RCCMF - Nippon Dragon Resources Inc. (Nippon Dragon) sells its interests in the Rocmec 1 and Denain projects to Australian Stock Exchange listed Orminex Limited

(TheNewswire)

SEPTEMBER 1, 2021 – TheNewswire - Nippon Dragon ( TSXV:NIP ) (OTC:RCCMF) ispleased to announce that it has signed a project acquisition agreement(the “ Agreement ”) dated August 30, 2021 with Orminex Limited ( ASX: ONX ) for theacquisition (the “ Transaction ”) by Orminex of NipponDragon’s interest in the Rocmec 1  and Denain projects (the“ Projects ”).

In consideration for the sale of the Projects, Orminexwill pay a cash consideration of CAD$5,000,000 (the “ Purchase Price ”),payable in three installments over the course of one year withCAD$2,000,000 payable on closing of the Transaction (the“ CommencementDate ”), CAD$1,500,000 payable six months fromthe Commencement Date, and CAD$1,500,000 payable twelve months fromthe Commencement Date.

Nippon Dragon will retain title to the Projects untilOrminex has completed payment of the Purchase Price in full, withtransfer deeds being executed and held with a third-party escrow agentuntil such time. In addition to the Purchase Price, Orminex has agreedto pay to Nippon Dragon an additional CAD$1,085,000 to fund Nippon’songoing exploration program on the Denain exploration project, whichis scheduled to be fully completed before payment of the PurchasePrice, with such funds to deployed based on the discretion of Orminex.

Furthermore, Orminexwill deliver to Nippon Dragon 4,500 ounces of physical gold within anto be delivered on an agreed upon schedule based on the productionactivities of Orminex, and in all cases no later than 48 months of theCommencement Date. This important component ofthe Transaction will be used by Nippon Dragon to deliver gold to itsgold lenders. Moreover, Nippon Dragon will be entitled to a 1% netsmelter royalty on revenue received from certain individual veinspresent on the Projects, including the Boucher vein. Orminex shallhave the ability to purchase one-half of this royalty forCAD$1,000,000.

Orminex 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. Orminex has a strategy of acquiring and operating qualityassets in Tier-1 jurisdictions with a view to unlock significant valuefrom high-grade gold projects through demonstrated geological andmining expertise.

“Today's announcement fits into the major andnecessary transformation of the company which began with myappointment as Interim President last November. This agreement withOrminex 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 Orminex¨ stated Jean-Yves Thérien, Nippon’sInterim President and CEO.

The Transaction would constitute a “ReviewableTransaction” in accordance with TSX Venture Exchange (the“ TSXV ”) Policy 5.3 – Acquisitions and Dispositions of Non-Cash Assets , and therefore remains subject to the review and approval ofthe TSXV. Moreover, as the sale of the Projectswould constitute a sale of substantially all of the assets of NipponDragon, it is subject to shareholder approval. Accordingly, theTransaction shall require the approval of 66 2/3% of Nippon Dragon’sshareholders at an annual and special meeting intended to be held onOctober 28, 2021 (the “ Meeting ”), where the shareholders will beasked to vote to approve of the Transaction and matters ancillarythereto. It should be noted that there are no finders fee payable inconnection with the Transaction.

In connection with the Transaction, Nippon Dragon hasagreed to discharge two encumbrances affecting the Projects.

• - On the Commencement Date, in consideration for thefollowing, Groupe RM2C (“ RM2C ”) has agreed to discharge its securityregistered against title to the Rocmec project (the “ RM2C Transaction ”),Nippon Dragon shall:

  • - pay to RM2C an amount of CAD$580,541.00 from theproceeds of the Transaction to repay the outstanding amount of itssecured loan; and

    - convert an amount of $100,000 of the secured loaninto units of Nippon Dragon (the “ Units ”) at a priceof $0.05 per Unit, with each Unit being comprised of one common shareand one common share purchase warrant (each a “ Warrant ”) of NipponDragon. Each Warrant shall entitle its holder to acquire one commonshare of Nippon Dragon for the price of $0.075 per common share, for aperiod of 24 months following the Commencement Date.

The RM2C Transaction remains subject to the approval ofthe TSXV; and

• - Secondly, Nippon Dragon entered into a joint venturereimbursement agreement (the “ Reimbursement Agreement ”) with MaterialJapan Inc. (“ MJ ”), pursuant to which it has agreed to terminate its jointventure (the “ JV ”) on the Project, in exchange for with MJ and to Nipponreimbursing MJ’s CAD$2,500,000 cash contribution to the Projects. Byway of context, pursuant to a joint venture agreement between NipponDragon and MJ, dated March 15, 2019, as amended, MJ and the Vendorpreviously agreed to each participate in the profits resulting from(i) production activities on the Denain project, on the basis 60% and40%, respectively; and (ii) production activities on the Rocmecproject, on the basis 49% and 51%, respectively. The ReimbursementAgreement effectively terminates the joint venture, and, inconsideration therefor, Nippon Dragon will, on the CommencementDate:

  • - make a cash payment of CAD$25,000 to MJ;

    - in lieu of payment of an amount of CAD$500,000, issue10,000,000 common shares of the Nippon Dragon to MJ, at a deemed priceof $0.05 per common share;

    - as to the balance to the JV contribution of MJ in anamount of CAD$1,975,000, issue to MJ a three-year convertibledebenture (the “ Debenture ”) for the same amount bearinginterest at a rate of 5% payable quarterly. The terms of the Debentureprovide that, (i) during the first year, Nippon Dragon has the optionto only pay the accrued interest on a quarterly basis; (ii) if theDebenture has not been repaid in full by the end of the first year,Nippon Dragon shall make a minimum quarterlypayment of CAD$123,436.50 plus interest during the second year of theterm of the Debenture; (iii) if the Debenture has not been repaid infull by the end of the second year, MJ shall have the right to either(a) continue to receive cash payments under the convertible debentureuntil the expiry of the term of the Debenture; or (b) immediatelyconvert the balance of the amount owed into common shares of NipponDragon at a deemed price per share of $0.10 per share.

The issuance of the Debentures, and the terms thereof,remains subject to the approval of the TSXV, and of the approval ofthe disinterested shareholders of Nippon Dragon at the Meeting.

Until such time as the Purchase Price has been paid infull and title to the Projects has been transferred, Orminex will begranted operational control over the Projects. For a period of 48months following the Commencement Date, Nippon Dragon will be grantedaccess to certain areas of the Projects to enable Nippon Dragon tofurther demonstrate its patented “thermal fragmentation”technology (“ DragonTechnology ”). Nippon Dragon may extractproduct from the existing stockpile (estimated at approximately 3,000tonnes) on the Rocmec project (with no maximum on the amount which maybe extracted) and to retain 100% of any revenue received on the saleproduct so extracted (less any costs incurred by Orminex in relationto such extraction, if any), in return for granting Orminex a netsmelter royalty of 10% on any gold extracted from the projects afterthe first 900 ounces.

Following the Transaction, Nippon Dragon intends tofocus on its Courville/Maruska gold exploration project (the“ CourvilleProject ”), which is located in the Courvilletownship, 32 kilometres northeast of Val d’Or, where it intends tofocus on the application of its Dragon Technology. Nippon Dragon shallissue a subsequent news release prior to the Meeting with regard toits future plans concerning the development of its business and theCourville Project..

AboutNippon

Nippon is active in the exploration and the developmentof gold resources in Quebec. The Corporation holds three goldproperties, Rocmec 1 with resources recognized in accordance withNI43-101, Denain and Courville-Maruskaproperties. Nippon also has an exclusive license for the ThermalFragmentation mining process.

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

Le présent communiqué est disponible en françaissite web de Ressources Nippon Dragon.

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 Dragonto be materially 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 governmental,shareholder, environmental or other project approvals; uncertaintiesrelating to the availability and costs of financing needed in thefuture; changes in equity markets; inflation; fluctuations incommodity prices; delays in the development of projects; other risksinvolved in the mineral exploration and development industry; andthose risks set out in Nippon Dragon’s public documents filed onSEDAR (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.

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

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