Novo Resources Corp (TSX:NVO, OTCQX:NSRPF, ASX:NVO) has entered into a joint venture (JV) agreement with SQM Australia, the local subsidiary of global lithium producer Sociedad Química y Minera de Chile S.A., forming the Harding Battery Metals Joint Venture.
As part of the agreement, Novo will sell a 75% interest in five of its prospective lithium and nickel exploration tenements in the West Pilbara to SQM for A$10 million.
The agreement will further boost Novo’s cash reserves to continue its primary gold focus — as it works to define deposits with more than 1-million ounce development potential — while delivering shareholders potential upside exposure to battery metals exploration.
“Leverage to battery metals discoveries”
The JV marks a significant milestone for Novo, providing leverage to battery metals discoveries across a package of tenements adjacent to or in the vicinity of Azure Minerals’ Andover Lithium-Nickel Project and Artemis Resources’ Carlow Castle Gold-Copper-Cobalt Project.
In addition to 75% interest in the priority lithium-nickel tenements, the A$10 million will provide SQM an option over additional Novo Pilbara exploration tenements.
Novo will retain 25% interest in the tenements, along with 100% ownership of the gold, silver, PGE, copper, lead and zinc mineral rights. Novo will continue to explore for these minerals across these tenements.
Under the agreement, SQM will be the manager while Novo’s 25% interest will be free carried by SQM until a decision to mine is made by the parties. Novo will also be entitled to a contingent success payment based on the lithium contained in a JORC-compliant ore reserve once a feasibility study is completed.
Novo executive co-chair and acting CEO Mike Spreadborough said: “To be participating in a JV with a global lithium leader like SQM is an excellent outcome for Novo and will see us receive an immediate payment of A$10 million that will further boost cash reserves for our primary gold exploration focus.
“Meanwhile, SQM can focus on the battery metals prospectivity of the West Pilbara area and our shareholders can benefit from future exploration success with a free-carried interest until a decision to mine.
“SQM has been very active in the Western Australian lithium sector with a ~19% shareholding in Azure Minerals, and a 50% JV with Wesfarmers (ASX:WES) in Mt Holland, that among other investments demonstrates that SQM clearly sees the potential of Western Australia for battery metals, as do we for gold.
“This joint venture expands Novo’s lithium exploration exposure given the existing lithium Quartz Hill JV with Liatam Mining.”