RCCMF - Nippon Dragon Resources Inc. (Nippon Dragon or the Company) Announces the Closing of the Sale Its Interests in the Rocmec 1 and Denain Projects and the Resumption in Trading of Its Common Shares of the TSX Venture Exchange

(TheNewswire)

TheNewswire - NOVEMBER8, 2021 - Nippon Dragon (TSXV:NIP) ispleased to announce,following overwhelming support from theCompany’s disinterested shareholders at its annual and specialmeeting of the shareholders held on October 28, 2021, that it  hasclosed its transaction with Labyrinth Resources Limited(“ Labyrinth ”)(ASX: LRL, formerly Orminex Limited) pursuant to aproject acquisition agreement (the “ Agreement ”) datedAugust 30, 2021 (the “ Transaction ”) for the sale of NipponDragon’s interest in the Rocmec 1 and Denain projects (the“ Projects ”).

Sale toLabyrinth

As is further disclosed in the Company’s news releaseof September 1, the following summarizes the material terms of theAgreement and the Transaction:

• - In consideration for the sale of the Projects, theCompany shall receive total cash consideration of CAD$5,000,000 (the“ Purchase Price ”), of which if it received the first instalment payment inan amount of CAD$2,000,0000 from Labyrinth on November 8, 2021, withthe balance of the Purchase Price being payable in twoequalinstallments over the course of one year. The first instalment isdue on May 8, 2022, and then second and final instalment is due onNovember 7, 2022.

  - Nippon Dragon will retain title to the Projects untilLabyrinth has completed payment of the Purchase Price in full, withtransfer forms being executed and held with a third-party escrow agentuntil such time. In addition to the Purchase Price, Labyrinth hasagreed to pay to Nippon Dragon an additional CAD$1,085,000 to fundNippon’s ongoing exploration program on the Denain explorationproject, which is scheduled to be fully completed before payment ofthe Purchase Price, with such funds to deployed based on thediscretion of Labyrinth. A portion of the funds has already been expended, therequired permits and drill campaign plans for an estimated 4000mdrilling programme on the North and South veins have been obtained.The drill rig should be mobilized on the Denain site on November10th.

  - Furthermore, Labyrinth will deliver to Nippon Dragon4,500 ounces of physical gold within an to be delivered on an agreedupon schedule based on the production activities of Labyrinth, and inall cases no later than 48 months of the Commencement Date. This important component of the Transaction willbe used by Nippon Dragon to deliver gold to its Forward Gold PurchaseAgreement (FGPA) participants. Moreover, Nippon Dragon will beentitled to a 1% net smelter royalty on revenue received from certainindividual veins present on the Projects, including the Boucher vein.Labyrinth shall have the ability to purchase one-half of this royaltyfor CAD$1,000,000.

Labyrinth is an Australian Stock Exchange listed miningand exploration company with multiple high grade gold projects inWestern Australia and a team with a proven record of operating safe,high performing underground mines that deliver consistent shareholdervalue. Labyrinth has a strategy of acquiring and operating qualityassets in Tier-1 jurisdictions with a view to unlock significant value from high-grade gold projects throughdemonstrated geological and mining expertise.

“Today's announcement fits into the major andnecessary transformation of the company which began with myappointment as Interim President last November. This agreement withLabyrinth could not have been concluded without the cooperation of ourcreditors RM2C as well as Material Japan and we thank them for theirsupport. I must also point out that this was the result of the work ofNippon’s entire team. I am also very proud of what we haveaccomplished together. The future of Nippon Dragon Resources has neverbeen brighter and I look forward to very long and successfulrelationship with Labyrinth” stated Jean-Yves Thérien, Nippon’sInterim President and CEO.

Resumption ofTrading

As the Transaction constitutes a “ReviewableTransaction” in accordance with TSX Venture Exchange (the“ TSXV ”) Policy 5.3 – Acquisitions and Dispositions of Non-Cash Assets , the Transaction remains subject to the receipt of finalapproval of the TSXV. Moreover, as the sale of the Projectsconstitutes a sale of substantially all of the assets of NipponDragon, the Company sought and obtained the approval of 66 2/3% ofNippon Dragon’s shareholders at its annual and special meeting heldon October 28, 2021 (the “ Meeting ”), where the disinterestedshareholders voted to approve of the Transaction and matters ancillarythereto. It should be noted that no finders fee was paid in connectionwith the Transaction.

The Company expects to receive final approval of theTransaction from the TSXV on or around November 11, 2021, followingwhich its common shares will resume trading on the facilities of theTSXV. An updating news release to that effect will be disseminated bythe Company in due course.

RM2CTransaction

On the date hereof, the Company paid to Groupe RM2C(“ RM2C ”) an amount of CAD$580,541.00 from the proceeds of theTransaction to repay the outstanding amount of its secured loan, andan amount of $100,000 of outstanding accrued interest into units ofNippon Dragon (the “ Units ”) at a price of $0.05 per Unit, witheach Unit being comprised of one common share and one common sharepurchase warrant (each a “ Warrant ”) of Nippon Dragon. Each Warrantshall entitle its holder to acquire one common share of Nippon Dragonfor the price of $0.075 per common share. The securities issued toRM2C are subject to a four-month hold period expiring on March 9,2022.

In consideration for the above, RM2C has discharged itssecurity registered against title to the Rocmec project (the“ RM2CTransaction ”) and has released the Companyfrom its obligations toward RM2C.

The RM2C Transaction remains subject to the approval ofthe TSXV.

Material JapanTransactions

As disclosed in the Company’s news releases datedSeptember 1, 2021, disinterested shareholders of Nippon voted at theMeeting to (i) ratify, approve and confirm the joint venture agreemententered into by the Company and Material Japan Inc. (“ Material Japan ”) onMarch 15, 2019 and its amendment on August 1,2019 (together, the “ JointVenture ”) and (ii) approve the termination ofthe Joint Venture and the terms of the joint venture reimbursementagreement (the “ Reimbursement Agreement ”). Accordingly, onthe date hereof, the Company:

• - made a cash payment of CAD$25,000 to MaterialJapan;

  - in lieu of payment of an amount of CAD$500,000,issued 10,000,000 common shares of the Nippon Dragon to MaterialJapan, at a deemed price per common share of $0.05. The common sharesissued to Material Japan are subject to a four-month hold periodexpiring on March 9, 2022.

  - as to the balance of the consideration payable underthe Reimbursement Agreement in an amount of CAD$1,975,000, athree-year unsecured non-transferable convertible debenture (the“ Debenture ”) was issued to Material Japan for the same amount bearinginterest at a rate of 5% per annum, calculated and payable on aquarterly basis. The terms of the Debenture provide that, (i) duringthe first year, Nippon Dragon has the option to only pay the accruedinterest on a quarterly basis; (ii) if the Debenture has not beenrepaid in full by the end of the first year, Nippon Dragon shall makea minimum quarterly payment of CAD$123,436.50 plus interest during thesecond year of the term of the Debenture; (iii) if the Debenture hasnot been repaid in full by the end of the second year, MJ shall havethe right to either (a) continue to receive cash payments under theconvertible debenture until the expiry of the term of the Debenture;or (b) immediately convert the balance of the amount owed into commonshares of Nippon Dragon at a deemed price per share of $0.10 pershare. Furthermore, for the avoidance of doubt, any payment of accruedinterest in common shares of the Company shall be subject to agreementbetween the parties, the required corporate approvals and regulatoryapprovals, as may be required.

The Reimbursement Agreement and the considerationpayable in accordance therewith, remains subject to the approval ofthe TSXV.

Following the issuance of the 10,000,000 common sharesof the Company to Material Japan, it will hold 29,056,447 commonshares of the Company, representing 13.57% of the issued andoutstanding common shares of the Company on the date hereof.Furthermore, the issuance of the Debenture could result in thecreation of a new “control person”, as such term is defined by theTSXV, which was approved by the disinterested shareholders of theCompany at the Meeting. Following the issuance of the Debenture, theDebenture could entitle Material Japan to receive 19,750,000 commonshares of the Company, representing 20.88% of the issued andoutstanding common shares of the Company, assuming completion of theRM2C Settlement. This amount excludes and securities issuable toMaterial Japan in settlement of any interest owing on the principalamount of the Debenture.

Update

Until such time as the Purchase Price has been paid infull and title to the Projects have been transferred, Labyrinth willbe granted operational control over the Projects.For a period of 48months following the Commencement Date, Nippon Dragon will be grantedaccess to certain areas of the Projectsto enable Nippon Dragon tofurther demonstrate its patented “thermal fragmentation”technology (“ DragonTechnology ”).Nippon Dragon may extract productfrom the existing stockpile (estimated at approximately 3,000 tonnes)on the Rocmec project (with no maximum on theamount which may be extracted) and to retain 100% of any revenuereceived on the sale product so extracted (less any costs incurred byLabyrinth in relation to such extraction, if any), in return forgranting Labyrinth a net smelter royalty of 10% on any gold extractedfrom the projects after the first 900 ounces.

Following the Transaction, Nippon Dragon intends tofocus on its Courville/Maruskagold exploration project (the“ CourvilleProject ”), which is located in the Courvilletownship, 32 kilometres northeast of Val d’Or, where itintends tofocus on the application of its Dragon Technology.

About Nippon

Nippon is active in the exploration and the developmentof gold resources in Quebec. [ ? ] Nippon alsohas an exclusive license for the Thermal Fragmentation miningprocess.

The company’s growth strategy is based on:

- The development of its gold deposits with theobjective of producing revenue from its operations;

- Increasing the value of its mining assets byprioritizing its exploration targets; and

- The commercialization and employment of its thermalfragmentation technology.

On behalf of the Board,

Fabien Miller, Eng., M.Sc.

Director

514-892-1935

Neither TSXV nor its RegulationServices Provider (as that term is defined in policies of the TSV)accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note RegardingForward-Looking Information

This news release contains"forward-looking information" within the meaning of theapplicable Canadian securities legislation that is based onexpectations, estimates, projections and interpretations as at thedate of this news release.  The information in this news releaseabout the closing of the Transaction; the approval of the TSXVrelating to the Transaction; and any other information herein that isnot a historical fact may be "forward-looking information".

Any statement that involvesdiscussions with respect to predictions, expectations,interpretations, beliefs, plans, projections, objectives, assumptions,future events or performance (often but not always using phrases suchas "expects", or "does not expect", "isexpected", "interpreted", "management'sview", "anticipates" or "does notanticipate", "plans", "budget","scheduled", "forecasts", "estimates","believes" or "intends" or variations of suchwords and phrases or stating that certain actions, events or results"may" or "could", "would","might" or "will" be taken to occur or beachieved) are not statements of historical fact and may beforward-looking information and are intended to identifyforward-looking information. This forward-looking information is basedon reasonable assumptions and estimates of management of Nippon Dragonat the time such assumptions and estimates were made, and involvesknown and unknown risks, uncertainties and other factors which maycause the actual results, performance or achievements of Nippon Dragon to bematerially different from any future results, performance orachievements expressed or implied by such forward-looking information.

Such factors include, but are notlimited to, Nippon Dragon’s ability to complete the Transaction;delays in obtaining or failures to obtain required governmentalorother project approvals; uncertainties relating to the availabilityand costs of financing needed in the future; changes in equitymarkets; inflation; fluctuations in commodity prices; delays in thedevelopment of projects; other risks involved in the mineralexploration and development industry; and those risks set out inNippon Dragon’s public documents filed on SEDAR (www.sedar.com)under Nippon Dragon's issuer profile.

Although Nippon Dragon believes thatthe assumptions and factors used in preparing the forward-lookinginformation in this news release are reasonable, undue reliance shouldnot be placed on such information, which only applies as of the dateof this news release, and no assurance can be given that such eventswill occur in the disclosed timeframes or at all. Nippon Dragondisclaims any intention or obligation to update or revise anyforward-looking information, whether as a result of new information,future events or otherwise, other than as required by law.

______________________________________________________________________________RessourcesNippon Dragon Resources Inc. 7055 Taschereau Blvd., suite 500,Brossard (Québec) J4Z 1A7 Tel: (450) 510-4442   www.nippondragon.com

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