Novo Resources Corp (TSX:NVO, OTCQX:NSRPF) has received strong endorsement of the company, its project generation capabilities, exploration strategy and Becher Gold Project in Western Australia with major gold explorer and developer De Grey Mining Ltd becoming a strategic partner and making a significant investment.
De Grey has been granted the right to earn a 50% interest in the Egina Joint Venture (JV), which neighbours DEG’s northern Pilbara region gold projects, by spending up to A$25 million on exploration within four years.
Separately, De Grey has agreed to take a cornerstone investment of A$10 million in Novo common shares for an approximate 11.6% post-financing undiluted interest in Novo and will become the company’s largest single shareholder.
“Right strategic partner”
Novo 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.”
About Egina JV
The Egina JV will encompass Novo’s Becher Gold Project and adjacent tenements that cover around 1,000 square kilometres of existing Novo tenements, expanding DEG’s exploration exposure in the Mallina Basin by 70% to a total of +2,500 square kilometres.
Becher is in the northern sector of the Egina Gold Camp, about 28 kilometres along trend from De Grey’s Hemi deposit within the Mallina Gold Project.
The Egina JV tenements are considered highly prospective for large-scale, intrusion-related gold deposits similar to the Hemi deposit, as well as shear-hosted orogenic deposits similar to De Grey’s Withnell and Mallina deposits.
DEG’s participation
DEG will earn a 50% direct stake in the relevant tenements by spending A$25 million on exploration within four years, with a minimum commitment of A$7 million within 18 months, at which time the 50/50 Egina JV will be established.
De Grey, which expects to release a DFS for Mallina next quarter, will manage all exploration under the earn-in and become the manager of the Egina JV once established.
The cornerstone investment, which will be completed at Novo's current spot price of C$0.255 per common share, underpins Novo’s exciting exploration portfolio and growth strategy.
De Grey has also been granted a financing participation right and board nomination right and will be subject to extended contractual hold period and orderly sale restrictions subsequent to the expiry of such hold period.
Successful Becher exploration
This strategic agreement between De Grey and Novo follows a successful period of exploration completed at Becher by Novo since September 2022.
Novo’s exploration program to date, including 2,130 aircore drill holes for more than 50,000 metres in the last nine months, has confirmed that Becher has the geological indicators of potential discovery success.
It will now partner with De Grey to continue exploration efforts at Becher and is hopeful of discovering the next major Pilbara gold project.
“De Grey has committed to a minimum exploration spend of A$7 million within 18 months and potentially up to A$25 million, over the next four years to advance the strong platform already established by Novo,” Spreadborough said.
"The Novo exploration team has achieved a great deal of success at Becher to date, with reconnaissance exploration zeroing in on key initial targets with results from these programs hitting all the right indicators.”
The exploration success at Becher is testament to the credentials of Novo’s experienced management and exploration team that will continue to focus on opportunities for major gold discoveries.
Future Novo focus
Novo will continue to focus on exploration with drilling programs planned for Nunyerry North and Balla Balla in the Pilbara and Belltopper in Victoria in the second half of 2023.
The company also intends to commence a strategic review of the Nullagine Gold Project to assess value-maximising options for shareholders.
This transaction with De Grey will result in Novo having an unaudited consolidated cash position of approximately C$29.8 million/A$33 million.
“The future for Novo is promising; we have a tier-one strategic partner, supportive major shareholders, a highly prospective exploration portfolio, an A-grade exploration team and funding to continue progressing on our path of exploring and defining potential standalone gold projects that can deliver value to our shareholders,” Spreadborough added.
Seeking ASX dual listing
Novo has 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.