Nova Royalty Corp said it has signed a royalty purchase agreement with Macocozac to acquire an existing 1% net smelter return royalty on the Aranzazu copper-gold-silver mine in Zacatecas, Mexico.
The deal will see Nova pay a total of $9 million, of which $8 million is in cash and $1 million in common shares.
The Royalty covers copper, gold, and silver production at the mine that is wholly owned by Aura Minerals Inc. (TSX:ORA)
READ: Nova Royalty acquires new royalty on Anglo American and Glencore's West Wall copper-gold-molybdenum project in Chile
The Aranzazu operation recently had a throughput expansion, increasing capacity by about 30% to 100,000 tons/month.
"Aura Minerals has clearly demonstrated Aranzazu's potential as a low-cost, long-life, mid-size copper mine,” Alex Tsukernik, Nova's CEO said in a statement.
Tsukernik went on to say: “We are excited to acquire this royalty at a time of such strong production and resource growth at the asset. Aranzazu is Nova's first cash flowing royalty and is a natural fit with our existing portfolio of premier copper and nickel development assets.”
According to the release, Aura disclosed that Aranzazu produced 9.5 million pounds (Mlbs) copper equivalent at cash costs of $1.90/lb during 2Q 2021 and 11.7 Mlbs copper equivalent at cash costs of $1.46/lb during Q1 2021.
Aranzazu is projected to produce between 22.8 and 27.5 Mlbs copper equivalent during the second half of 2021.
On a corporate note, Nova also announced a public offering of common shares. The royalty company hopes to raise approximately $10.0 million with each share priced at $3.30.
The offering will be led by PI Financial Corp as lead agent, and PI Financial Corp and Cantor Fitzgerald Canada Corporation will serve as co-bookrunners.
Proceeds from the offering will be used to fulfill the payment obligation of the Aranzazu royalty deal.
Contact the writer at georgia@proactiveinvestors.com
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