Novo Resources Corp (TSX:NVO, OTCQX:NSRPF) has closed the $A10 million cornerstone investment by prominent Western Australian explorer De Grey Mining Ltd after receiving the green light from the Toronto Stock Exchange.
The TSX has notified Novo that it has accepted notice of the financing and provided conditional approval of the listing of the shares issued under the financing.
Novo will issue De Grey with 35,223,670 common shares at a price of approximately C$0.255 per share for gross proceeds of approximately C$8.97 million (A$10 million).
This will represent an undiluted 11.6% post-financing position in Novo.
READ: Novo Resources receives strong endorsement through major investment by De Grey Mining
Egina Joint Venture
The investment by De Grey also includes an earn-in and joint venture agreement which will see Novo’s Becher Gold Project in WA’s Pilbara region advanced by way of the Egina Joint Venture.
De Grey has been granted the right to earn a 50% interest in the Egina JV, which neighbours DEG’s northern Pilbara region gold projects, by spending up to A$25 million on exploration within four years.
DEG, which expects to release a DFS for the Mallina Project next quarter, will manage all exploration under the earn-in and become the manager of the Egina JV once established.
While the new JV will focus on Becher, Novo will use net proceeds from the investment by DEG to fast-track exploration at its key projects, including Nunyerry North, Balla Balla and Belltopper, as well as for general working capital purposes.
Seeking ASX dual listing
Novo has also commenced a process to seek a dual listing on the Australian Securities Exchange (ASX) through an initial public offering (IPO). Argonaut has been appointed lead manager to the IPO.
The company believes that a listing on the ASX would complement its current TSX and OTCQX listings and is a logical next step given the location of its assets.
Financing details
Shares issued to DEG in the financing are subject to a statutory hold period expiring on October 29, 2023, along with an additional voluntary contractual hold period expiring on June 28, 2024. However, if Novo has not received a formal listing decision letter for its proposed dual listing on the ASX by December 28 2023, the latter hold period will expire on December 28, 2023.
Commencing on December 28, 2023, and subject to De Grey maintaining at least a 12.5% undiluted interest in Novo at all times, De Grey has a one-time right to nominate a director to Novo’s board.
However, if Novo has not received a formal listing decision letter from the ASX regarding its proposed dual listing by December 28, 2023, the nomination threshold will decrease to 10%.
De Grey also has the right to participate in any raising conducted in conjunction with the ASX listing such that it holds up to a maximum undiluted post-financing interest of 12.5% of Novo.
“A strong endorsement”
When announcing the De Grey partnership last week, Novo’s executive co-chairman and acting CEO Mike Spreadborough said, “Attracting a joint venture partner and cornerstone investor like De Grey is a strong endorsement of Novo, our team, exploration efforts to date, the Becher Project and our project generation abilities.
"I would like to welcome De Grey as a major shareholder of Novo and look forward to working with them as we focus on pursuing the next major gold project in the Pilbara.
“De Grey is the right strategic partner for Becher with their understanding of the area, geology and what is required to make a major discovery within the region, highlighted by their 11.7-million-ounce Mallina Gold Project, which sits only about 28 kilometres ENE of Becher.”