Nova Royalty Corp has announced the completion of its acquisition of a royalty on two copper projects in Arizona owned by Hudbay Minerals Inc.
The Vancouver-based company now owns an existing 0.135% net smelter return (NSR) on the Copper World and Rosemont projects, as well as the right of first refusal for another 0.540% NSR covering the same area as the royalty.
Nova paid an upfront consideration of US$1 million in cash and $500,000 in shares.
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The firm issued 214,610 shares at C$2.950940 per share, calculated based on the twenty-day volume weighted average trading price of the common shares of Nova up to and including January 7, 2022.
Another $4 million in cash will be payable in installments, starting with $1 million due either 12 months following the transaction’s close or Nova completing at least a $10 million financing, and the remaining $3 million payable upon commencement of production from the royalty area or the receipt of the first three payments to Nova.
The Copper World asset, only discovered in 2020, already boasts an initial resource of 400 million tonnes. Hudbay is planning to advance a pre-feasibility study following completion of the preliminary economic assessment, which is expected in the first half of 2022, according to Nova.
Meanwhile, Rosemont has the potential to be the third-largest copper mine in the US. A feasibility study in 2017 contemplated an initial 19-year mine life with average annual copper production of 127,000 tonnes at a cash cost of US$1.14 per pound of copper for the first ten years. Hudbay is evaluating the next steps for Rosemont after the US District Court for Arizona issued an unprecedented ruling that resulted in the suspension of construction activities in 2019.
Nova also said it drew an additional C$1.5 million under its convertible loan facility with Beedle Capital, leaving it with $18.5 million in funds to use.
The funds will be directed towards the closing cash payment and the balance will be used for general corporate purposes.
The loan carries an interest rate of 8% per annum on advanced funds and 1.5% per annum on standby funds.
Nova is a royalty company focused on providing investors with exposure to copper and nickel, which it considers the “key building blocks” of clean energy.
Contact Angela at angela@proactiveinvestors.com
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