TSX-listed Novo Resources has secured the support of giant neighbour De Grey Mining as a cornerstone investor and potential joint venture (JV) partner in a deal worth up to $35 million at the Becher gold project in Western Australia’s Pilbara region.
As part of the deal, De Grey has the right to earn a 50 per cent interest in Novo’s Becher project and adjacent tenements by spending $25 million over four years when the 50-50 “Egina” JV will be formed, with a minimum $7 million spent within 18 months.
Separately, De Grey has agreed to take a cornerstone investment of $10 million in Novo common shares for about an 11.6 per cent interest, making it the Canadian-based company’s biggest single shareholder.
Becher forms part of Novo’s 10,500-square-kilometre Pilbara tenement package and sits within its greater Egina gold camp between De Grey’s Mallina and Hemi gold projects. The company says the greater Egina gold camp includes an 80km strike trend along a known gold-fertile corridor between Becher and Nunyerry North.
De Grey will manage all exploration at Becher under the earn-in agreement and will become the manager of the Egina JV once it is established.
Becher spans a 20sq km area of the Egina gold camp in the underexplored Mallina Basin and directly neighbours De Grey’s bulging Mallina deposit. It lies just 2.5 km south of De Grey’s Withnell South discovery.
Mallina’s resource was recently upgraded by 1.1 million ounces through ongoing drilling to now sit at a whopping 11.7 million gold ounces.
De Grey’s latest binding agreement with Novo increases its exploration exposure in the Mallina Basin by 70 per cent to a total of more than 2500sq km. However, certain tenements comprising the greater Egina project are currently subject to pre-existing JVs into which Novo has already earned an interest.
Novo Resources acting chief executive officer and co-chairman Mike Spreadborough said: “Attracting a joint venture partner and cornerstone investor like De Grey is a strong endorsement of Novo, our team, exploration efforts to date, the Becher Project and our project generation abilities. I would like to welcome De Grey as a major shareholder of Novo and look forward to working with them as we focus on pursuing the next major gold project in the Pilbara.”
In addition to the agreement with De Grey, Novo has also announced plans to seek a dual listing on the ASX due to the WA-based location of its projects and its management team. Management believes dual listing will deliver a host of benefits including an enhanced profile, access to new potential sources of equity and attracting additional investment.
For the past nine months, the company has prioritised Becher, where it has completed a large amount of exploration drilling with 2130 air-core (AC) drill holes over 50,000m.
Novo says it will now partner with De Grey to continue its exploration efforts at Becher and is hopeful of discovering the next major Pilbara gold project.
The agreement appears to be a win-win for both companies as it allows De Grey to expand its exploration base near its flagship Mallina project and Novo can focus on its additional Pilbara tenements while its neighbour funds drill campaigns at Becher.
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By Michael Philipps
