Nova Royalty Corp. is pleased to announce that it has entered into royalty purchase agreements with arm’s length private parties pursuant to which Nova will acquire a combined, existing 0.24% Net Smelter Return royalty on the Taca Taca copper-gold-molybdenum project in Salta Province of Argentina, 100% owned by First Quantum Minerals Ltd. (TSX: FM) for approximately US$12.75 million.
Alex Tsukernik, Nova’s President and CEO, commented, “Taca Taca is one of the world’s premier copper development projects, under the ownership of an outstanding operator in First Quantum. Its size, grade, and location, position it among the top tier of a new generation of copper mines necessary to facilitate the world’s transition from fossil fuels to clean energy. We are proud to add another world class copper project with decades of future copper exposure and expansion potential for our shareholders. We will look to continue Nova’s growth beyond what has already been a very exciting year for the Company”.
The royalty ground covers substantially the entire mining plan in the preliminary economic assessment technical report dated May 24, 2013 and prepared by Ausenco for Lumina Copper Corporation, the previous owner of the project, in 2013. The Transaction is subject to consent of First Quantum, not to be unreasonably withheld, confirmatory due diligence on behalf of Nova and the acceptance of the TSX Venture Exchange. Transaction completion is expected later in 2020.
The aggregate purchase price for the Transaction includes upfront consideration of US$8.5 million in cash and 2 million shares of Nova. Nova will make additional cash payments of US$0.5 million six months after Closing, US$1.0 million twelve months after Closing, and US$0.5 million twenty four months after Closing.
The royalty is subject to a buyback right based on the proven reserves at Taca Taca in a feasibility study completed by a recognized, international consulting firm that is contracted by mutual consent of all parties, including royalty holders. The buyback amount will be equivalent to the amount of the Proven Reserves multiplied by the prevailing market prices of all applicable commodities within Taca Taca.
The 0.24% NSR is a part of a broader, existing 1.50% NSR (“1.50% NSR“) on Taca Taca. The other parties in the 1.50% NSR are Franco-Nevada (NYSE: FNV) (1.08%) and certain private entities (0.18%).
Nova has agreed to pay a finder’s fee to an arm’s length person totaling two percent of the transaction value to be paid at Closing based on a volume weighted average trading price of the common shares of the Company prior to the date of Closing (subject to the acceptance of the TSX Venture Exchange).
Taca Taca is a porphyry copper-gold-molybdenum project located in northwestern Argentina in the Puna (Altiplano) region of Salta Province, approximately 55 kilometers east of the Chilean border and 90 kilometers east of Escondida, the world’s largest copper mine. The project is located 10 km from the railway line that connects Salta with Antofagasta with previous studies showing available local power and water sources for the operation of the project.
In August 2014, First Quantum acquired Lumina for approximately C$470 million. In 2013, Lumina published the PEA, which outlined a plan for a 28-year mine life with average annual production of approximately 244,000 tonnes of copper, 110,000 ounces of gold, and 4,100 tonnes of molybdenum. C1 cash cost net of byproducts were estimated at US$1.11/lb of copper, and initial capital costs at approximately US$3 billion.
As disclosed by First Quantum in their annual information form dated March 30, 2020 at Taca Taca, First Quantum has selected the scale and extents of open pit mining and processing, and the location and scope of required infrastructure items. Technical and commercial work has proceeded on power and water supply logistics, freight and product transport options. First Quantum’s project engineering phase has advanced such that the primary permit application may be submitted. The primary Environmental and Social Impact Assessment, which covers the principal proposed project sites, was submitted to the Secretariat of Mining of Salta Province in February 2019.
Taca Taca – Resources
As disclosed by First Quantum in the FQ AIF and in the PEA, Taca Taca contains the following resource estimate:
|Taca Taca – Resources (100% basis)|
|Category||Tonnes (millions)||Copper Grade (%)||Contained Copper (Millions of Tonnes)||Gold Grade(g/t)||Gold (millions of ounces)||Molybdenum Grade (%)||Contained Molybdenum (Millions of Tonnes)|
The Purchase Agreements were agreed to with the Sellers as of October 7, 2020.
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.
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 TSX Venture Exchange.
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