Novo Exercises Option Over GBM Resources’ Malmsbury Gold Project
September 24 2020 - 8:01AM
Novo Resources Corp.
(“
Novo” or the “
Company”) (TSX-V:
NVO; OTCQX: NSRPF) is pleased to announce that it has exercised its
option to earn a 50% interest (the “
Interest”) in
the Malmsbury gold project (the “
Malmsbury
Project”) held by ASX-listed GBM Resources Limited (ASX:
GBZ) (“
GBM”). Transfer of the Interest to Novo is
subject to approval from the Victorian Department of Jobs,
Precincts and Regions and the Australian Foreign Investment Review
Board (the “
Conditions”). Please see the Company’s
news releases dated March 30, 2020 and April 6, 2020 for further
details.
“We are pleased to exercise our option over the
Malmsbury project,” commented Quinton Hennigh, Chairman and
President of Novo. “Although early stage, Malmsbury hosts one of
the closest geologic analogues to the high-grade Fosterville gold
deposit situated approximately 50 km to the north. Like
Fosterville, Malmsbury is situated along the eastern margin of the
prolific Bendigo zone. Mineralization is of classic epizonal
orogenic style displaying high-level vuggy quartz veins, elevated
antimony and finely disseminated high-grade gold. Novo believes
that it now holds one of the most prospective high-grade gold
projects in the Victorian gold fields.”
Upon satisfaction of the Conditions, Novo will
issue 1,575,387 common shares (the “Option
Shares”) to GBM as consideration for the exercise of the
option. The Option Shares will be subject to a statutory hold
period expiring four months from the date of issuance of the Option
Shares. The Company will also reimburse GBM for validly incurred
and documented exploration expenditures on the Malmsbury Project of
up to AUD $250,000 incurred from March 30, 2020 to today, with such
reimbursed amount being credited against the Earn-In Amount
(defined below).
Upon satisfaction of the Conditions, Novo will have
the right to earn an additional 10% interest in the Malmsbury
Project and form a joint venture with GBM by incurring AUD $5
million in exploration expenditure (the “Earn-In
Amount”) over a four-year period (the
“Earn-In
Period”), as to a minimum of AUD $1 million during the
first year, and AUD $1.25 million in each subsequent year, of the
Earn-In Period. Any expenditure incurred during any year of the
Earn-In Period which surpasses the minimum required amount will be
credited against the subsequent year’s commitment. If Novo does not
satisfy the Earn-In Amount during the Earn-In Period, Novo’s
interest in the Malmsbury Project will decrease to 49%.
If Novo satisfies the Earn-In Amount during the
Earn-In Period and delivers to GBM written notice of its election
to increase its interest in the Malmsbury Project to an aggregate
60% interest and initiate a joint venture with GBM (the date on
which such notice is given being the “Joint Venture
Date”), GBM will be required to elect to (i) retain its
40% interest in the Malmsbury Project by contributing to 40% of
exploration and development expenditure incurred subsequent to the
Joint Venture Date, or (ii) dilute its interest in the Malmsbury
Project to 25% upon delivery by Novo of a preliminary economic
assessment (the “PEA”) disclosing at least a 1
million ounce gold resource, of which at least 60% must be in the
Indicated classification, within 3 years from the Joint Venture
Date. In such case, Novo will pay all development expenditure
incurred commencing from the Joint Venture Date, but if a decision
to mine is made, GBM will reimburse Novo as to 25% of any such
development expenditure from a maximum of 80% of Malmsbury Project
cash flows.
Novo and GBM are currently finalizing a royalty
arrangement whereby, subsequent to a decision to mine, GBM will be
entitled to receive a maximum 2.5% net smelter returns royalty (the
“Maximum Royalty”). The Malmsbury
Project is encumbered by certain pre-existing royalties; where such
an encumbrance is present, GBM will only be entitled to an adjusted
royalty, being the Maximum Royalty less any pre-existing royalty
amount.
About Novo Resources Corp.
Novo is advancing its flagship Beatons Creek gold
project to production while exploring and developing its highly
prospective land package covering approximately 14,000 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.comOn
Behalf of the Board of Directors,
Novo Resources Corp.
“Quinton Hennigh”Quinton Hennigh President and
Chairman
Neither 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 news release.
Forward-looking information Some
statements in this news release contain forward-looking information
(within the meaning of Canadian securities legislation) including,
without limitation, that Malmsbury project is one of the most
prospective high-grade gold projects in the Victorian gold fields,
the expected finalization of the Maximum Royalty arrangement, the
expected satisfaction of the Conditions, and the advancement of
Novo’s Beatons Creek project to production. Forward-looking
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, the results of further negotiations
with GBM, the timeframe associated with Australian Foreign
Investment Review Board and the Victorian Department of Jobs,
Precincts and Regions approvals, and customary risks of the mineral
resource exploration industry.
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