Novo Resources Corp of Canada (TSX-V:NVO) (CVE:NVO) (FRA:1NO) (OTCMKTS:NSRPF) will snap up De Grey Mining Limited’s (ASX:DEG) joint venture partner in the Egina district of Western Australia’s Pilbara region for $8 million, in a cash-and-scrip deal with Farno McMahon Pty Ltd and its shareholders.
The deal, if executed after a due diligence period, will leave De Grey with a new joint venture partner for its E47/2502 tenement farm-in project.
READ: De Grey Mining hits high-grade gold at Mt Berghaus, likely to add to Pilbara bounty
De Grey was a 4% shareholder in Farno and has accepted Novo’s cash and scrip offer, which is worth a total $100,000 cash to De Grey and brings with it $220,000 of Novo shares priced at C$4.107 each.
The total cash payment for Novo’s buy-up is $2.5 million, including a $150,000 initial amount already paid, and $5.5 million in Toronto Stock Exchange-listed Novo common shares.
De Grey’s JV with Farno, announced on August 21 last year, allows it to earn into 75% of the tenement by spending $4 million over 4 years.
READ: De Grey Mining expects upgrade to 1.2 million ounce resource at Pilbara Gold Project
The tenement is one of four Farno holds 100% of in the Egina district of Western Australia’s Pilbara region which Novo considers prospective for conglomerate gold.
Farm-in play De Grey reported today: “De Grey is currently undertaking heritage clearance work as part of the final planning towards commencement of the first significant reverse circulation drilling program across the tenement since 2005, which it expects to commence in October.”
De Grey is near on a year into the deal.\
De Grey gold mineralisation.
Novo highlights value in Egina
Novo Resources chairman and president Quinton Hennigh told the Canadian market overnight yesterday: “Egina has long been known as an important Pilbara gold district.
“Gold nuggets have been found in modern surface gravels over a vast area around Egina since the late 1800s.
“Upon researching the distribution and nature of gold nuggets earlier this year, Novo has concluded these are largely derived from weathering and erosion of basal Fortescue conglomerates similar to those at Comet Well and Purdy’s Reward.
“This makes Egina particularly intriguing.”
Comet Well and Purdy’s Reward are Novo assets in so-called Pilbara Gold Rush territory.
Hennigh said: “In our view, not only is there potential for the discovery of gold-bearing conglomerates, there is also very good potential for significant surface gold deposits occurring in modern lag gravels.
“Acquisition of the core tenements at Egina consolidates Novo’s position in this potentially very important gold district.”
De Grey's Mt Roe Basalt in the vicinity of Novo ground is prospective for conglomerate gold.
Pioneer farm-in
Novo also announced a deal with Pioneer Resources Ltd (ASX:PIO) where it would farm into a 70% interest in precious metal rights on the four Egina subregion exploration tenements that make up the Kangan Gold Project.
Novo will pay a $200,000 signing fee to Pioneer, issue 100,000 fully paid Novo shares worth about $380,000 and sole-fund exploration for 2 years to the tune of $500,000.
The Canadian company may then opt to form a JV and would fund it up to a decision to mine.
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TSX-listed Novo would also subscribe to $1 million of Pioneer ordinary shares as part of the transaction, at 2 cents a share in a private placement.
Pioneer managing director David Crook said: “Attracting Novo to the project endorses the quality of the Kangan Gold Project.
“Novo has steadily increased its position within the Pilbara as the conglomerate gold genesis model gained veracity and, most recently, has entered into this specific agreement with Pioneer targeting the Kangan project as a good fit with the prevailing exploration model.”
READ: Pioneer Resources gains approval for mining proposal at Sinclair Caesium Deposit
Novo begun accumulating holdings in the Pilbara region in 2011 with its investment in the Beatons Creek Gold Project and tenements held by explorationist Mark Creasy.
Creasy is among Novo’s major shareholders which also include Kirkland Lake Gold Ltd (ASX:KLA) (TSE:KL) (NYSE:KL) (FRA:NGDA), Newmont Mining Corp (NYSE:NEM) (SWX:NEM) (ETR:NMM) (VIE:NEWM) and Canadian businessman Eric Sprott.