Nova Royalty Corp (CVE:NOVR) (OTCQB:NOVRF) announced it had acquired a new royalty on the West Wall copper-gold-molybdenum project in a US$4.2 million deal with Sociedad Minera Auromin Limitada.
Nova will maintain a 1% net proceeds royalty on the Chile-based project, which is a joint venture between Anglo American plc (LON:AAL) and Glencore plc (LON:GLEN).
Located in the Valparaiso Region of Chile, West Wall has two distinct mineralized zones, Lagunillas and West Wall Norte, that are part of an “extensive” north-northeast striking hydrothermal alteration zone, according to Nova.
READ: Nova Royalty says Vizcachitas investment project is moving ahead; appoints new strategic advisor
The royalty covers the Lagunillas and West Wall Norte zones, which comprise the existing resource on West Wall.
According to a maiden resource estimate put out by Anglo American in 2020, the indicated resource was 861 million tons at 0.51% copper, 0.05 grams per ton (g/t) gold, and 0.01% molybdenum, while the inferred resource came in at 1.1 million tons at 0.42% copper, 0.01 g/t gold and 0.01% molybdenum. The project also contains 4.4 million tons of copper, 77,000 tons of molybdenum and 1.5 million ounces of gold of indicated resource and another 4.5 million tons of copper, 64,000 tons of molybdenum and 1.9 million ounces of gold in the inferred category.
Nova CEO Alex Tsukernik called West Wall “one of the world’s premier greenfield copper projects.”
“Together with the 0.98% NSR that we already own on the neighboring Vizcachitas project, through this transaction, Nova now owns royalties on two of the largest and most advanced development projects in one of Chile’s most strategic copper-producing regions,” Tsukernik said in a statement.
“West Wall is owned by two leading mining companies in Anglo American and Glencore and is a natural extension of Nova’s strategy of securing royalties on the most advanced and strategic copper and nickel assets in core mining jurisdictions.”
Deal terms
As for the transaction terms, Auromin and Nova inked a participation agreement that calls for a “sociedad contractual minera” (SCM) to be incorporated, into which the mining tenements corresponding to the project will be transferred. The owner of the Participation will be issued shares in the SCM, which will give such owner an 8% interest in the SCM.
Subsequently, if one or more mines is brought into production for West Wall or another designated area, Anglo American will repurchase from the owner of the Participation the shares in the SCM that correspond to a 7% interest in the SCM for a predetermined price, leaving the owner of the Participation with a 1% interest in the SCM, which entitles the owner to a 1% net proceeds of production royalty from West Wall.
A SCM will be similarly established for any other designated area within the scope of the Participation Agreement, giving the owner of the Participation the same rights with respect to such designated areas.
All payments resulting from the repurchase by Anglo American of the 7% interest in the SCM will be reimbursed in full to Auromín. Nova will retain sole ownership of 1% of the shares in the SCM, which entitle the owner of the shares to the 1% net proceeds of production royalty from the project or another designated area, as the case may be, which will not be subject to repurchase by Anglo American.
Funding update
Separately, Nova updated shareholders on its At-the-Market Equity program, saying that it has sold nearly 1.6 million shares at an average price of C$3.60 for gross proceeds of C$5.73 million. The proceeds from the ATM and existing cash on hand means that Nova will be able to fully fund its acquisition of the West Wall royalty.
Contact Angela at angela@proactiveinvestors.com
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