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Nova Royalty Acquires Producing 1.0% Net Smelter Return Royalty on the Aranzazu Copper Mine Owned by Aura Minerals Inc.

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Nova Royalty Acquires Producing 1.0% Net Smelter Return Royalty on the Aranzazu Copper Mine Owned by Aura Minerals Inc.

 

 

 

 

 

Nova Royalty Corp. (TSX-V: NOVR) (OTCQB: NOVRF) is pleased to announce that it has entered into a royalty purchase agreement with Macocozac, S.A. de C.V. pursuant to which Nova will acquire an existing 1.0% net smelter return royalty on the Aranzazu copper-gold-silver mine in Zacatecas, Mexico, for $9.0 million, comprised of $8.0 million in cash and $1.0 million in common shares of Nova. Aranzazu is 100% owned by Aura Minerals Inc. (TSX: ORA).

 

Alex Tsukernik, Nova’s President and CEO, commented, “Aura Minerals has clearly demonstrated Aranzazu’s potential as a low-cost, long-life, mid-size copper mine. 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”. 

 

Royalty Highlights

 

  • Aura’s full year 2021 production guidance and current commodity prices imply payments under the Royalty of approximately $1.5 million; the Royalty covers copper, gold, and silver production(1)
  • Addition of top mining jurisdiction Mexico continuing to diversify the portfolio across the Americas
  • Addition of highly experienced mid-tier multi-national counterparty that owns and operates gold and copper mines in Honduras, Brazil, and Mexico
  • Aranzazu is expected to produce between 22.8 and 27.5 Mlbs CuEq during the second half of 2021(2)
  • Aura’s guidance suggests significant potential for further expansion and/or mine life extension, with over 48,900 meters of drilling planned to support Aura management’s goal of doubling future production capacity

 

Aranzazu

 

Aranzazu is a copper-gold-silver deposit located within the Municipality of Concepcion del Oro in the State of Zacatecas, Mexico, approximately 250km to the southwest of the city of Zacatecas. The current mine at Aranzazu has been in operation since 1962, with documented evidence of mining in the area dating back nearly 500 years. Aura is the sole owner and operator of Aranzazu, having assumed ownership in 2010. In 2014, Aura closed the mine to re-engineer and re-develop various aspects of the operation. The mine reopened in 2018 and attained commercial production in December 2018, since which time Aura has continually improved the efficiency of the operation.

 

The Aranzazu operation comprises an underground mine using long hole open stoping and an on-site plant, which produces copper concentrate with gold and silver by-product via conventional flotation processing. Aura recently achieved a throughput expansion at Aranzazu, increasing capacity by approximately 30% to 100,000 tons/month. Operations at Aranzazu achieved this expanded capacity in Q2 2021.

 

Aura disclosed that Aranzazu produced 9.5 Mlbs CuEq at cash costs of $1.90/lb CuEq during Q2 2021 and 11.7 Mlbs CuEq at cash costs of $1.46/lb CuEq during Q1 2021.

 

Aura further disclosed the production guidance range for Aranzazu for the second half of 2021 is calculated as 22.8 and 27.5 Mlbs CuEq.(2)

 

As of December 31, 2020, Aura disclosed the mineral resource and reserve estimates for Aranzazu as:(3)

 

December 31, 2020 Mineral Resource Estimate

 

Tonnes Grade Contained Metal (Kt)
Classification Kt Cu (%) Au (g/t) Ag (g/t) Cu (Klbs) Au (koz) Ag (koz)
Measured 9,544 1.47 1.14 20.75 310,167 350 6,367
Indicated 2,483 1.27 1.04 18.63 69,408 83 1,487
Measured & Indicated 12,027 1.43 1.12 20.31 379,575 433 7,854
Inferred 3,497 1.45 0.98 19.82 111,816 110 2,229

 

December 31, 2020 Mineral Reserve Estimate

 

Tonnes Grade Contained Metal (Kt)
Classification Kt Cu (%) Au (g/t) Ag (g/t) Cu (Klbs) Au (koz) Ag (koz)
Proven 5,424 1.36 1.02 18.29 162,705 178 3,189
Probable 850 1.33 1.03 19.23 24,924 28 525
Proven & Probable 6,274 1.36 1.02 18.41 187,629 206 3,714

 

The Royalty covers an area of approximately 1,440 hectares, which includes the location of the existing underground mine and the entire mineral resource and reserve estimates for Aranzazu. A map of the Royalty area is shown below.

 

Transaction Details

 

The aggregate purchase price for the Transaction includes $8.0 million in cash and $1.0 million in common shares of Nova, based on the 10-day volume weighted average trading price on the TSX Venture Exchange of Consideration Shares prior to the closing date of the Transaction. The Company intends to file a prospectus supplement to its base shelf prospectus dated October 30, 2020 to qualify the distribution of the Consideration Shares to the Seller.

 

The owner of the Royalty is entitled to 1.0% of the net smelter returns on all products sold at Aranzazu, less certain allowable deductions, provided that the monthly average price per pound of copper, as quoted by the London Metals Exchange, equals or exceeds $2.00/lb. Aranzazu currently receives revenue from the sale of copper concentrate, including payment for gold and silver by-products, all of which is subject to the Royalty.

 

Under the terms of the Agreement, Nova will be entitled to 100% of the payments from the Royalty corresponding to the net smelter returns generated at Aranzazu following June 30, 2021. Nova expects to receive Royalty payments on a semi-annual basis in accordance with the terms of the Royalty. The Seller is entitled to economic benefits on Royalty payments that accrue from July 1, 2021 up to the (“Closing Date“), which is currently anticipated to be August 27, 2021. Nova is fulfilling that obligation by paying approximately $200,000 in cash in addition to the $9.0 million purchase price for the Royalty on the Closing Date. The Transaction is subject to customary closing conditions, including the acceptance of the TSXV with respect to the issuance of the share consideration, and the Consideration Shares will contain contractual restrictions on trading in accordance with the terms of the Agreement.

 

Qualified Person

 

Technical information contained in this news release originates in the public disclosure set out above and has been reviewed and approved by Christian Rios, AIPG Certified Professional Geologist, Advisor to Nova and a Qualified Person as defined in National Instrument 43-101, Standards of Disclosure for Mineral Projects.

 

About Nova

 

Nova is a royalty company focused on providing investors with exposure to the key building blocks of clean energy – copper and nickel. The Company is headquartered in Vancouver, British Columbia and is listed on the TSXV and on the US OTCQB.

 

Posted August 17, 2021

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