Canadian listed conglomerate gold developer Novo Resources has extended and expanded its non-binding 2017 MoU with Japanese heavyweight Sumitomo Corporation, over its significant suite of Australian projects dotted throughout the Pilbara region of WA.
Sumitomo has agreed to provide personnel and up to 5 billion Yen – about AUD$64.4m – in order to evaluate, advance and help develop Novo’s vast 12,000 square kilometre tenement package into economic gold mining operations.
Accordingly, Novo has granted Sumitomo the right to fund a gold project through an option to purchase an interest, based on a mutually agreed valuation or via a subscription for common Novo shares at the prevailing market prices.
The arrangements are subject to the companies’ mutual agreement on development plans for any gold project and the transaction structures selected, with Sumitomo retaining the right to determine the final funding method.
If Sumitomo agrees to commit funding to a project, Novo will seek approval from its Board to provide Sumitomo the right of first refusal over the project.
If the right of first refusal is granted to Sumitomo, the Japanese company will then be given a 30-day period to elect to enter into a project transaction with Novo, to match the terms and conditions of any competing third-party offer for the project.
The terms of the updated MoU between the companies expire at the end of calendar year 2023.
Novo Resources Chairman and President Quinton Hennigh said: “We are delighted to continue working with Sumitomo Corporation to advance Novo’s Australian projects.”
“Sumitomo has a long history of working constructively with mining companies to evaluate, finance and develop mines.”
Novo has substantially widened its remit in the conglomerate gold space, since the original MoU was signed with Sumitomo back in July 2017.
At that time, the company only had its hands around the Beatons Creek gold project, near the town of Nullagine in WA and the small Tuscarora gold-silver project, located in the US state of Nevada.
In the 18 months since, Novo has been instrumental in bringing the conglomerate gold potential of the ancient Pilbara craton in WA into global focus, pegging new ground, gobbling up companies and entire projects, and striking gold JV’s left, right and centre.
Since executing the initial MoU with Sumitomo in 2017, Novo’s market cap has also swelled more than 5-fold and was this week sitting just above AUD$480m.
By Matt Birney
