TXRogers wrote: HuberPeter wrote: 30% contingency is usually used in the operative price assessments. therefore this pea - as novo is already a producer - is of little importance.
Let's see if the PEA is conservative because of the conglomerate style of deposit.
Now novo has to deliver.
peter
At this point, I agree but it is a process that is being followed as per 43-101 compliancy (which has been ill suited for Novo since the beginning)
The use and disclosure of a "preliminary economic assessment" (PEA), is defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).
A PEA, also referred to as a “scoping study”, is a study that includes an economic analysis of the potential viability of mineral resources taken at an early stage of the project PRIOR to the completion of a preliminary feasibility study (PFS). PEA's will generally include information on how much money it will take to bring the project into production, how the mine will operate once it is built, and how much metal (and money) it will produce. More specifically, a PEA will have information on pre-production capital costs, life-of-mine sustaining capital, mine life and cash flow, as well as details on processing and production methods and rates.
The definition of PEA has two key elements that distinguish it from other studies. First, by definition, it cannot be a PFS (pre-feasibility study) or FS (feasibility study). Second, a PEA can only demonstrate the potential viability of mineral resources.
Unlike pre-feasibility PFS and feasibility studies, PEA’s may contain results that are based on inferred mineral resources. This means the information on resource quantity and grade that is included may be based on limited information and sampling. So, there is no need to hope for invention or for discovery. The issue will be addressed, but it will be limited in scope as allowed under the regulatory definition of a PEA.
PFS and FS are more comprehensive studies and, therefore, are more sufficient to demonstrate the technical and economic viability of a mineral project. A PFS will also take into account other key factors that could impact a project such as community issues, geographic obstacles, permit challenges and more. In addition, it will usually include a range of options for the technical and economic aspects of a project and are used to justify continued exploration, to complete the required project permitting, or to attract a joint-venture partner.
In general, PFS`s should have an accuracy within 20 to 30 percent, while feasibility studies (FS) require more formal engineering work and have an accuracy within 10 to 15 percent.
Section 2.3(1)(b) of NI 43-101 does not allow issuers to include inferred mineral resources in a PFS-level economic analysis, whereas section 2.3(3) of NI 43-101 allows issuers to include inferred mineral resources in a PEA. Issuers that blur the boundary between a PEA and a PFS by stating that some or all of the components of the PEA are done at the level of a PFS, run the risk that the Ontario Securities Comminssion may challenge whether the study meets the definition of a PEA.
But like so many things that are regulatory, regulations find themselves becoming inserted in financial dealing. As per the August 4th, 2020 "Transformative Acquisition" for Novo:
In conjunction with the Acquisition, Novo has entered into a four-year credit facility with Sprott for an aggregate amount of $60 million. The funds will be available in two tranches, the first $35 million being available upon closing and the second $25 million available to be drawn until March 31, 2021, at Novo’s sole discretion, upon delivery of a pre-feasibility study on the Beatons Creek Project acceptable to Sprott. The facility will bear interest at 8% plus the greater of US 3-month LIBOR or 1%, and will be repayable in equal quarterly installments commencing 24 months from closing.
Note that March 31, 2021 is now a rear view mirror deadline. Didn't seem like Novo was in such a rush to release their BC PFS. Must not need the money, I suppose.
I wonder why?
Tx