Nova Royalty Corp. has reported its financial results for the second quarter ended June 30, 2023. Nova’s financial statements and management’s discussion and analysis for the three and six months ended June 30, 2023 are available on Nova’s website at www.novaroyalty.com and on SEDAR+ at www.sedarplus.ca.

Q2 2023 and Subsequent Highlights:

• Quarterly revenue: Nova recognized revenue of $520,258 in Q2 2023 from its royalty interests, primarily related to Aura Minerals’ Aranzazu mine in Zacatecas, Mexico.
• Increased Copper World royalty: Nova more than doubled its exposure to Hudbay Minerals’ Copper World project, a Tier-1 development asset located in Arizona. Nova increased its NSR royalty on Copper World from 0.135% to 0.315% through three separate transactions. Nova also retains a right of first refusal in respect to an additional 0.360% NSR royalty.
• Acquired royalty on Newmont’s Saddle North deposit: In July 2023, Nova acquired a 0.25% NSR royalty on Newmont Corporation’s Tatogga Property, which contains the high-quality copper-gold-silver Saddle North deposit. Tatogga is located in British Columbia’s Golden Triangle, one of Canada’s premier mining camps. Nova has also been granted a right of first refusal in respect to an additional 0.25% NSR.
• Progress of portfolio assets: Several key development assets on which Nova holds royalties continued to progress toward construction decisions. First Quantum, Hudbay, and Lundin Mining advanced feasibility, engineering, and permitting activities at Taca Taca, Copper World, and Josemaria, respectively.
• Senior management & director changes: On May 16 and May 17, 2023, the Company announced certain management and board changes.
• Initiated shareholder value maximization process: On May 17, 2023, the Company announced that it had engaged PI Financial as its financial advisor to commence a process to explore, review and evaluate all options that may be available to the Company to maximize shareholder value.

Hashim Ahmed, Interim CEO of Nova commented, “Nova was extremely active in growing and strengthening its portfolio of high-quality copper royalty assets during the second quarter of 2023. The Company completed four separate transactions on Tier-1 projects – all of which were on strategy – and on projects that we expect to be significant contributors to future copper supply.”

Mr. Ahmed continued, “Looking at our current portfolio, Aranzazu delivered continued strong operational performance and contributed revenue consistent with prior quarters and in line with our expectations. We were also pleased by the meaningful progress made at several of the key development assets underlying our royalty interests, including Taca Taca, Copper World, and Josemaria. We are encouraged to see these projects being prioritized and steadily advanced toward construction decisions, as pre-development, feasibility, and permitting activities continue and are planned throughout the year.”

Asset update

Aranzazu

Aura Minerals Inc. disclosed that Aranzazu produced 12.9 million copper equivalent pounds during Q2 2023. CuEq production in Q2 2023 was 6% higher than in Q2 2022 and 12% higher than in Q1 2023, with production at Aranzazu remaining close to an average of 100,000 tonnes processed per month⁽¹⁾.

Nova recognized $0.5 million in revenue during Q2 2023, compared to $0.5 million in Q2 2022 and $0.6 million in Q1 2023, attributable to the Aranzazu royalty.

Aura reported on August 7, 2023 that it expects to produce between 104,000 – 112,000 gold equivalent ounces (“GEO”) at Aranzazu during 2023, revising prior production guidance of between 101,000 – 116,000 GEO. Aranzazu produced 111,531 GEO during the year ended December 31, 2022⁽¹⁾.

Aura last reported proven and probable mineral reserves at Aranzazu as of December 31, 2022 of 9.6 million tonnes at 1.23% copper, 0.81 g/t gold and 17.61 g/t silver⁽²⁾.

Taca Taca

First Quantum Minerals Ltd. continued to conduct pre-development and feasibility activities at Taca Taca during Q2 2023. During the second quarter of 2021, First Quantum submitted two environmental permits regarding key infrastructure at Taca Taca. The primary Environmental and Social Impact Assessment for Taca Taca was submitted to the Secretariat of Mining of Salta Province in 2019. In June 2023, First Quantum received observations on the ESIA from the Secretariat and reported that it is currently working to provide the requested information. First Quantum anticipates approval of the ESIA in 2023.

In November 2022, the Salta Production Minister signed Resolution 191/2022, approving the environmental pre-feasibility for the Taca Taca 345 kilovolt power line development. The power line development still requires detailed construction permits, but the main environmental aspects of its development have been approved. First Quantum reported that it expects an additional environmental permit related to the proposed bypass and access road construction for Taca Taca to be approved in 2023.

Additionally, First Quantum reported that the Phase III groundwater exploration campaign was successfully completed during Q2 2023, with eighteen pumping wells constructed and tested, obtaining positive results. The initial water use permit applications for Taca Taca were submitted during the second quarter of 2023 and the remaining permits are expected to be submitted progressively in 2023⁽³⁾.

First Quantum last reported proven and probable mineral reserves at Taca Taca of 1,758.5 million tonnes at 0.44% Copper, 0.09 g/t gold, and 0.012% molybdenum⁽⁴⁾.

Copper World Complex (formerly Copper World and Rosemont)

From April 2023 to July 2023, Nova completed three transactions to acquire, in aggregate, an additional 0.180% NSR royalty on the Copper World Complex, owned and operated by Hudbay Minerals Inc.  The Additional Copper World Royalties have the same characteristics as the original 0.135% NSR royalty on the Copper World Complex acquired in 2022 and cover all metals, including copper, molybdenum, silver, and gold extracted from the majority of mining claims covering the Copper World Complex. Nova now holds a 0.315% NSR royalty on the Copper World Complex and retains a right of first refusal with respect to an additional 0.360% NSR royalty on the Copper World Complex.

In June 2022, Hudbay released the results of a preliminary economic assessment for the Copper World Complex, which includes both the recently discovered Copper World deposits and the East deposit (formerly Copper World and Rosemont). The PEA contemplates a two-phased mine plan with an after-tax net present value (10%) of US$1,296 million and generates an 18% IRR at US$3.50/lb copper. Phase I reflects a stand-alone operation on private land and patented mining claims over a 16-year mine life with average annual copper production of approximately 86,000 tonnes at cash costs and sustaining cash costs of US$1.15 and US$1.44 per pound of copper, respectively. Phase II expands mining activities onto federal land and extends the mine life to 44 years with Phase II average annual copper production of approximately 101,000 tonnes at cash costs and sustaining cash costs of US$1.11 and US$1.42 per pound of copper, respectively⁽⁵⁾.

The Copper World Complex requires state and local permits for Phase I. Hudbay reported that it submitted the state-level applications for an Aquifer Protection Permit and an Air Quality Permit to the Arizona Department of Environmental Quality in late 2022. Hudbay expects to receive these two remaining state permits by early 2024⁽⁶⁾.

Hudbay reported in March 2023 that it received confirmation from the Army Corps of Engineers that its previous surrender of the Section 404 Clean Water Act permit for the former Rosemont project was formally accepted and revoked, as requested. The ACOE also reaffirmed the validity of the March 2021 approved jurisdictional determinations, whereby the ACOE determined there are no waters of the U.S. in the area submitted for analysis, which is consistent with Hudbay’s internal studies that also contemplate the full Copper World Complex area. Hudbay reported that it surrendered the 404 Permit to the ACOE in April 2022, as there is no evidence of jurisdictional waters of the U.S. on the former Rosemont project site. In May 2022, Judge Soto from the U.S. District Court for the District of Arizona issued a favourable ruling that affirmed Hudbay’s surrender of the 404 Permit was effective and that the new Copper World Complex project is not connected to the previous federal permitting process⁽⁷⁾.

Hudbay reported in May 2023 that the Arizona Corporation Commission approved an amendment to the Certificate of Environmental Compatibility authorizing the electric transmission line to site. The CEC was granted for the former Rosemont project in 2012 and the amendment removed the requirements for federal permits so that the CEC can be used to construct the transmission line for the Copper World Complex⁽⁷⁾.

Hudbay reported that it is continuing to advance clearing and grading work to prepare for the development of the Copper World Complex. Hudbay also reported in May 2023 that it received a favourable ruling from the U.S. Court of Appeals for the Ninth Circuit that reversed the U.S. Fish and Wildlife Service’s designation of the area near the Copper World Complex and the East deposit as jaguar critical habitat. Hudbay reported that, while this ruling does not impact the state permitting process for Phase I of Copper World, it is expected to simplify the federal permitting process for Phase II⁽⁶⁾.

Hudbay reported in August 2023 that pre-feasibility study activities for Phase I are well-advanced and that it expects to release a PFS in the third quarter of 2023⁽⁶⁾. Hudbay has also reported that it intends to initiate a minority joint venture partner process, which will allow the potential joint venture partner to participate in definitive feasibility study activities in 2024 as well as in the final project design for the Copper World Complex⁽⁶⁾.

Hudbay last reported measured and indicated resources at the Copper World Complex of 1,173 million tonnes at 0.41% copper and inferred resources at the Copper World Complex of 262 million tonnes at 0.37% copper. In the PEA published by Hudbay for the Copper World Complex in June 2022, Hudbay reported that, as compared to the mineral resources included in a 2017 feasibility study published by Hudbay for the former Rosemont project, contained copper in measured and indicated resources at the Copper World Complex increased by 17% and contained copper in inferred resources increased by 328%⁽⁸⁾.

Josemaria

As of June 30, 2023, Lundin Mining Corporation reported that Josemaria continues to advance in several areas of pre-construction in reducing risks and enhancing the project, including by advancing government agreements, evaluating inflation and currency devaluation impacts, enhancing mining and production plans and further water, geotechnical and exploration drilling planned for the remainder of 2023⁽⁹⁾.

Lundin Mining reported that the construction of the Phase 1 camp is substantially complete, except for the installation of the power supply system. Internal roadwork has also been completed. Lundin Mining reported that site work is now focused on drilling for additional water resources, and that exploration drilling will commence after winter in the fourth quarter. Lundin Mining reported that long lead grinding mills started to arrive in Argentina and are scheduled to be moved to San Juan in July with deliveries continuing throughout the remainder of 2023 and into 2024⁽⁹⁾.

Lundin Mining reported that negotiations continue on the San Juan infrastructure agreements regarding the royalty offset funding of the access road and power line capital costs, with signing of these agreements scheduled after the change in provincial governor determined by the recent election on July 2, 2023. Lundin Mining reported that agreements for the Guandacol access road bypass and road maintenance agreements are nearing completion, and that work will be proceeding imminently⁽⁹⁾.

Lundin Mining also reported that a work plan for Josemaria was prepared for the remainder of 2023, focusing on de-risking and adding value to the project, as well as advancing project financing and execution readiness activities. This work involves eight work streams in the categories of mine optimization, throughput and concentrator recovery, concentrate shipping, infrastructure optimization, commercial reviews and project financing, execution readiness and project permitting and government agreements⁽⁹⁾.

Lundin Mining reported that, during the quarter ended June 30, 2023, it spent $50.6 million at Josemaria, inclusive of foreign exchange and trading gains on debt and equity investments of $30.7 million. Capital expenditures during the current quarter were $91.7 million and on a year-to-date basis Lundin has spent $141.1 million in project development cost at Josemaria. Lundin Mining reported that annual guidance has been reduced from $400 million to $350 million to reflect foreign exchange, a delay in planned equipment deliveries, and reduced activities⁽⁹⁾.

Lundin Mining last reported proven and probable reserves at Josemaria of 1,012 million tonnes at 0.30% copper, 0.22 g/t gold, and 0.94 g/t silver⁽¹⁰⁾.

Vizcachitas

On April 11, 2023, LAC filed the results of a positive PFS and a maiden reserve estimate at Vizcachitas. The PFS contemplates conventional open pit mining, crushing, grinding and flotation to produce a copper-silver concentrate and molybdenum concentrate product. Over an initial 26-year mine life, average annual production is forecast to be 152,883 tonnes of copper at C1 cash costs of US$1.25/lb Cu, with average annual production of 183,017 tonnes of copper at C1 cash costs of US$0.93/lb Cu over the first 8 years. The PFS contemplates an after tax US$2.8 billion NPV₈% and IRR of 24%⁽¹¹⁾.

LAC last reported proven and probable reserves for Vizcachitas of 1,220 million tonnes at 0.36% copper, 136 ppm molybdenum and 1.1 g/t silver. LAC also reported measured and indicated resources at Vizcachitas of 1,541 million tonnes at 0.38% copper, 155 ppm molybdenum, and 1.1 g/t silver⁽¹¹⁾.

Tatogga

In July 2023, Nova acquired a 0.25% NSR royalty from an arm’s length private party on the Tatogga Property, which contains the Saddle North copper-gold-silver deposit. Tatogga is located in British Columbia, Canada, and is 100% owned by Newmont. Nova was also granted a ROFR in respect to an additional 0.25% NSR royalty on Tatogga.

The Tatogga Royalty is part of a broader, existing 2.00% NSR royalty on Tatogga. The Seller is the sole legal and beneficial owner of 50% of the 2.00% Tatogga NSR, thereby owning a 1.00% NSR royalty on Tatogga. The Seller’s Interest is subject to a 50% buyback right in favour of Newmont which, if exercised, would reduce the Seller’s Interest to a 0.50% NSR royalty. Nova has acquired a 0.25% NSR royalty and has been granted a ROFR in respect to an additional 0.25% NSR royalty, which in aggregate is equivalent to 100% of the Seller’s Interest after providing for the Buyback. Nova’s royalty portion is not subject to the Buyback.

Saddle North is a gold-rich copper porphyry deposit located in the Golden Triangle in northwest British Columbia, Canada. Before being acquired by Newmont in 2021, Saddle North was owned by GT Gold Corp. GT Gold published a maiden resource estimate for Saddle North in 2020, which included 1.81 billion pounds of copper, 3.47 million ounces of gold, and 7.58 million ounces of silver contained in Indicated Resources, and 2.98 billion pounds of copper, 5.46 million ounces of gold, and 11.64 million ounces of silver contained in Inferred Resources⁽¹²⁾.

About Nova

Nova Royalty Corp. is a copper and nickel focused royalty company. Nova has assembled a portfolio of royalties on a significant proportion of the next generation of major copper projects located in 1st-tier jurisdictions, providing investors exposure to some of the most critical resource assets for the clean energy transition. These projects are being advanced by the world’s premier mining companies, which include First Quantum, Lundin Mining, Hudbay, Newmont, Anglo American and Glencore, among others.