Novo Resources has completed the acquisition of an existing mothballed mine in the Pilbara and cashed up the company by completing placements to the Sprott group and private entities. The transformational purchase delivers Millennium Minerals’ old Golden Eagle gold plant at Nullagine to Novo who has a significant in-ground resource just down the road.
Novo announced its deal to purchase Millennium Minerals early last month and with all the due diligence and paperwork now in place, the company has emerged as the proud owner of Millennium’s assets in the Pilbara, having parted with around US$51 million in its own stock for the privilege and agreeing to pay down the debt owing on the operation.
The company also has not missed the opportunity to top up its cash reserves, with Sprott stumping up much of the finance for the aspiring gold miner as it transitions from explorer into the more coveted miner status.
Novo has placed a mix of shares and warrants to Sprott, pocketing US$3.6 million in cash whilst also drawing down the first tranche of funding from its Sprott credit facility, placing an additional US$35 million in the kitty to ensure a smooth transition into production.
In a separate transaction, the company has secured additional funding to the tune of US$42.3 million through a private placement which will be used to clear the secured debt currently sitting against the Millennium assets.
Once all the moving parts of the transaction fall into place, Novo will be sitting on around US$45 million in cash with a further US$25 million available to it through the Sprott credit facility to advance the company’s Beatons Creek gold project into production.
The Beatons Creek gold project is located just 2km west of Nullagine in the emerging Pilbara goldfield of Western Australia. The project already boasts a resource of over 11Mt grading 2.4 g/t gold for 900,000 ounces which will form the primary feed for the company’s new Golden Eagle mill at Nullagine.
Nullagine will also form a production hub for a developing pipeline of projects across Novo’s 13,750 square kilometres of auriferous ground in the region, with both the nearby Blue Spec and Marble Bar conglomerate gold projects also looking primed for development.
The Golden Eagle plant was originally commissioned in 2012 and produced over 500,000 ounces of gold before being placed on care and maintenance in December 2019. The mill is set up to process both oxide and hard rock ores with engineering and metallurgical studies showing that it is ideally suited to process Novo’s conglomerate and oxide ores from Beatons Creek.
The plant also boasts a sulphide circuit to handle the deeper underground ores found throughout the Nullagine region, delivering Novo a multi-faceted processing solution for most of the ore types found in the Pilbara region.
The icing on the cake is clearly the mill which can potentially be brought back into production in a short time frame and for relatively little cost.
With the Millennium transaction now complete, Novo is set whip the covers off the Golden Eagle plant and lead the Pilbara pack into production, displaying a keen sense of timing with gold continuing to steam along just off its highs at US$1,900 an ounce.
Is your ASX listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
