Good news to start the new year.
TSXV: NOVR
VANCOUVER, BC, Jan. 11, 2021 /CNW/ - Nova Royalty Corp. ("Nova" or the "Company") is pleased to announce that it has entered into royalty purchase agreements (the "Purchase Agreements") with existing shareholders of the Company (the "Sellers") pursuant to which Nova will acquire a combined, existing 0.18% net smelter return royalty ("Royalty") on the Taca Taca copper-gold-molybdenum project in Salta Province of Argentina ("Taca Taca"), 100% owned by First Quantum Minerals Ltd. (TSX:FM) ("First Quantum") for US$13 million in common shares of Nova ("Nova Shares") and US$3 million cash payable on closing and an additional US$4 million in cash payments at commercial production at Taca Taca (the "Transaction"). Together with Nova's previous acquisition of a 0.24% interest in the Royalty, the Transaction will increase Nova's interest to an aggregate 0.42% Royalty on the world class Taca Taca development project.
Alex Tsukernik, Nova's President and CEO, commented, "This transaction is a great vote of confidence in Nova's strategy from existing shareholders who are now significantly increasing their ownership in the Company. Since Nova's initial royalty acquisition, First Quantum has outlined the path to project development, which will make Taca Taca one of the very few copper development projects being advanced by a major mining company. We are excited to increase our ownership in this outstanding project and look forward to continuing to grow Nova into a premier copper-nickel royalty company".
The Transaction is subject to consent of First Quantum, which is not to be unreasonably withheld, and the acceptance of the TSX Venture Exchange. Transaction completion ("Closing") is expected by February 2021.
TRANSACTION
The aggregate purchase price for the Transaction includes upfront consideration of US$3 million in cash and 4,545,454 Nova Shares with an aggregate value of US$13 million, based on the average of the 10-day and 15-day volume weighted average prices of the Nova Shares on the TSX Venture Exchange as of January 8, 2021. Nova will make additional cash payments totaling US$4 million upon the commencement of commercial production from Taca Taca. The Company intends to file a prospectus supplement to its base shelf prospectus dated October 30, 2020 to qualify the distribution of the Nova Shares to the Sellers.
The royalty is subject to a buyback right based on the proven reserves at Taca Taca in a feasibility study completed by a recognized, international consulting firm that is contracted by mutual consent of all parties, including royalty holders. The buyback amount will be equivalent to the amount of the Proven Reserves multiplied by the prevailing market prices of all applicable commodities within Taca Taca.
Nova has agreed to pay a finder's fee to an arm's length person totaling two (2) percent of the Transaction value to be paid at Closing based on a volume weighted average trading price of the common shares of the Company prior to the date of Closing (subject to the acceptance of the TSX Venture Exchange).
TACA TACA
Taca Taca is a porphyry copper-gold-molybdenum project located in the Puna (Altiplano) region of Salta Province, northwestern Argentina, approximately 55 kilometers east of the Chilean border and 90 kilometers east of Escondida, the world's largest copper mine.
On November 30, 2020, First Quantum announced a maiden reserve of 7.7 million tonnes of copper, an updated measured & indicated resource of 9.45 mm tonnes, an initial mine life of 32 years, and a timetable to consider a production decision for Taca Taca in 2023-2024.
First Quantum provided the following reserve and resource information at Taca Taca:
Mineral Reserve statement as at October 2020
| Classification | Tonnes
(Mt) | Cu grade (%) | Mo grade (%) | Au grade
(g/t) | Cu metal
(kt) | Mo metal
(kt) | Au metal
(koz) |
| Proven | 408.3 | 0.59 | 0.016 | 0.13 | 2,401.6 | 63.3 | 1,749.8 |
| Probable | 1,350.2 | 0.39 | 0.011 | 0.08 | 5,333.1 | 150.2 | 3,336.9 |
| Proven & Probable | 1,758.5 | 0.44 | 0.012 | 0.09 | 7,734.7 | 213.5 | 5,086.7 |
| Note: The estimated mineral reserve was determined using metal prices of $3.00/lb for copper, $12.00/lb for molybdenum, and $1,200/oz for gold. The actual marginal cut-off grade for the mineral reserve varies according to the copper recovery assigned to various mineralogical groupings. However, the overall average marginal copper cut-off grade is in the order of 0.13% Cueq |
Mineral Resource statement as at October 2020
| Classification | Volume (Mbcm) | Tonnes (Mt) | Density (t/m3) | Cu grade (%) | Mo grade (%) | Au grade (g/t) | Cu metal
(kt) | Mo metal (kt) | Au metal (koz) |
| Measured | 157.7 | 421.5 | 2.67 | 0.60 | 0.016 | 0.14 | 2,542.8 | 67.02 | 1,852.6 |
| Indicated | 671.6 | 1,781.8 | 2.65 | 0.39 | 0.011 | 0.07 | 6,908.0 | 197.52 | 4,199.5 |
| Measured & Indicated | 829.3 | 2,203.3 | 2.66 | 0.43 | 0.012 | 0.09 | 9,450.7 | 264.54 | 6,052.1 |
| Inferred | 269.4 | 716.9 | 2.66 | 0.31 | 0.009 | 0.05 | 2,206.0 | 65.15 | 1,182.7 |
| Note: The copper equivalent cut-off ("Cueq") grade accounts for a $3.00/lb copper price, a $1,200/oz gold price, and a $12.00/lb molybdenum price. Inventory and classification are guided by the design ultimate pit. The stated mineral resource includes the mineral reserve. |
First Quantum has filed a National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101") technical report titled "Taca Taca Project Salta Province, Argentina" dated November, 2020 (the "Report"). The Report documents an updated mineral resource model and a significant maiden mineral reserve estimate derived from an open pit mine design and plan which contemplates processing throughput of up to 60 million tonnes per annum through a conventional flotation circuit with a mine life of approximately 32 years. The recovered copper reaches a peak of approximately 275,000 tonnes within the first ten years of operations.
First Quantum reports that a decision to proceed with the construction of Taca Taca is expected in 2023 or 2024.
ACCELERATION OF WARRANTS
Nova is also electing to accelerate the expiry of certain outstanding common share purchase warrants of the Company exercisable at prices of $0.40 and $1.00 per Nova Share (the "Warrants"). Pursuant to the terms of the Warrants, in the event that the closing price of the Nova Shares is greater than $1.00 or $1.25 per Nova Share for twenty (20) consecutive trading days at any time after the issue date (the "Acceleration Trigger"), the Company may accelerate the expiry date of the Warrants by providing written notice, or by way of news release in lieu of written notice, to the holders of such Warrants such that the Warrant will expire on the 30th day following the date of notice thereof given to the holder (the "Expiry Date"). The Company confirms that prior to the date hereof, an Acceleration Trigger has occurred. In accordance with the terms of the Warrants, the Company hereby provides notice to the holders of Warrants that the Acceleration Trigger has occurred and that the Company is exercising its right to accelerate the expiry of the Warrants. Accordingly, the Expiry Date is now set for 4:00 p.m. (Vancouver time) on February 10, 2021, being the 30th day following the date of this news release. Any Warrants remaining unexercised after the Expiry Date will expire and be of no force and effect.
As of January 8, 2021, 5,923,186 Warrants to purchase Nova Shares have yet to be exercised. Accordingly, if all of the outstanding Warrants are exercised, gross proceeds to the Company will total approximately $5,582,686. The proceeds from the exercise of the Warrants will be primarily used by the Company to continue to execute on its growth strategy, as well as for general corporate and working capital purposes.
Holders may exercise the Warrants before the Expiry Date by observing the process as set out in the Warrant certificates. The contact information for the exercise of the Warrants is William Tsang, Chief Financial Officer at Nova Royalty Corp., Suite 501, 543 Granville Street, Vancouver, British Columbia, V6C 1X8 and can be reached at info@novaroyalty.com.
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