Nova Royalty Corp. (TSX-V: NOVR) (OTCQB: NOVRF) has reported its financial results for the fourth quarter and year ended December 31, 2022. Nova’s financial statements and management’s discussion and analysis for the three months and year ended December 31, 2022 are available on Nova’s website at www.novaroyalty.com and on SEDAR at www.sedar.com.

Full year 2022 and early 2023 highlights:

• Revenue: for the year ended December 31, 2022, Nova recognized revenue of $2.0 million from its royalty interests, primarily related to Aranzazu reaching record production in multiple quarters.
• Acquired exposure to two advanced, Tier-1 copper projects: In 2022, Nova acquired a royalty on Hudbay Minerals’ Copper World Complex and secured the right to acquire a net profit interest royalty on Lundin Mining’s Josemaria project. Nova subsequently increased its royalty interest in Copper World in March 2023.
• Achieved critical mass among advanced, Tier-1 copper assets: Nova now has exposure to 5 of the top 10 open pit copper development projects in the Americas by mineral reserves; three of those projects: Taca Taca (First Quantum), Lundin Mining (Josemaria), and Copper World (Hudbay Minerals) are expecting construction decisions by their operators in 2024-2025.
• Continued progress of portfolio assets: Key development assets on which Nova holds royalties showed strong advancement toward construction decisions in 2022 with First Quantum, Lundin and Hudbay making significant engineering and permitting progress at Taca Taca, Josemaria, and Copper World, respectively. In February 2023, Los Andes Copper announced the results of a maiden pre-feasibility study and mineral reserve for the Vizcachitas project, showing an initial mine life of 26 years, average annual production of 183,017 tonnes of copper for the first 8 years, an IRR of 24%, and a post-tax NPV of $2.8 billion.
• Bolstered Board and Management: Announced the addition of Douglas Silver to Nova’s Board of Directors and the appointment of Hashim Ahmed as Nova’s CFO in February 2023; Mr. Ahmed’s transition into the CFO role is expected to be effective at the start of the second quarter of 2023.

Alex Tsukernik, President & CEO of Nova, commented, “Nova is off to an excellent start in 2023. We have a full pipeline of acquisition opportunities, our core assets are showing strong progress toward production, and we have enhanced our team for the next stage of the Company’s growth. I look forward to updating the market on our progress.”

Asset update

Aranzazu

Aura Minerals Inc. disclosed that Aranzazu sold 13.8 million lbs copper equivalent at cash costs of US$1.47/lb CuEq during Q4 2022. CuEq sales were 14% higher than in Q4 2021 and 9% higher than in Q3 2022. For the year ended December 31, 2022, Aura reported that Aranzazu sold 52.3 million lbs CuEq at cash costs of US$1.51/lb CuEq. CuEq sales were 16% higher than for the year ended December 31, 2021, reflecting a full year of operations at expanded throughput capacity⁽¹⁾.

Nova recognized $0.5 million in revenue during the fourth quarter of 2022, compared to $0.5 million in the comparative quarter in 2021, attributable to the Aranzazu royalty. For the full year ended December 31, 2022, Nova recognized $2.0 million in revenue, compared to $0.7 million in 2021, with the increase primarily related to an increase in revenue from a full year of the Aranzazu NSR.

Aura reported that it expects to produce between 101,000 – 116,000 gold equivalent ounces at Aranzazu during 2023. Aranzazu produced 111,531 GEO during the year ended December 31, 2022. Additionally, Aura reported that it is advancing several promising targets near existing mine workings to expand the life of mine at Aranzazu, including at the Glory Hole Zone, El Cobre, Limestone Bridge and Cabrestante. Aura expects to continue infill drilling and additional geological work at these target areas in 2023⁽¹⁾.

Aura last reported proven and probable mineral reserves at Aranzazu of 6.4 million tonnes at 1.38% copper, 0.97 g/t gold and 18.82 g/t silver⁽²⁾.

Taca Taca

First Quantum Minerals Ltd. continued to conduct pre-development and feasibility activities at Taca Taca during Q4 2022. 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 and approval of the ESIA is anticipated in 2023. Water supply studies and pump tests to support the application for a water permit advanced steadily in 2022 and are expected to be completed in early 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⁽³⁾.

As of December 31, 2022, 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

Hudbay Minerals Inc. reported that, on September 21, 2022, an application for an Aquifer Protection Permit was submitted to the Arizona Department of Environmental Quality, and on October 21, 2022, an application for an Air Quality Permit was submitted to the ADEQ. Hudbay reported that it expects to receive these two remaining state permits in 2023. Copper World requires state and local permits for Phase I. Hudbay reported that the other key state permit, the Mined Land Reclamation Plan, was received in 2022⁽⁵⁾. In January 2023, Hudbay received an approved right-of-way from the State Land Department that will allow for infrastructure such as roads, pipelines, and powerlines to connect between properties in Hudbay’s private land package at Copper World⁽⁶⁾.

Hudbay reported that it is continuing to advance pre-feasibility activities for Phase I of the Copper World Complex, which is expected to include conversion of inferred mineral resources to measured and indicated, optimization of the layout and sequencing of the processing facilities, and the evaluation of other upside opportunities. Pre-feasibility level engineering for the main processing facility, as well as geotechnical and hydrogeological site investigation activities were completed by December 31, 2022. Metallurgical test work continued into 2023, the results of which are being analyzed as part of Hudbay’s concentrate leaching tradeoff evaluations. Hudbay expects to release a pre-feasibility study in the second quarter of 2023⁽⁶⁾.

Upon receipt of state permits, Hudbay reported that it expects to conduct a bulk sampling program to continue to de-risk the Copper World Complex by testing grade continuity, variable cut-off effectiveness, and metallurgical strategies. Hudbay also reported that, following receipt of the state permits, Hudbay 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⁽⁶⁾.

Josemaria

Lundin Mining Corporation reported that the Josemaria project team is working with national and provincial authorities in Argentina to progress the project through the next stages of development and associated approvals. Lundin Mining also reported that it is advancing work towards a baseline capital cost estimate and project execution schedule. Plant engineering, including procurement of long-lead equipment, is ongoing, and was 38% complete as of December 31, 2022. Early works continue onsite, including the preparation of platforms for the camp, commissioning of additional fuel storage, and expansion of the existing camp. Pre-construction early works including internal access roads and the completion of phase 1 of a new camp were also advanced during 2022. Lundin Mining reported that it submitted the environmental impact assessment for a new power line, while permitting works and agreements regarding power supply, concentrate logistics, infrastructure funding and a project construction union agreement continue to progress⁽⁷⁾.

Lundin Mining reported that it spent US$237.4 million at Josemaria during 2022 and intends to spend approximately US$400 million at Josemaria during 2023. Additionally, Lundin Mining reported that approximately 30,600 meters of drilling has been completed at Josemaria since a 2020 Mineral Resource and Mineral Reserve Estimate was published by Josemaria Resources, the results of which will be incorporated into a new estimate to be published by Lundin Mining⁽⁷⁾.

As of December 31, 2022, Lundin Mining last reported proven and probable mineral reserves at Josemaria of 1,012 million tonnes at 0.30% copper, 0.22 g/t gold, and 0.94 g/t silver⁽⁸⁾.

Vizcachitas

On September 29, 2022, Los Andes Copper announced that it continued to advance the PFS for the Vizcachitas project. Initial resource modelling for mine plan optimization work on general engineering, infrastructure planning, plant design, and environmental considerations are all ongoing. LAC reported that it expects to resume drilling in Q4 2022, with the objective of expanding resources at Vizcachitas beyond those currently being considered in the PFS⁽⁹⁾.

On February 23, 2023, LAC announced 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%⁽¹⁰⁾.

On February 23, 2023, LAC also announced an initial proven and probable mineral 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 & indicated resources at Vizcachitas of 1,541 million tonnes at 0.38% copper, 155 ppm molybdenum, and 1.1 g/t silver⁽¹⁰⁾.

Financial summary

For Q4 2022, the Company recorded a net loss of $1.9 million or $0.02 per share, compared to a net loss of $5.2 million or $0.06 per share for Q4 2021. The reduced net loss relative to the fourth quarter of 2021 was largely attributable to a lower general and administrative expense, lower share-based payments expense, and a $2.7 million impairment on the Twin Metals royalty, which was incurred in Q4 2021.

For the year ended December 31, 2022, the Company recorded a net loss of $7.9 million or $0.09 per share, compared to a net loss of $9.4 million or $0.12 per share for the year ended December 31, 2021. The reduced net loss relative to the year ended December 31, 2021 was largely attributable to higher royalty revenue recognized from the Aranzazu NSR that offset higher depletion and G&A expenses, and due to the Twin Metals royalty impairment recorded in 2021. Net cash used in operating activities for the year ended December 31, 2022 was $2.1 million.

About Nova

Nova Royalty Corp. is a copper-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, Anglo American and Glencore, among others.