Jiulian Resources to Acquire Pedra Branca Gold Project in Brazil and Announces Financing for up to $1.75M



July 30, 2020 - TheNewswire - JIULIAN RESOURCES INC. (TSXV:JLR) ("Jiulian" or the "Company") is pleased to announce that it has entered into an arm's length definitive option agreement (the "Option Agreement") with Jaguar Mining Inc. (TSX:JAG) ("Jaguar") effective July 29, 2020 to acquire up to a 100% interest in the Pedra Branca project ("Pedra Branca" or the "Project") tenement package, located in Ceara State, Northeastern Brazil (the "Acquisition")

Douglas Meirelles, President and CEO, stated, "The Pedra Branca Project in Brazil is a significant opportunity for Jiulian. By completing this exploration program, we will be able to gain control of a highly prospective project in a pro-business state in Brazil. The upside potential considering the 40 km regional shear zone coupled with the successful efforts that have been made from previous drilling and mapping completed by Jaguar and prior holders will provide Jiulian the opportunity to substantially develop this project."

Highlights of Option Agreement for Pedra Branca

  • - 75% interest for US$1 million in exploration expenses

    - Jiulian can increase its interest to 100% by delivering a technical report that is compliant with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") and granting a 0.5% net smelter royalty (an "NSR") to Jaguar.

    - Jiulian will be the operator of the exploration program

    - Jiulian can purchase half of the NSR for US$1 million

Consideration for the initial 75% interest in the Pedra Branca Project can be earned through exploration expenditures totaling a minimum of US$1 million (the "Earn-In Expenditures"). This exploration budget under the Option Agreement was determined as the minimum work commitment to maintain the tenement area in good standing with the Brazilian Ministry of Mines and Energy. Jiulian can increase its interest to 100% by delivering a NI 43-101 (National Instrument) technical report on the Pedra Branca Project.

Pursuant to the terms of the Option Agreement, Jiulian will be the operator on the Project and Jaguar has agreed to provide technical support during the initial hand-over period. Both Jiulian and Jaguar will share responsibility for the preparation and submission of the final exploration reports should time constraints become critical.

Jaguar shall retain a back-in-right to acquire a 24% interest (the "Back-In-Right") wherein upon completion of the Earn-In Expenditures (the "Earn-In Vesting Date") Jaguar shall have 45 days from the Earn-In Vesting Date to exercise its Back-In Right by paying the Company 2.5 times the Earn-In Expenditures incurred by the Company resulting in the Company holding at 51% interest and Jaguar a 49%. In the event Jaguar exercises its Back-in-Right the parties shall form a joint venture (the "JV"). In the event any party dilutes their interest below 10%, such interest shall revert to 0.5% NSR (the "JV NSR") of which 0.25% of the JV NSR may be purchased for US$1 million by the non-diluting party.

The Pedra Branca Project is also subject to underlying royalties to the original vendors which include:

  1. i.Base Metal - 1.0% on gross revenues over any production for as long as there is effective production and sales;

  2. ii.Gold Deposit

    1. a.In the case of Measured and Indicated Resources of up to 200,000 Au oz = 0.5% royalty on gross revenues and a US$500,000 payment due within 3 months after commercial production; and

    2. b.In the case of Measured and Indicated Resources in excess 200,000 Au oz = 1.0% royalty on gross revenues and in this scenario 0.5% of the royalty may be purchased for US$750,000.

Highlights of Pedra Branca Project

  • - 24 exploration licenses covering 38,926 ha

    - Excellent infrastructure in and around Project area including power, paved roads and mine facilities

    - 40 km shear zone running through Project area

    - 9 km of drilling already complete

    - 3 discoveries and 5 prospective target areas to date

Pedra Branca is located in Ceara State, Northeast Brazil. The state is a pro-mining region with excellent infrastructure. The capital of the state, Fortaleza, is approximately 280 kilometers from the Project and has an international airport and provides good access to the Project. Pedra Branca consists of 24 exploration licenses covering 38,926 hectares. Infrastructure includes paved roads, access to the power grid and mine facilities are situated on-site. Jaguar acquired the project area in 2007.

There is a regional shear zone on the project area of some 40 km in length. A total of 9 km of drilling has outlined three discoveries which include Mirador (3.14 g/t Au over 6.4 m), Coelho (1.78 g/t Au along 7.3 m) and Queimadas (1.03 g/t over 9.3m). Five additional prospective target areas have been identified from surface mineralization and remain open along strike. Exploration at Pedra Branca to date shows the three discoveries are ready for drilling to determine the potential expansion of the target areas. Mapping of this area from drilling results have shown the continuity of the mineralization identified to date which demonstrates they are open along strike.

Qualified Person

Jonathan Victor Hill, BSc (Hons) (Economic Geology - UCT), FAUSIMM, is the Vice President of Jaguar and in connection with the Acquisition is the Qualified Person as defined by NI 43-101 who has reviewed and approved the technical data in this news release.

Concurrent Financing

Concurrently with the Acquisition the Company will conduct a non-brokered private placement (the "Concurrent Financing") of up to 17,500,000 units (a "Unit") of the Company at a price of $0.10 per unit for gross proceeds of up to $1,750,000.

Each Unit consists of one common share of the Company and one-half of one common share purchase warrant (each whole warrant a "Warrant"). Each Warrant will entitle the holder to acquire one additional common share in the capital of the Company at a price of $0.15 per share for a period of 24 months from closing, subject to an accelerated expiry. In the event the closing trading price of the Company's shares is greater than $0.25 per share for a period of 10 consecutive trading days (the "Acceleration Event") the Company will give notice to the holders of the Acceleration Event and the Warrants will expire 30 days thereafter.

The Company intends to use the net proceeds of the Concurrent Financing for purposes of completing the Acquisition and funding the required Earn-In Expenditures and operating costs in relation to the development of the Project. The Concurrent Financing is integral to the proposed Acquisition and therefore the Company expects to rely on the "part and parcel pricing exception" provided for in the policies of the TSX Venture Exchange (the "Exchange").

Completion of the Acquisition and the Concurrent Financing are expected to occur in August 2020 and are subject to satisfaction of a number of customary conditions precedent, including, without limitation, the acceptance of the Exchange and the satisfaction of any conditions which the Exchange may impose, including those applicable to Fundamental Acquisitions (as defined in Exchange Policy 5.3).

The Company may pay finders' fees of 5% cash and 5% finders warrants ("Finder Warrant"). Each Finder Warrant will entitle the holder to acquire one additional common share in the capital of the Company at a price of $0.15 for 24 months from closing subject to the Acceleration Event.

All securities issued under the Concurrent Financing will be subject to a hold period of four months and a day from the date of issuance under applicable securities laws.

About Jiulian

Jiulian is an exploration company engaged in acquiring and advancing prospective and under-explored gold properties both in Canada and internationally. The Company's current portfolio includes the wholly-owned, Bigg Kidd property, located near Aspen Grove, BC. Jiulian Resources is listed on the Exchange under the symbol "JLR".

ON BEHALF OF THE BOARD

Douglas Meirelles, President and CEO

For more information regarding this news release, please contact:

Douglas Meirelles

T: 250-762-5777

W: www.jiulianresources.com

Cautionary Note Regarding Forward-Looking Information

This news release contains statements that constitute "forward-looking Information", as such term is used in applicable Canadian securities laws. Such forward-looking information involves known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements, or developments in the industry to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking information. Forward-looking information includes 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 that events or conditions "will," "would," "may," "could" or "should" occur.

Forward-looking information in this document includes statements concerning the Company's intention to complete the Acquisition and the Concurrent Financing and the expected use of proceeds of the Concurrent Financing and all other statements that are not statements of historical fact.

Although the Company believes the forward-looking information contained in this news release is reasonable based on information available on the date hereof, by its nature forward-looking information involves assumptions and known and unknown risks, uncertainties and other factors which may cause our actual results, level of activity, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information.

Examples of such assumptions, risks and uncertainties include, without limitation, assumptions, risks and uncertainties associated with general economic conditions; the Covid-19 pandemic; adverse industry events; the receipt of required regulatory approvals and the timing of such approvals; that the Company maintains good relationships with the communities in which it operates or proposes to operate, future legislative and regulatory developments in the mining sector; the Company's ability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favorable terms; mining industry and markets in Canada and generally; the ability of the Company to implement its business strategies; competition; the risk that any of the assumptions prove not to be valid or reliable, which could result in delays, or cessation in planned work, risks associated with the interpretation of data, the geology, grade and continuity of mineral deposits, the possibility that results will not be consistent with the Company's expectations, as well as other assumptions risks and uncertainties applicable to mineral exploration and development activities and to the Company, including as set forth in the Company's public disclosure documents filed on the SEDAR website at www.sedar.com.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.

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.

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