Mr. Quinton Hennighreports
NOVO EXERCISES RIGHT TO PURCHASE HALF OF COMET WELL ROYALTY
Novo Resources Corp. has exercised its right of first refusal (the ROFR) to purchase one-half of a 1-per-cent net smelter returns royalty (the NSR) on the company's Comet Well property in the Karratha region of Western Australia. The company is exercising its ROFR and matching the terms of an offer made by International Prospect Ventures Ltd. (IZZ) to the holder of the NSR. The exercise of the ROFR is subject to the approval of the TSX Venture Exchange.
The consideration payable by the company to the holder for the acquisition includes $1.75-million in cash, payable as follows:
$1-million upon receipt of TSX-V approval;$250,000 on the six-month anniversary of the approval date;$500,000 on the 12-month anniversary of approval date.
The consideration payable by the company also includes the issuance to the holder of such number of Novo common shares, issued at a deemed price per share equal to the volume-weighted average closing price (VWAP) of the company's common shares for the 20 trading days immediately prior to thedate of execution of a formal purchase agreement, which equals the value of 9 per cent of IZZ's issued share capital at that date. The IZZ value will be determined by reference to the number of IZZ's issued and outstanding common shares at the execution date and the VWAP of IZZ's common shares for the 20 trading days immediately prior to the execution date.
The company has also agreed to pay the holder a subroyalty, in cash or satisfied by the issuance of Novo common shares at the company's discretion, based on either (i) resource reports being announced by the company in compliance with either National Instrument 43-101 or the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves for the Comet Well property, demonstrating measured mineral resources or indicated mineral resources of gold, or a combination thereof, or (ii) if there are no announced resources but the Comet Well property is being mined by the company, gold produced by the company, as follows:
For announced resources and/or mined resources up to five million ounces of gold, Novo shall make a payment of 50 cents per ounce;For announced resources and/or mined resources over five million ounces of gold, Novo shall make a payment of $1 per ounce.
If applicable, any subroyalty will be paid quarterly, and the obligation to pay the subroyalty expires on the 10th anniversary of the approval date. The subroyalty is only payable once in respect of announced resources that may subsequently become mined resources. If a subroyalty is paid in common shares issued by the company, the issue price will be determined by reference to the VWAP of the company's shares for the last 20 trading days of the relevant quarter.
The Novo common shares to be issued as consideration for the acquisition, and any shares issued by the company in satisfaction of any subroyalty, will be subject to a statutory hold period of four months and one day from the date of issuance in accordance with applicable securities legislation and the policies of the TSX-V as applicable.
"The exercise of this ROFR represents the company's commitment to the Comet Well and surrounding properties," commented Dr. Quinton Hennigh, chairman, president and a director of Novo Resources. "We see substantial value in the minimization of any potential profit dilution from future operations in order to maximize the company's performance, noting that the holder still retains a 0.5-per-cent net smelter returns royalty."
About Novo Resources Corp.
Novo's focus is to explore and develop gold projects in the Pilbara region of Western Australia and Novo has built up a significant land package covering approximately 12,000 square km.
We seek Safe Harbor.
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