Novo Agrees to Sell Stake in New Found Gold for C$125.9 Million
Novo Resources Corp. has agreed to sell 15 million shares of New Found Gold Corp. for C$125.9 million, with a 9.3% premium to the market. This transaction will leave Novo debt-free, with a projected cash balance of C$97 million. The sale will accelerate exploration efforts in Western Australia and Victoria, particularly for the Beatons Creek project. The first tranche of 8.25 million shares will settle on April 27, while the second tranche of 6.75 million shares is set for August 5, 2022.
- Sale of 15 million shares at C$125.9 million enhances liquidity.
- Pro-forma cash position projected to be C$97 million post-transaction.
- Debt-free status expected upon transaction completion.
- Increased risks associated with achieving anticipated production costs.
- Commercial production declaration does not guarantee economic results.
KEY POINTS
- Novo has agreed to sell its stake of 15 million shares in New Found Gold Corp. (TSXV: NFG) (“New Found”) to a corporation controlled by Eric Sprott for gross proceeds of C
$125.9 million pursuant to arm’s length negotiations (the “Transaction”) representing an aggregate9.3% premium to market - Completion of the Transaction will leave Novo debt-free and with a pro-forma cash balance of almost C
$97 million 1, with funds providing Novo with the flexibility to aggressively advance exploration efforts across the Pilbara and Victoria, while expediting a Feasibility Study on the Fresh component of the Company’s Beatons Creek project in Nullagine, Western Australia
VANCOUVER, British Columbia, April 12, 2022 (GLOBE NEWSWIRE) -- Novo Resources Corp. (“Novo” or the “Company”) (TSX: NVO, NVO.WT & NVO.WT.A) (OTCQX: NSRPF) is pleased to announce that it has agreed to sell its 15 million New Found shares to a corporation controlled by Eric Sprott for gross proceeds of approximately C
“Novo has always considered its sizeable investment portfolio as a means to fund growth expenditure” commented Mr. Mike Spreadborough, Executive Co-Chairman of Novo. “The sale of our New Found holding at a premium of
The first tranche of the Transaction totals 8.25 million New Found shares at C
The second tranche of the Transaction totals 6.75 million New Found shares at C
Pursuant to a general security agreement and terms of the US
Assuming completion of the Transaction and repayment of the Credit Facility, Novo’s pro-forma cash position is approximately C
Subsequent to completion of the Transaction, the Company’s strategic investment portfolio will still include a
QP STATEMENT
Dr. Quinton Hennigh (P.Geo.) is the qualified person, as defined under National Instrument 43-101 Standards of Disclosure for Mineral Projects, responsible for, and having reviewed and approved, the technical information contained in this news release. Dr. Hennigh is the Non-Executive Co-Chairman and a director of Novo.
CAUTIONARY STATEMENT
The decision by the Company to produce at Beatons Creek was not based on a feasibility study of mineral reserves demonstrating economic and technical viability and, as a result, there is an increased uncertainty of achieving any particular level of recovery of minerals or the cost of such recovery, including increased risks associated with developing a commercially mineable deposit. Production has not achieved forecast to date. Historically, such projects have a much higher risk of economic and technical failure. There is no guarantee that anticipated production costs will be achieved. Failure to achieve the anticipated production costs would have a material adverse impact on the Company’s cash flow and future profitability.
The Company cautions that its declaration of commercial production effective October 1, 20215 only indicates that Beatons Creek was operating at anticipated and sustainable levels and it does not indicate that economic results will be realized.
ABOUT NOVO
Novo operates its flagship Beatons Creek project while exploring and developing its prospective land package covering approximately 12,500 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.com.
On Behalf of the Board of Directors,
Novo Resources Corp.
“Michael Spreadborough”
Michael Spreadborough
Executive Co-Chairman
Forward-looking information
Some statements in this news release contain forward-looking information (within the meaning of Canadian securities legislation) including, without limitation, that Tranche 1 will settle on April 27, 2022, that Tranche 2 will settle on August 5, 2022, that repayment of the Credit Facility will not be required until settlement of Tranche 2 and Novo being debt free upon completion of the Transaction, that Novo’s pro-forma cash position is approximately C
_____________________
1 This balance represents Novo’s current cash balance of approximately C
2 Refer to note 14 of the Company’s audited consolidated financial statements for the year ended December 31, 2021, which are available under Novo’s profile on SEDAR at www.sedar.com.
3 Refer to the Company’s news release dated April 7, 2022.
4 This value excludes the fair value of warrants held in GBM Resources Ltd. Please refer to the Company’s management discussion and analysis for the financial year ended December 31, 2021, which is available under Novo’s profile on SEDAR at www.sedar.com. The value of Novo’s holdings in E3D is based on E3D’s most recent financing price of US
5 Refer to the Company’s news release dated October 12, 2021.
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