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Canada's Novo consolidates Victorian landholding

10th March 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – TSX-listed Novo Resources has struck a deal with ASX-listed GBM Resources and fellow-listed Kalamazoo Resources over their respective joint ventures in Victoria.

ASX-listed junior GBM Resources has inked a sale and purchase agreement with Novo Resources for the remaining 50% interest in the Malmsbury gold project, giving the Canadian company full ownership over the asset.

Novo in 2021 initially acquired a 50% interest in the project, and has since been incurring farm-in expenditure with the goal of earning an additional 10% interest in the project by May 2025.

Under the agreements struck, Novo has agreed to pay A$1-million and issue more than 4-million shares and more than 2-million transferrable warrants to GBM for the remaining interest in the project, with each warrant entitling GBM to purchase one additional share in Novo at a price of C$0.60 each for a period of 24 months.

“Novo has been funding exploration activities at Malmsbury since 2020 as part of its earn-in for an additional 10% interest. While both Novo and GBM have been encouraged by the success to date, GBM’s focus is on the prospective Drummond basin where large, high-grade epithermal gold deposits exist and where it has expanded Joint Ore Reserves Committee resources to some 1.85-million ounces of gold,” said GBM MD and CEO Peter Rohner.

“The sale of GBM’s remaining interest in the Malmsbury project to Novo will realise value for GBM’s shareholders and progresses GBM’s strategy of using sale proceeds from noncore assets to repay the convertible note facility when it becomes due. Taking some consideration in Novo shares provides GBM with continued exposure to the project and to gold equities if sentiment improves from current market conditions.”

Meanwhile, in the deal struck with Kalamazoo, Novo will take the remaining 50% interest in the Queens project in exchange for A$0.75-million in cash and the issue of more than 2-million common shares to Kalamazoo. The royalty previously held by Kalamazoo has been terminated in conjunction with the acquisition.

Novo in 2021 also acquired the initial 50% interest in the Queens gold project, and has since been incurring farm-in expenditure with the goal of acquiring an additional 20% interest in the project by March 2026.

Kalamazoo chairperson and CEO Luke Reinehr told shareholders on Friday that the sale was the right strategic move for the company.

“As Novo already has a similar arrangement on the ground adjacent to the Queens project with GBM, there are obvious synergies for Novo to consolidate its exploration activities in this highly prospective region. Given our existing relationship with Novo as a strategic Kalamazoo investor and as an exploration partner, we appreciate that this is a great opportunity for Novo to apply its exploration skills across the combined Malmsbury project area,” he said.

Novo told its own shareholders that the transaction would consolidate the company’s Belltopper gold project, subject to the approval from the TSX.

“Consolidation of Belltopper will give Novo a central and strategic position in the prolific Bendigo Tectonic Zone of Australia’s Victorian Goldfields,” said executive co-chairperson and acting CEO Mike Spreadborough.

“Diamond drilling planned in 2023 will test remaining high-priority mapping targets at Belltopper, in addition to developing high-grade shoot potential on the Leven Star Reef and key significant results from the diamond drilling campaign completed in 2022. We would like to thank our joint venture partners, GBM and Kalamazoo, for their support and we look forward to advancing the consolidated Belltopper project.”

Edited by Creamer Media Reporter

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