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Atlantic Gold to invest C$9M in Velocity Minerals to advance Rozino project

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Atlantic Gold to invest C$9M in Velocity Minerals to advance Rozino project

Atlantic Gold Corp. agreed to invest C$9 million in Velocity Minerals Ltd. to secure a 39.2% interest in the company on a partially diluted basis.

The companies will work together to advance Velocity's 70%-owned Rozino gold project in Bulgaria through a feasibility study ahead of construction and commissioning, according to a Jan. 17 news release.

The financing comprises C$3.9 million to acquire 18.6 million Velocity units priced at 21 Canadian cents apiece. Each unit will consist of one share and half of a share purchase warrant, with each whole warrant exercisable at 25 cents per share for 36 months.

Atlantic Gold will make the remaining investment in exchange for convertible debentures of Velocity worth C$5.1 million. The 60-month debentures will earn interest at a rate of 8.5% per annum.

Velocity will use the proceeds to advance Rozino toward feasibility and permitting; work plans include resource expansion and definition drilling as well as engineering studies. The company will also proceed with exploration of its optioned satellite deposits.

Under the agreement, Atlantic will have the right to appoint one director to the Velocity board as long as it maintains a minimum 15% interest, which will increase to two directors when the interest exceeds 30%.

A preliminary economic assessment of Rozino completed in September 2018 defined an after-tax net present value of C$129.2 million, discounted at 5%, with a 33.1% internal rate of return.