Novo Reports 2021 Financial Results 📰
Novo Reports 2021 Financial Results
VANCOUVER, British Columbia, March 31, 2022 (GLOBE NEWSWIRE) -- Novo Resources Corp. ( “Novo” or the “Company” ) (TSX: NVO, NVO.WT & NVO.WT.A) (OTCQX: NSRPF) is pleased to announce its financial results for the three and twelve-month periods ended December 31, 2021. All amounts are expressed in Canadian dollars, unless otherwise noted.
This news release should be read together with Novo’s management’s discussion and analysis (the “ Annual MD&A ”) and audited consolidated financial statements (the “ Audited Financial Statements ”) for the year ended December 31, 2021 (“ Fiscal 2021 ”) and the eleven-month transitional period ended December 31, 2020 (“ Fiscal 2020 ”) which are available under Novo’s profile on SEDAR (www.sedar.com). The fourth quarter of Fiscal 2021 is referred to as “ Q4 2021 ” in this news release.
Highlights
Revenue of $112.2 million from the sale of 49,232 ounces of gold from the Company’s Beatons Creek gold project (the “ Beatons Creek Project ”) in Fiscal 2021 ($29.9 million from the sale of 13,023 ounces in Q4 2021) at an average realized price 1 of $2,281 / A$2,421/ US$1,819 per ounce ($2,294 / A$2,498 / US$1,821 per ounce for Q4 2021) subsequent to Novo’s inaugural gold pour on February 16, 2021 2
Cash and cash equivalents of $32.5 million as at December 31, 2021
Investment portfolio balance of $156.2 million 3 as at December 31, 2021, including a 9.13% undiluted stake in New Found Gold Corp. (TSXV: NFG) (“ New Found ”)
Continuing focus on high-priority exploration targets, with exploration spend of $12.1 million in Fiscal 2021 ($12.3 million in Fiscal 2020)
Earnings before interest, taxes, depreciation and amortization (“ EBITDA ”) 1 of $41.7 million in Fiscal 2021 ($(49.8) million for Q4 2021) and adjusted EBITDA 1 of $(2.4) million in Fiscal 2021 ($(5.2) million for Q4 2021)
Total cash costs 1 of $1,865 / A$1,980 / US$1,488 per ounce sold in Fiscal 2021 ($2,296 / A$2,501 / US$1,822 in Q4 2021) and all-in sustaining costs (“ AISC ”) 1 of $2,637 / A$2,799 / US$2,104 per ounce sold in Fiscal 2021 ($3,143 / A$3,423 / US$2,494 per ounce sold in Q4 2021)
Recognition of a one-time non-cash gain of $85.6 million in Fiscal 2021 as a result of the accounting treatment (discontinuation of equity accounting; see below) for the Company’s investment in New Found
Recognition of a non-cash impairment charge of $46.9 million in Q4 2021 due to uncertainty regarding the timing of the receipt of the Fresh mining approvals and Beatons Creek Project operational performance to date against forecast
Completion of final payment of AUD$3 million for the Comet Well project near Karratha, Western Australia in February 2021 4
Amendment of senior secured credit facility with Sprott Private Resource Lending II (Collector), LP (the “ Sprott Facility ”) and draw-down of additional USD$5 million in April 2021 5
Completion of sale of part of the Company’s Blue Spec project near Nullagine, Western Australia to Calidus Resources Ltd. (ASX: CAI) (“ Calidus ”) in April 2021 for gross aggregate consideration of AUD$12.5 million cash (AUD$2.5 million received in Fiscal 2020) plus 13,333,333 ordinary shares of Calidus 6 , all of which were sold in Q4 2021 (along with some pre-existing Calidus shares) for gross proceeds of AUD$8.7 million
Completion of $26.4 million brokered private placement of special warrants in May 2021 7
Also refer to the Company’s Q4 2021 operational update 8 and comprehensive exploration update 9 . The Company will provide further operations and exploration updates during April 2022.
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1 Non-IFRS measure; the definitions and reconciliations of these measures are included under “Non-IFRS Measures” below.
2 Refer to the Company’s news release dated February 16, 2021 .
3 Novo’s ability to dispose of its investments is subject to certain thresholds under the Sprott Facility. Please refer to the Annual MD&A which is available under Novo’s profile on SEDAR at www.sedar.com . Novo’s investment in New Found Gold Corp. is subject to escrow requirements pursuant to National Instrument 46-201 Escrow for Initial Public Offerings. The value of Novo’s holdings in Elementum 3D, Inc. (“ E3D ”) is based on E3D’s most recent financing price of US$8.00 per unit comprised of one common share and one-half of one common share purchase warrant. Except for its investment in E3D and warrant holdings, the fair value of Novo’s investments is based on closing prices of its investments and relevant foreign exchanges rate as at December 31, 2021.
4 Refer to the Company’s news release dated February 4, 2021 .
5 Refer to the Company’s news release dated April 9, 2021 .
6 Refer to the Company’s news release dated March 23, 2021 .
7 Refer to the Company’s news release dated May 4, 2021 .
8 Refer to the Company’s news release dated January 14, 2022 .
9 Refer to the Company’s news release dated January 28, 2022 .
Financial Highlights
In thousands of CAD, except where noted For the three
months ended
December 31,
2021 For the three
months ended
December 31,
2020 For the year
ended
December 31,
2021 For the
11-month
period ended
December 31,
2020
Gold sold Oz Au 13,023 - 49,232 -
Average realized price 1 $/oz 2,294 - 2,281 -
Average realized price 1 AUD$/oz 2,498 - 2,421 -
Average realized price 1 USD$/oz 1,821 - 1,819 -
Total revenue $ 29,857 - 112,243 -
Cost of goods sold $ (37,769 ) - (110,767 ) -
Net loss from operations $ (5,084 ) (10,640 ) (22,740 ) (26,804 )
Impairment of non-current assets $ (46,905 ) - (46,905 ) -
Other income, net $ 2,253 574 90,947 398
Finance items $ (2,395 ) (503 ) (16,337 ) (2,173 )
Income tax expense (benefit) $ 739 - (7,145 ) 778
Net loss for the period after tax $ (59,304 ) (10,569 ) (704 ) (27,801 )
Basic and diluted loss per common share $/share (0.24 ) (0.05 ) (0.00 ) (0.14 )
EBITDA 1 $ (49,839 ) (8,598 ) 41,508 (24,209 )
Adjusted EBITDA 1 $ (5,187 ) (9,172 ) (2,534 ) (24,607 )
Adjusted earnings 1 $ (16,116 ) (11,143 ) (52,073 ) (28,199 )
Adjusted earnings per common share 1 $/share (0.07 ) (0.05 ) (0.22 ) (0.14 )
Total cash costs 1 $/oz 2,296 - 1,865 -
Total cash costs 1 AUD$/oz 2,501 - 1,980 -
Total cash costs 1 USD$/oz 1,822 - 1,488 -
AISC 1 $/oz 3,143 - 2,637 -
AISC 1 AUD$/oz 3,423 - 2,799 -
AISC 1 USD$/oz 2,494 - 2,104 -
The Company did not have any revenue-generating operations prior to its inaugural gold pour on February 16, 2021 2 .
Novo generated revenue of $112.2 million from the sale of 49,232 ounces of gold at an average realized price 1 of $2,281 / A$2,421/ US$1,819 per ounce in Fiscal 2021. Approximately 1,362,534 tonnes of mineralized material were processed through the Golden Eagle processing facility (the “ Golden Eagle Plant ”) in Fiscal 2021 subsequent to the Company’s inaugural gold pour 2 , equating to an annual processing rate of approximately 1.6 million tonnes per annum. Processed material had an average head grade of 1.25 g/t Au with average recovery of 93.0% 8 resulting in 49,364 ounces of gold produced in Fiscal 2021 8 .
Revenue for Q4 2021 was $29.9 million from the sale of 13,023 ounces of gold at an average realized price 1 of $2,294 / A$2,498 / US$1,821 per ounce. Processing rates were affected by a number of unscheduled short-term mill shuts during Q4 2021, including a longer shut in early November 2021 which accompanied significant crusher maintenance 10 . Approximately 395,000 tonnes of mineralized material were processed through the Golden Eagle Plant in Q4 2021 at an average head grade of 1.16 g/t Au and average recovery of 91.5% 8 . The Company produced 12,833 ounces of gold and sold 13,023 ounces of gold in Q4 2021 8 .
The Company generated a net loss of $(0.7) million or $(0.00) per share in Fiscal 2021, and a net loss of $(59.3) million or $(0.24) per share in Q4 2021.
EBITDA 1 totaled $41.5 million in Fiscal 2021 ($(49.8) million in Q4 2021), and adjusted EBITDA 1 totaled $(2.5) million in Fiscal 2021 ($(5.2) million in Q4 2021).
Total cash costs 1 were $1,865 / A$1,980 / US$1,488 in Fiscal 2021 ($2,296 / A$2,501 / US$1,822 in Q4 2021). AISC 1 was $2,637 / A$2,799 / US$2,104 in Fiscal 2021 ($3,143 / A$3,423 / US$2,494 in Q4 2021). Total cash costs 1 and AISC 1 are heavily influenced by the number of ounces of gold sold and are higher than anticipated due to, among other things, a lower production base than forecast.
Adjusted earnings (losses) 1 were $(52.0) million or $(0.22) per share in Fiscal 2021, and $(16.1) million or $(0.07) per share in Q4 2021. Non-cash adjustments include a gain recognized on the discontinuation of equity accounting for the Company’s investment in New Found, impairment related to the Beatons Creek Project, and income tax expenses related to the movement in fair value of the Company’s investment portfolio.
The Company recognized a non-cash impairment expense of $46.9 million related to the Company’s Beatons Creek Project in Q4 2021 due to current uncertainty regarding the timing of the receipt of the Fresh mining approvals and Beatons Creek Project operational performance to December 31, 2021 against forecast.
The Company is committed to aggressively advancing its highly prospective exploration portfolio and devoted
$12.1 million to such efforts in Fiscal 2021.
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10 Refer to the Company’s news releases dated November 1, 2021 , and November 5, 2021 .
Financial Position
In thousands of CAD, December 31, 2021 December 31, 2020 January 31, 2020
except where noted $'000 $'000 $'000
Cash 32,345 40,494 28,703
Short-term investments 108 195 88
Working capital 1 3,925 14,071 26,051
Sprott Facility adjusted working capital (USD$) 1 18,332 25,089 -
Marketable securities 3 156,209 18,770 14,457
Available liquidity 1 102,868 59,623 42,501
Total assets 462,682 456,408 158,049
Current liabilities excluding current portion of financial liabilities 19,805 12,083 1,082
Non-current liabilities excluding non-current portion of financial liabilities 36,342 28,615 -
Financial liabilities (current and non-current) 75,608 86,271 8,565
Total liabilities 148,420 126,969 9,647
Shareholders' equity 314,262 329,439 148,402
The Company held cash and cash equivalents of $32.5 million as at December 31, 2021, with a working capital 1 balance of $3.9 million. The Company’s investment portfolio balance grew by 732% from December 31, 2020 to $156.2 million 3 and includes the Company’s 9.13% undiluted investment in New Found (currently worth approximately $114.75 million) along with the Company’s undiluted 12.6% investment (pre-financing) in unlisted Elementum 3D Inc. (“ E3D ”). The Company revalued its holdings in E3D in Q4 2021 from $6.6 million to $16.5 million based on E3D’s ongoing financing at USD$8.00 per unit.
During Fiscal 2020, the Company determined that it exercised significant influence over New Found pursuant to IAS 28 Investment in Associates and Joint Ventures . On September 17, 2021, immediately subsequent to New Found’s most recent annual general meeting, Novo determined that it had ceased to exercise significant influence over New Found, discontinued equity accounting, and recognized its retained interest in New Found as a marketable security at fair value resulting in a non-cash one-time gain of $85.6 million based on the difference between New Found’s fair value using its share price on the date of derecognition ($7.15) and the carrying value of the investment using the equity accounting method, with certain adjustments.
The Sprott Facility remains fully drawn at USD$40 million. Interest accrues on the outstanding principal amount of the Sprott Facility at a rate of 8% per annum plus the greater of (i) US three-month LIBOR and (ii) 1.00%. All interest is payable in cash on a monthly basis. Principal is repayable commencing December 2022 and quarterly thereafter until September 2024 in eight equal instalments. The availability of the Sprott Facility is subject to certain conditions and covenants, including the maintenance of minimum unrestricted cash and working capital balances after certain adjustments. As at December 31, 2021 and the date of this news release, the Company is in compliance with Sprott Facility conditions and covenants, as amended or waived.
Outlook
The Company reiterates its previous production forecast for the first half of 2022 of 27 koz – 33 koz Au 11 , which remains influenced by close-spaced drilling and mine-to-mill reconciliation efforts and assumes receipt of requisite approvals. The Company will provide an operations performance and approvals update following completion of the first quarter of 2022.
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11 Refer to the Company’s news releases dated December 13, 2021 , and January 14, 2022 .
Non-IFRS Measures