Novo Completes Second and Final Tranche of Sale of New Found Gold Shares for C$57.0 Million
August 08 2022 - 7:00AM
Novo Resources Corp. (
“Novo” or
the
“Company”) (TSX: NVO, NVO.WT & NVO.WT.A)
(OTCQX: NSRPF) is pleased to advise that it has closed the second
and final tranche of its previously announced sale of 15 million
shares (the “
Transaction”) of New Found Gold Corp.
(“
New Found”)1. In the second tranche, Novo sold a
total of 6.75 million escrowed New Found shares to a corporation
controlled by Eric Sprott (“
Sprott”) at C$8.45 per
share for gross proceeds of approximately C$57.0 million
(“
Tranche 2”). Inclusive of the gross proceeds
raised from the sale of 8.25 million New Found shares sold to
Sprott at C$8.35 per share in the first tranche1, gross proceeds of
approximately C$125.9 million have been raised from the
Transaction.
Novo’s consolidated unaudited cash position is
currently approximately C$126.4 million. After-tax proceeds from
the Transaction will continue to be used to provide Novo with the
flexibility to aggressively advance its exploration programs across
the Pilbara and Victoria, Australia, while expediting a feasibility
study on the Fresh component of the Company’s Beatons Creek project
in Nullagine, Western Australia2 (“Beatons
Creek”).
Sprott Resource Lending Corp., Novo’s senior
secured lender, waived any event of default which was triggered by
Novo’s recent operational pause at its Beatons Creek project in
Western Australia3 in anticipation of full repayment of the US$40
million (currently approximately C$51.4 million) senior secured
credit facility (the “Credit Facility”) in August
2022 subsequent to completion of the Transaction. Novo will use the
net proceeds from Tranche 2, in part, to repay the Credit Facility
in full and will provide an update once repayment has been made
leaving Novo free of long-term debt.
Update on Beatons Creek Fresh
Approval
The Company also advises that the Western
Australian Environmental Protection Authority’s
(“EPA”) decision to not assess the Company’s
submission regarding the Fresh mineralization component of Beatons
Creek4 has been appealed by a local proponent who is seeking to
address a limited number of questions relating to potential impacts
to groundwater in the Nullagine area. The Company has all technical
information readily available to confidently address these
questions and is preparing a response to this appeal and expects to
resolve it in due course. Importantly, in the case of an appeal
against a decision by the EPA to not assess a proposal, the
original decision not to assess stands until the appeal is
determined. As such, the Company will continue to engage with the
Western Australian Department of Mines, Industry Regulation and
Safety (“DMIRS”) to seek approval to mine the
Beatons Creek Fresh mineral resource and expects to make a final
investment decision post receipt of results of the feasibility
study3.
QP STATEMENT
Dr. Quinton Hennigh (P.Geo.) is the qualified
person, as defined under National Instrument 43-101 Standards of
Disclosure for Mineral Projects, responsible for, and having
reviewed and approved, the technical information contained in this
news release. Dr. Hennigh is the non-executive co-chairman and a
director of Novo.
ABOUT NOVO
Novo operates its flagship Beatons Creek project
while exploring and developing its prospective land package
covering approximately 11,000 square kilometres in the Pilbara
region of Western Australia. In addition to the Company’s primary
focus, Novo seeks to leverage its internal geological expertise to
deliver value-accretive opportunities to its shareholders. For more
information, please contact Leo Karabelas at (416) 543-3120 or
e-mail leo@novoresources.com.
CAUTIONARY STATEMENT
The decision by the Company to produce at the
Beatons Creek Project was not based on a feasibility study of
mineral reserves demonstrating economic and technical viability
and, as a result, there is an increased uncertainty of achieving
any particular level of recovery of minerals or the cost of such
recovery, including increased risks associated with developing a
commercially mineable deposit. Production has not achieved forecast
to date. Historically, such projects have a much higher risk of
economic and technical failure. There is no guarantee that
anticipated production costs will be achieved. Failure to achieve
the anticipated production costs would have a material adverse
impact on the Company’s cash flow and future profitability.
The Company cautions that its declaration of
commercial production effective October 1, 20215 only indicates
that Beatons Creek was operating at anticipated and sustainable
levels and it does not indicate that economic results will be
realized.
On Behalf of the Board of Directors,
Novo Resources Corp.
“Michael Spreadborough”
Michael Spreadborough
Executive Co-Chairman and Acting CEO
Forward-looking information
Some statements in this news release contain
forward-looking information (within the meaning of Canadian
securities legislation) including, without limitation, that Novo
will use proceeds from Tranche 2 to repay the Credit Facility, will
continue to use net proceeds from the Transaction to provide Novo
with the flexibility to aggressively advance exploration efforts
across the Pilbara and Victoria while expediting a feasibility
study on the Fresh component of the Company’s Beatons Creek project
in Nullagine, Western Australia, that the Company expects to
resolve the appeal to the EPA’s decision in due course, and that
the Company will continue to engage with DMIRS to seek approval to
mine the Beatons Creek Fresh mineral resource and expects to make a
final investment decision post receipt of results of the
feasibility study. These statements address future events and
conditions and, as such, involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the statements. Such factors include, without limitation, customary
risks of the resource industry, and the risk factors identified in
Novo’s management’s discussion and analysis for the three-month
period ended March 31, 2022 which is available under Novo’s profile
on SEDAR at www.sedar.com. Forward-looking statements speak only as
of the date those statements are made. Except as required by
applicable law, Novo assumes no obligation to update or to publicly
announce the results of any change to any forward-looking statement
contained or incorporated by reference herein to reflect actual
results, future events or developments, changes in assumptions or
changes in other factors affecting the forward-looking statements.
If Novo updates any forward-looking statement(s), no inference
should be drawn that the Company will make additional updates with
respect to those or other forward-looking statements.
1 Refer to the Company’s news releases dated
April 12, 2022 and April 27, 2022. 2 Refer to the
Company’s news release dated June 14, 2022.3 Refer
to the Company’s news release dated June 14, 2022.
4 Refer to the Company’s news release dated July
11, 2022.5 Refer to the Company’s news release
dated October 12, 2021.
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