Novo Resources Corp (TSX:NVO, OTCQX:NSRPF, ASX:NVO) will improve its financial position on completing the sale of its non-core Nullagine Gold Project (NGP) in the East Pilbara region of Western Australia to Calidus Resources Ltd (ASX:CAI).
The company executed agreements with Calidus on December 20 and expects completion to occur today.
These agreements follow the conclusion of the strategic review of the NGP outlined in the company’s August 2023 ASX IPO prospectus.
The sale is another key step in Novo’s pursuit of identifying and delivering prospective standalone gold projects with +1-million-ounce development potential.
“A good outcome”
Novo executive co-chairman Mike Spreadborough said, “As we continue to execute our exploration growth strategy to define gold deposits with significant development potential, to complete this disposal of Novo’s Nullagine Gold Project, which was a non-core asset, is a good outcome for the company and our shareholders.”
Calidus has assumed all obligations, royalties, claims and liabilities relating to the Nullagine Gold Project, including the rehabilitation liability of approximately A$45 million.
Financial position improved
Novo has received completion consideration of A$250,000 in CAI shares and has a right to receive a further A$5 million in deferred consideration subject to the achievement of a production milestone relating to the NGP assets.
“Through this agreement, our financial position is improved with the removal of the existing rehabilitation liability of approximately A$45 million from our balance sheet.
“Fundamentals on the gold price and the sector generally remain very strong and we look forward to continuing our strong exploration strategy into the first half of 2024 across our extensive, highly prospective portfolio.”
Sale agreements
The sale occurred as part of:
- A share sale agreement under which Calidus agreed to acquire all issued shares in Millennium Minerals Pty Ltd; and
- An asset sale agreement under which Calidus agreed to acquire additional tenements and assets in the broader Mosquito Creek Basin (from Novo subsidiaries Beatons Creek Gold Pty Ltd, Nullagine Gold Pty Ltd and Rocklea Gold Pty Ltd).
Both agreements were inter-conditional and collectively provided for the acquisition of the NGP by Calidus.
Deferred consideration
At the time of acquiring Millennium, Novo entered into a deferred consideration deed with IMC Holdings, the main shareholder of Millennium.
Under the terms of that deed, Novo was required to pay deferred consideration, in certain circumstances, up to a total amount of A$20 million.
As part of the sale of NGP, Novo has renegotiated the terms of the deferred consideration deed with IMC Holdings.
Under these revised arrangements, Novo has agreed to pay a balance of a A$15.6 million to IMC Holdings by December 2026, with a mechanism for reductions for early payments by Novo.
Tenure relinquished
The company’s ongoing exploration program across key Pilbara areas has identified targets for exploration follow-up in 2024, along with identifying tenure that provides no further exploration value or follow-up.
As a result, a planned relinquishment program has been initiated to reduce land tenure holding costs.
The combined relinquishment program, transfer of some tenure in accordance with the Harding Battery Minerals JV, and the divestment of NGP have reduced the Pilbara tenure area held or managed by Novo to ~7.500 square kilometres.