Velocity Minerals Ltd.

TSX VENTURE : VLC.H


Velocity Minerals Ltd.

November 19, 2012 17:00 ET

Velocity Minerals Ltd.-Share Consolidation and NEX Listing

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 19, 2012) - Velocity Minerals Ltd. (the "Company")(TSX VENTURE:VLC.H) advises that, at the upcoming annual and special general meeting of its shareholders scheduled for December 18, 2012, the shareholders will be asked to approve a special resolution to consolidate (the "Consolidation") all of the issued and outstanding Common Shares on the basis of a ratio not to exceed one post-consolidation Common Share for every four pre-consolidation Common Shares, or such lesser whole number of pre-consolidation Common Shares that the directors of the Company in their discretion may determine, with the Consolidation to be implemented by the Board at any time, such that on completion of the Consolidation, all of the 29,132,833 Common Shares presently issued and outstanding will be consolidated into not less than 7,283,208 issued and outstanding Common Shares. This Consolidation remains subject to all required regulatory approvals, including both TSX Venture Exchange ("TSXV") approval and shareholder approval. The number of outstanding stock options and warrants of the Company will similarly be adjusted by the consolidation ratio, and the exercise prices adjusted accordingly.

The Company's directors believe the Consolidation is necessary for the following reasons:

  1. The current number of outstanding Common Shares is 29,132,833. Improvements in the corporate outlook result in $0.01 - $0.02 trading increments, which is a material impact on market capitalization and returns. However, the low absolute share price trading ranges do not attract the larger audience of necessary new investors that would notice comparable and significant $0.05 - $0.08 per share price swings and market capitalization gains after the post 4:1 consolidation.
  2. Merger or acquisition proposals to acquire new projects based on share consideration are hampered by the need to issue very large amounts of stock to effect any transaction.
  3. TSXV rules are designed to encourage public companies to maintain price per share trading ranges above $0.05 per share through minimum share and warrant equity issue rules. At this time the number of shares outstanding makes it difficult to sustain higher share prices. This low share price range results in material limitations on the Company's ability to finance future projects through equity or convertible debt issues.
  4. Many institutional and sophisticated investors prefer not to invest in public companies with a high number of outstanding shares and low trading price ranges. A smaller share float tends to discourage low volume traders from using limited capital to set trading ranges and bid / ask price spreads that are not reflective of the underlying value of assets of the Company.
  5. Over longer periods, share consolidations do not have a material impact on the Company's total market capitalization and shareholder equity value. Market capitalization is reflective of the underlying value of the assets of the Company.

The Company does not plan to change its name in conjunction with the proposed Consolidation.

The Company further advises that the TSX delisted the Company's securities at the close of market on November 5, 2012 due to its inability to meet the TSX's minimum listing requirements. In an effort to maintain liquidity in the Common Shares, the Board applied to transfer the Company's listing to the NEX, a separate board of the TSXV that provides a trading forum for listed companies that have low levels of business activity or have ceased to carry on an active business. Effective November 6, 2012, the Common Shares commenced trading on the NEX.

The Company continues to seek a funding for its mineral projects or, in the alternative, a new resource project acceptable to funding sources.

On behalf of the Board of Directors,

Kenneth R. Holmes, Chairman

Forward-Looking Information

This release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address events or developments that the Company expects to occur, are forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or by words indicating that events or conditions "will", "would", "may", "could" or "should" occur. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in the forward-looking statements. Forward-looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made. Except as required by applicable securities laws, the Company undertakes no obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions, or other factors, should change.

Neither 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.

Contact Information

  • Velocity Minerals Ltd.
    Jeremy Yaseniuk
    Investor Relations
    (604) 689-7411 or Toll Free: (866) 920-0567
    www.velocityminerals.com