Novo Resources Corp.
) (TSX: NVO, NVO.WT & NVO.WT.A)
(OTCQX: NSRPF) provides a Q3 2021 operational update from Beatons
Creek, located in Nullagine, Western Australia.
Commenting on Q3 2021 operational performance,
Novo’s Executive Co-Chairman Mr. Mike Spreadborough said, “The ramp
up of operations since February has proceeded well, with both
mining and processing achieving target rates. However, gold
production fell short of expectations. We saw lower head grade than
forecast as a result of lower accuracy in the grade control grade
estimate. This was due to the current predominant wide-spaced grade
control drilling at the high-nugget Beatons Creek oxide
mineralization combined with higher mining dilution from the more
complex mining areas.
We have found that closer spaced drilling is
providing more certainty for mine forecasting and we are continuing
to progress the completion of this drilling. The rapid assay
turnaround provided by the Chrysos PhotonAssay technology through
Intertek is allowing for this data to be used to mine more
To incorporate all of the learnings from this
unique mining at Beatons Creek into future mine planning, we have
initiated an oxide mining study. We are confident that the outcomes
of the review, when delivered later this year, will result in a
plan which will further optimize production levels and
profitability of the oxide resource.
Importantly, Novo remains in a very strong
financial position to optimize production results and maximize
value from Beatons Creek and, importantly, our exploration
activities are being accelerated.”
NULLAGINE GOLD PROJECT
Safety and COVID Update
Safety is a core value, with continuous focus on
safety outcomes. Over the past 12 months through Q3 2021, the lost
time injury frequency rate remained zero. The Company continues to
experience minimal COVID-19 pandemic-related operational
Mining rates at Beatons Creek stabilized
throughout Q3 2021, with 478 kt of mineralized material mined from
the Beatons Creek deposit compared to 477 kt in Q2 2021.
The Company’s Golden Eagle processing plant
(“Golden Eagle Plant”) processed 451 kt of
mineralized material in Q3 2021, representing a 23% increase over
Q2 2021 throughput of 366 kt.
Since the start of commissioning of Beatons
Creek in February 2021 (refer to the Company’s news release dated
February 3, 2021) based on the Beatons Creek mineral resource, Novo
targeted a throughput rate of 1.8 Mtpa to match the capacity of the
Golden Eagle Plant. This milestone was achieved in Q3 2021.
Production in Q3 2021 totalled 18,144 ounces of
gold, representing a 22% increase over Q2 2021 production of 14,890
ounces of gold. Recovery rates were approximately 94% throughout Q2
and Q3 2021.
The Q3 2021 head grade was 1.34 g/t Au, a slight
increase from a Q2 2021 head grade of 1.30 g/t Au2. However, the
head grade has been relatively variable throughout Q2 and Q3 2021,
which reflects the high-nugget content of the conglomerate Beatons
Creek gold deposit and necessary mine sequencing. Additional
high-grade Beatons Creek oxide material assisted to increase July
2021 head grade to 1.94 g/t Au.
The lower head grades compared to forecast is
due to previous reliance on wide spaced grade control drilling
which results in lower accuracy of the modelled high-nugget effects
in the Beatons Creek oxide mineral resource combined with higher
mining dilution associated with more complex mining areas.
In order to provide greater certainty in grade
forecasting for mine planning, the Company continues to progress
its Beatons Creek grade control drilling program at a spacing of 10
m x 10 m. Analysis confirms that this level of grade control
drilling provides improved reconciliation between the resource
model grade and the actual grade mined.
The operation previously relied on wide-spaced
grade control drilling due to slow assay turnaround. The use of the
Chrysos PhotonAssay technology through Intertek Testing Services
(Australia) Pty Ltd (“Intertek”) has allowed rapid
assay turnaround allowing for this data to be used to mine more
selectively. This assay technique is a necessity given the
high-nugget nature of the Beatons Creek conglomerate gold
mineralization. This rapid assay turnaround is necessary to support
the use of closer-spaced grade control drilling.
In July 2021, a test package of approximately 43
kt of Beatons Creek fresh mineralization was processed at an
average head grade of 1.83 g/t Au confirming processing throughputs
and recovery with good grade prediction. This data will be used to
optimize fresh mining in the future. The most recently announced
Beatons Creek mineral resource estimate includes a fresh component
comprising approximately 65% of the global estimate (refer to the
Company’s news release dated April 30, 2021 and the report titled
“Preliminary Economic Assessment on the Beatons Creek Gold Project,
Western Australia” with an effective date of February 5, 2021 and
an issue date of April 30, 2021). Mineral resources that
are not mineral reserves do not have demonstrated economic
To further optimize the Beatons Creek oxide
mineralization mine plan, Novo has initiated an oxide mining study
which will focus on increased grade control drilling to improve the
accuracy of resource modelling, mining approaches, cut-off grade
sensitivities, and costs in order to enhance production and
profitability of the Beatons Creek oxide resource component of the
Nullagine Gold Project. The Company intends to provide an update on
this review once complete in Q4 2021.
The Company’s processing and mining rates
stabilized sufficiently throughout Q3 2021 to enable Novo to
declare commercial production2 effective October 1, 2021. Of
particular importance is that the Golden Eagle Plant has met it
____________________2 Refer to
the Company’s management’s discussion and analysis for the
six-month period ended June 30, 2021, available on the Company’s
website at www.novoresources.com and under the Company’s profile on
SEDAR at www.sedar.com.
Novo Financial Position
Novo’s strong financial position allows the
Company to address operational requirements while leveraging the
value of its strategic investment portfolio.
Q3 2021 gold sales totalled 18,753 ounces of
gold and 2,399 ounces of silver, representing a 34% increase over
Q2 2021 gold sales of 13,958 ounces.
Q3 2021 gross revenue grew by 36% from Q2 2021
to C$43 million (A$45.8 million).
The Company experienced a Q3 2021 average
realized gold price of A$2,483 compared to a Q2 2021 average
realized gold price of A$2,4012. Novo sells its gold in Australian
dollars to ABC Refinery of Sydney, Australia and continues to enjoy
strong gold price performance in Australian dollar terms.
Novo’s cash and working capital positions remain
strong, with cash reserves of C$44.1 million as at September 30,
2021 as compared to C$46.3 million as at June 30, 2021 while
spending approximately C$6 million on exploration during Q3
In addition to its cash reserves, the Company’s
strategic portfolio of investments held a fair value of
approximately C$135 million1 as at September 30, 2021, including
its 9.5% investment in New Found Gold Corp. (TSXV: NFG) which was
worth approximately C$116 million1.
Dr. Quinton Hennigh (P.Geo.) is the qualified
person, as defined under National Instrument 43-101 Standards of
Disclosure for Mineral Projects, responsible for, and having
reviewed and approved, the technical information contained in this
news release. Dr. Hennigh is the non-executive co-chairman and a
director of Novo.
The decision by the Company to produce at the
Nullagine Gold Project was not based on a feasibility study of
mineral reserves demonstrating economic and technical viability
and, as a result, there is an increased uncertainty of achieving
any particular level of recovery of minerals or the cost of such
recovery, including increased risks associated with developing a
commercially mineable deposit. Historically, such projects have a
much higher risk of economic and technical failure. There is no
guarantee that that anticipated production costs will be achieved.
Failure to achieve the anticipated production costs would have a
material adverse impact on the Company’s cash flow and future
The Company cautions that the declaration of
commercial production only indicates that the Nullagine Gold
Project is operating at anticipated and sustainable levels and it
does not indicate that economic results will be realized.
Novo operates its flagship Beatons Creek gold
project while exploring and developing its prospective land package
covering approximately 13,250 square kilometres in the Pilbara
region of Western Australia. In addition to the Company’s primary
focus, Novo seeks to leverage its internal geological expertise to
deliver value-accretive opportunities to its shareholders. For more
information, please contact Leo Karabelas at (416) 543-3120 or
On Behalf of the Board of Directors,
Novo Resources Corp.
Some statements in this news release contain
forward-looking information (within the meaning of Canadian
securities legislation) including, without limitation, planned
mining and processing activities; that grade control drilling may
control variability of the Nullagine Gold Project’s head grade and
provide for greater certainty for mine planning efforts; that the
strategic operational review, which is scheduled to be completed in
Q4 2021, may optimize production and profitability of the oxide
resource component of the Nullagine Gold Project; the declaration
of commercial production (which only indicates that the Nullagine
Gold Project is operating at anticipated and sustainable levels and
does not indicate that economic results will be realized); and that
Novo’s strong financial position allows the Company to address the
operational variabilities mentioned in this news release while
leveraging the value of its strategic portfolio. These statements
address future events and conditions and, as such, involve known
and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by the statements. Such factors include,
without limitation, customary risks of the resource industry and
the risk factors identified in Novo’s management’s discussion and
analysis for the six-month period ended June 30, 2021, which is
available under Novo’s profile on SEDAR at www.sedar.com.
Forward-looking statements speak only as of the date those
statements are made. Except as required by applicable law, Novo
assumes no obligation to update or to publicly announce the results
of any change to any forward-looking statement contained or
incorporated by reference herein to reflect actual results, future
events or developments, changes in assumptions or changes in other
factors affecting the forward-looking statements. If Novo updates
any forward-looking statement(s), no inference should be drawn that
the Company will make additional updates with respect to those or
other forward-looking statements.
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