TSX-listed Novo Resources is aiming to join the ranks of ASX mineral explorers after lodging a prospectus with the Australian Securities and Investments Commission amid plans for an initial public offering.
The move comes on the back of securing the support of giant neighbour De Grey Mining as a cornerstone investor and potential joint venture (JV) partner, in a deal worth up to $35 million at the Becher gold project in Western Australia’s Pilbara region.
Management believes joining the ASX will enhance its local profile across a broader range of shareholders and allow access to potential new sources of equity. Novo has been listed in Canada since 2010 and in the United States since 2012. Management says it intends to maintain both listings in addition to joining the ASX.
Through its proposed IPO, the company is aiming to raise $4 million with the issue of 20 million chess depositary interests (CDI) at an offer price of 20 cents, but also has the ability to accept over-subscriptions to raise an additional $3.5 million through a further 17.5 million CDIs.
The company says it will inject all of the IPO funds into its 12-month exploration strategy, subject to the approval of its application to list on the ASX.
Novo Resources executive co-chairman and acting chief executive officer Mike Spreadborough said: “We are confident that listing on the ASX will be very beneficial for Novo and our shareholders, as we look to increase liquidity, engage additional institutional investment and equity research coverage, access potential new sources of equity and enhance our profile across a broader mix of stakeholder groups.”
As part of its recent investment deal, De Grey has the right to earn a 50 per cent interest in Novo’s Becher project and adjacent tenements by spending $25 million in four years when the 50-50 “Egina” JV will be formed, with a minimum $7 million to be spent within 18 months. Separately, De Grey has agreed to take a cornerstone investment of $10 million in Novo common shares for about an 11.6 per cent interest, making it the Canadian-based company’s biggest single shareholder.
De Grey will manage all exploration at Becher under the earn-in agreement and will become the manager of the Egina JV once it is established.
Becher spans a 20-square-kilometre area of the Egina gold camp in the underexplored Mallina Basin and directly neighbours De Grey’s bulging Mallina deposit. It lies just 2.5km south of De Grey’s Withnell South discovery.
Mallina’s resource was recently upgraded by 1.1 million ounces through ongoing drilling to now sit at a whopping 11.7 million gold ounces.
Novo says it intends to use its existing cash reserves combined with funds raised from the offering to fund exploration at its Egina gold camp, including drilling at its Nunyerry North, Balla Balla and Belltopper projects, in addition to Pilbara-wide reconnaissance.
Just last month, the company revealed a combined 8000m drill campaign across its key Pilbara prospects and its Belltopper project in Victoria, following its success at Becher.
Joining the ASX shows Novo is serious about progressing its Australian-based projects and gives the local market the chance to consider another proven player when it comes to gold exploration.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Michael Philipps
