Nova Royalty Corp. (TSX-V:NOVR) has revealed that it is set to boost its portfolio, having secured the right to acquire part of an existing royalty on the Josemaria asset in Argentina, owned by major Lundin Mining, which is one of the most advanced large-scale copper development projects in the Americas.
Nova has struck a purchase agreement with private sellers. The whole royalty is a 0.5% net profit interest (NPI) covering an area of a reserve estimate for Josemaria and is payable for 10 years, plus an additional US$2 million payment six months after two years of full production is reached.
The portion to be acquired by Nova is subject to the finalization of an estate partitioning process in Argentina and the firm currently expects to acquire around 16.7% of the royalty (around 0.08325% NPI) for total consideration of US$2.4 million (including advanced payments), with a right of first refusal (ROFR) over a further 16.7% of the royalty (around 0.08325% NPI).
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The total purchase price is US$13.7 million for all of the royalty, payable on attainment of future milestones, plus advanced payments of US$100,000. The consideration will be calculated pro rata for the portion acquired by Nova.
"Securing rights to a royalty on the Josemaria project further demonstrates Nova's ability to execute on its strategy of building a diversified portfolio of Tier-one copper projects owned by proven operators and mine builders," said Alex Tsukernik, Nova's CEO, in a statement.
Josemaria, he added, was poised for a construction decision in the second half of 2022 and had a "clear path to production".
"The addition of the Josemaria royalty means Nova will own royalties on four of the 10 largest open pit copper projects in the Americas as measured by copper equivalent reserves," said the company boss.
"Three of these four projects - Taca Taca, Copper World/Rosemont, and now Josemaria - comprise a significant proportion of what is just a handful of large-scale copper projects being actively advanced by major operators towards production," he said.
"Nova continues to consolidate its ownership of royalties on some of the most strategic greenfield copper projects in the Americas - projects which we believe will become the backbone of future copper supply necessary to make the global energy transition a reality," Tsukernik concluded.
Josemaria is wholly owned by Lundin and sits in the San Juan province of Argentina, 9km east of the border with Chile. It is currently expected to employ conventional truck and shovel open pit mining, with conventional primary crushing, grinding and flotation to produce a gold-rich copper concentrate.
Over a mine-life of 19 years, average annual production is forecast to be 131,000 tonnes of copper, 224,000 ounces (oz) of gold and 1 million oz of silver at an average total cash cost of US$1.55 per pound of copper equivalent.
A mineral reserve statement of 2021 pegged the proven and probable reserve of 6.7 billion pounds of contained copper at a grade of 0.30%.
Nova noted that the transaction was not expected to close until the conclusion of the estate partitioning process, which may require more than 12 months.
"However, through the agreement, Nova has secured rights to future ownership of the royalty portion at a predetermined price," the company added.
Nova is a royalty company focused on providing investors with exposure to the key building blocks of clean energy - copper and nickel.
Contact the author at giles@proactiveinvestors.com