m of surface• Inferred mineral resource estimate1,2,3 contains 573,000

ounces gold at 0.6g/t COG (13Mt @1.37g/t gold)

Open Pit Mining • LOM mined gold of 461,000 ounces

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 ExpansionCautionary NoteThe PEA is preliminary in nature and includes Inferred mineral resources that are too speculative geologically to haveeconomic considerations applied to them that would enable them to be categorized as mineral reserves. There is nocertainty that the PEA results will be realized. Mineral resources are not mineral reserves and do not have demonstratedeconomic viability.

(1) Effective date September 10, 2018.(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).

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Velocity Minerals Ltd.

2300 – 1177 West Hastings StreetVancouverBC, V6E 2K3

Phone: 604 484 1233E-mail: [email protected]

may 2020 gold in bulgaria · 04/05/2020 · simple metallurgy and conventional processing methods...

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