Novo sells New Found Gold stake for C$125.9m
Toronto-listed Novo Resources has agreed to sell its shareholding in New Found Gold to a company controlled by Eric Sprott, raising C$125.90-million to fund its growth and expansion plans across Western Australia and Victoria.
Novo will sell its 15-million shares at a premium of 9.3% to New Found’s closing price of C$7.68 on April 11.
“Novo has always considered its sizeable investment portfolio as a means to fund growth expenditure,” commented executive co-chairperson Mike Spreadborough.
The first tranche of the transaction totals 8.25-million New Found shares at C$8.35 each for gross proceeds of C$68.9-million and is scheduled to complete on April 27. The second tranche of the transaction totals 6.75-million New Found shares at C$8.45 a share for gross proceeds of C$57-million and is scheduled to settle on August 5.
Pursuant to a general security agreement and terms of the $40-million senior secured credit facility with Sprott Private Resource Lending II, Sprott has consented to the transaction and has advised Novo that it will not require repayment of the facility in full until settlement of the second tranche. This will result in Novo being debt-free upon completion of the transaction.
Novo’s pro-forma cash position would be C$97.1-million, which the company said would provide it with the flexibility to aggressively advance exploration efforts across the Pilbara and Victoria, while expediting a feasibility study on the Fresh component of the Beatons Creek project in Nullagine, Western Australia.
Subsequent to completion of the transaction, the company's strategic investment portfolio will still include a 6.9% stake in ASX-listed joint venture (JV) partner Kalamazoo Resources, a 2.2% stake in ASX-listed JV partner GBM Resources, and a 12.4% stake in unlisted Elementum 3D. This portfolio is currently worth approximately C$21.0-million.
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