VANCOUVER, British Columbia, Sept. 24, 2020 (GLOBE NEWSWIRE) -- Novo Resources Corp. (“Novo” or the “Company”) (TSX-V: NVO; OTCQX: NSRPF) is pleased to announce that it has exercised its option to earn a 50% interest (the “Interest”) in the Malmsbury gold project (the “Malmsbury Project”) held by ASX-listed GBM Resources Limited (ASX: GBZ) (“GBM”). Transfer of the Interest to Novo is subject to approval from the Victorian Department of Jobs, Precincts and Regions and the Australian Foreign Investment Review Board (the “Conditions”). Please see the Company’s news releases dated March 30, 2020 and April 6, 2020 for further details.
“We are pleased to exercise our option over the Malmsbury project,” commented Quinton Hennigh, Chairman and President of Novo. “Although early stage, Malmsbury hosts one of the closest geologic analogues to the high-grade Fosterville gold deposit situated approximately 50 km to the north. Like Fosterville, Malmsbury is situated along the eastern margin of the prolific Bendigo zone. Mineralization is of classic epizonal orogenic style displaying high-level vuggy quartz veins, elevated antimony and finely disseminated high-grade gold. Novo believes that it now holds one of the most prospective high-grade gold projects in the Victorian gold fields.”
Upon satisfaction of the Conditions, Novo will issue 1,575,387 common shares (the “Option Shares”) to GBM as consideration for the exercise of the option. The Option Shares will be subject to a statutory hold period expiring four months from the date of issuance of the Option Shares. The Company will also reimburse GBM for validly incurred and documented exploration expenditures on the Malmsbury Project of up to AUD $250,000 incurred from March 30, 2020 to today, with such reimbursed amount being credited against the Earn-In Amount (defined below).
Upon satisfaction of the Conditions, Novo will have the right to earn an additional 10% interest in the Malmsbury Project and form a joint venture with GBM by incurring AUD $5 million in exploration expenditure (the “Earn-In Amount”) over a four-year period (the “Earn-In Period”), as to a minimum of AUD $1 million during the first year, and AUD $1.25 million in each subsequent year, of the Earn-In Period. Any expenditure incurred during any year of the Earn-In Period which surpasses the minimum required amount will be credited against the subsequent year’s commitment. If Novo does not satisfy the Earn-In Amount during the Earn-In Period, Novo’s interest in the Malmsbury Project will decrease to 49%.
If Novo satisfies the Earn-In Amount during the Earn-In Period and delivers to GBM written notice of its election to increase its interest in the Malmsbury Project to an aggregate 60% interest and initiate a joint venture with GBM (the date on which such notice is given being the “Joint Venture Date”), GBM will be required to elect to (i) retain its 40% interest in the Malmsbury Project by contributing to 40% of exploration and development expenditure incurred subsequent to the Joint Venture Date, or (ii) dilute its interest in the Malmsbury Project to 25% upon delivery by Novo of a preliminary economic assessment (the “PEA”) disclosing at least a 1 million ounce gold resource, of which at least 60% must be in the Indicated classification, within 3 years from the Joint Venture Date. In such case, Novo will pay all development expenditure incurred commencing from the Joint Venture Date, but if a decision to mine is made, GBM will reimburse Novo as to 25% of any such development expenditure from a maximum of 80% of Malmsbury Project cash flows.
Novo and GBM are currently finalizing a royalty arrangement whereby, subsequent to a decision to mine, GBM will be entitled to receive a maximum 2.5% net smelter returns royalty (the “Maximum Royalty”). The Malmsbury Project is encumbered by certain pre-existing royalties; where such an encumbrance is present, GBM will only be entitled to an adjusted royalty, being the Maximum Royalty less any pre-existing royalty amount.
About Novo Resources Corp.
On Behalf of the Board of Directors,
Novo Resources Corp.
President and Chairman
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Some statements in this news release contain forward-looking information (within the meaning of Canadian securities legislation) including, without limitation, that Malmsbury project is one of the most prospective high-grade gold projects in the Victorian gold fields, the expected finalization of the Maximum Royalty arrangement, the expected satisfaction of the Conditions, and the advancement of Novo’s Beatons Creek project to production. Forward-looking statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, without limitation, the results of further negotiations with GBM, the timeframe associated with Australian Foreign Investment Review Board and the Victorian Department of Jobs, Precincts and Regions approvals, and customary risks of the mineral resource exploration industry.