TSXV: NOVR
OTCQB: NOVRF
VANCOUVER, BC, Nov. 16,
2022 /CNW/ - Nova Royalty Corp.
("Nova" or the "Company") has reported its financial
results for the quarter ended September 30,
2022. Nova's financial statements and management's
discussion and analysis for the three and nine months ended
September 30, 2022 are available on
Nova's website at www.novaroyalty.com and on SEDAR at
www.sedar.com.
Q3 2022 highlights:
- Revenue: for the three and nine months ended
September 30, 2022, recognized
revenue of $344,155 and $1,488,461, respectively, from its NSR interests,
primarily related to the Aranzazu NSR.
- Updated at-the-market equity program: on
November 14, 2022, the Company filed
a preliminary short form base shelf prospectus (the "Base Shelf
Prospectus") in all provinces of Canada to enhance the Company's financial
flexibility. In connection with this transition, the Company
intends to terminate its earlier 2021 ATM Program (as defined
below) and establish the 2022 ATM Program (as defined below).
Alex Tsukernik, President &
CEO of Nova, commented, "We saw progress on multiple fronts in Q3
2022 as our portfolio of royalties on tier-one, large-scale copper
projects continued to advance. Many of our key assets were actively
progressed during the quarter, most notably Taca Taca, Copper
World, Josemaria, and Vizcachitas. We are encouraged by the
demonstrated commitment shown by the skilled owner-operators of
these assets to develop these projects in a prudent, methodical
way. We also saw strong operational performance from the Aranzazu
mine, which reported higher quarter-over-quarter copper equivalent
production and continues to be a valuable contributor of royalty
revenue to Nova."
Mr. Tsukernik concluded, "With the long-term foundation of the
Nova portfolio set and our key assets moving forward, we have
prioritized balancing our cash flow profile by adding cash-flowing
and near-term cash-flowing royalties. This is a major strategic
focus for Nova, which we expect will set us up for sustainable
profitability. We were very active in Q3 2022 on advancing deals on
cash-flowing or near-term cash-flowing assets and we continue to
work towards executing on this leg of our strategy. I look forward
to updating the market when appropriate."
Asset update
Aranzazu
Aura Minerals Inc. ("Aura") disclosed
that Aranzazu sold 12.7 Mlbs copper equivalent
("CuEq") at cash costs of US$1.48/lb CuEq during Q3 2022. CuEq sales were
10% higher than in Q3 2021 and 9% higher than in Q2 2022. Aura
reported that ore processed reached a historical record high during
Q3 2022, achieving 313,000 tonnes in the quarter and surpassing the
estimated maximum capacity of 100,000 tonnes per month.
Additionally, Aura reported that copper grade was 10% higher and
gold grade was 2% higher than Q3 2021 due to mine plan sequencing
and higher-grade material at the Glory Hole deposit. Copper
concentrate production was 9% higher during Q3 2022 than in Q3
2021(1).
Nova recognized $0.3 million in
revenue during the third quarter of 2022, compared to $0.2 million in the comparative quarter,
attributable to the Aranzazu royalty. Q3 2022 revenue recognized by
Nova from the Aranzazu royalty was negatively impacted by
approximately US$0.1 million due to
nonrecurring price adjustments reported by Aura and lower copper
prices. Aura reported price adjustments of US$10,331,000 in accordance with the offtake
agreement between Aranzazu and Trafigura Mexico, S.A.
According to a contractual provision which exists in the offtake
agreement between Aranzazu and Trafigura, on a monthly
basis, Trafigura is entitled to select an effective copper price
determination period of either (i) the average market price of the
subsequent month after an invoice is issued or (ii) the average
market price of the fourth month after an invoice is issued. Both
alternatives are subject to cash adjustments. Trafigura has
selected alternative (ii) the average market price of the fourth
month after an invoice is issued, since the beginning of
2022(1). Without this adjustment, Q3 2022 revenue for
Nova would have been approximately $0.5
million.
Aura also revised its production guidance for Aranzazu,
moving from 115,000-120,000 to 109,000-110,000 gold equivalent
ounces ("GEO"). Aura reported that the downward revision
in Aranzazu production guidance was driven largely by
assumptions for average copper market prices, which negatively
affects the calculation of GEO. Aura reported that, using previous
price assumptions for copper and gold
prices, Aranzazu would be expected to produce
approximately 8,000 additional GEO during 2022(1).
As of September 30, 2022, 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. ("First Quantum") continued
pre-development and feasibility activities at Taca Taca during Q3
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
("ESIA") for Taca Taca was submitted to the Secretariat of
Mining of Salta Province in 2019 and
approval of the ESIA is anticipated in late 2022. 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(3). First Quantum expects to continue
permitting work at Taca Taca throughout 2022, in addition to
engaging with government regarding key aspects of an administrative
and fiscal regime for investment into Argentina(4).
As of September 30, 2022, First
Quantum last reported proven & 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(5).
Copper World Complex
Copper World requires state and local permits for Phase I.
Hudbay Minerals Inc. ("Hudbay") reported that, on
September 21, 2022, an application
for an Aquifer Protection Permit was submitted to the Arizona
Department of Environmental Quality ("ADEQ"), 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 by
mid-2023. Hudbay reported that the other key state permit, the
Mined Land Reclamation Plan, was received in July 2022(6).
Hudbay reported that it is continuing to advance pre-feasibility
activities for Phase I of Copper World, 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 processing
plant is at 85% completion as of September
30, 2022 and geotechnical and hydrogeological site
investigation activities have been completed. Pre-feasibility
engineering design and metallurgical test work are on track to be
completed by the end of 2022, with the results of pre-feasibility
activities expected to be published in a pre-feasibility study
("PFS") during the first half of 2023(6).
Upon receipt of the state permits required for Phase I, Hudbay
reported that it expects to conduct a bulk sampling program to
continue to de-risk Copper World by testing grade continuity,
variable cut-off effectiveness, and metallurgical strategies in
high-grade, near surface areas. Hudbay reported that it intends to
prioritize the completion of the PFS, state level permits, bulk
sampling program, and a minority joint venture partner process in
2023, with feasibility study activities in 2024(6).
Josemaria
Lundin Mining Corporation ("Lundin Mining") reported that
it is currently advancing commercial agreements and additional
sectoral permits with national and provincial authorities in
Argentina. Lundin Mining also
reported that it is advancing work towards a baseline capital cost
estimate and project execution schedule(7).
Plant engineering, including procurement of long-lead equipment,
is ongoing, and was 33% complete as of September 30, 2022. Early works continue onsite,
including the preparation of platforms for the camp and batch
plant, additional fuel storage, and increasing camp capacity.
Lundin Mining reported that it expects to continue advancing the
building of additional camp capacity, internal access road
construction, access road maintenance, and water and geotechnical
work during the remainder of 2022(7).
Lundin Mining reported that it intends to spend approximately
US$300 million at Josemaria during
2022, of which, US$150.5 million was
spent as of September 30, 2022.
Additionally, Lundin Mining reported that approximately 31,000
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 September 30, 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 ("LAC") 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).
LAC now expects to finalize the PFS by the first quarter of
2023(10).
Financial summary
For Q3 2022, the Company recorded a net loss of $2.3 million or $0.03 per share, compared to a net loss of
$1.7 million or $0.02 per share in the comparative quarter. The
loss was largely attributable to a higher general and
administrative ("G&A") expense relating to higher
personnel recruitment costs, share-based payments, interest
expenses, foreign exchange loss, and $0.2
million of deferred acquisition costs, which were expensed
as management determined one of its proposed acquisitions would not
be completed. Excluding share-based payments, G&A expense
during Q3 2022 was approximately $1.0
million, compared to $0.7
million in the comparative quarter.
Updated at-the-market equity program
Nova intends to enter into a new equity distribution agreement
(the "Distribution Agreement") with BMO Capital Markets (the
"Lead Agent") and PI Financial Corp. (together with the Lead
Agent, the "Agents") to establish an at-the-market equity
program (the "2022 ATM Program"). The Distribution Agreement
is expected to allow the Company to distribute up to
$25 million in common shares of the
Company (the "Offered Shares") under the 2022 ATM Program.
The Offered Shares are expected to be issued by the Company to the
public from time to time, through the Agents, at the Company's
discretion. The Offered Shares sold under the 2022 ATM Program, if
any, are expected to be sold at the prevailing market price at
the time of sale. The net proceeds of any such sales will be used
to finance the future purchase of streams and royalties by the
Company and for working capital purposes.
Under the intended Distribution Agreement, sales of Offered
Shares will be made by the Agents through "at-the-market
distributions" as defined in National Instrument 44-102 – Shelf
Distributions on the TSX Venture Exchange, or any other
trading market for the Offered Shares in Canada. The Company is not obligated to make
any sales of Offered Shares under the intended Distribution
Agreement. Unless earlier terminated by the Company or the Agents
as permitted therein, the Distribution Agreement will terminate
upon the earlier of (a) the date that the aggregate gross sales
proceeds of the Offered Shares sold under the 2022 ATM Program
reaches the aggregate amount of $25
million; or (b) the termination date specified in the
Distribution Agreement.
The 2022 ATM Program will be made pursuant to a prospectus
supplement, which Nova intends to file following the issuance of a
receipt for the final Base Shelf Prospectus. The prospectus
supplement relating to the 2022 ATM Program will be filed with the
securities commissions in each of the provinces of Canada. Copies of the relevant documents will
be available on SEDAR at www.sedar.com. Alternatively, the
Lead Agent will send copies of the relevant documents to Canadian
investors upon request by contacting the Lead Agent at BMO Capital
Markets, by mail at Brampton Distribution Centre, 9195 Torbram
Road, Brampton, Ontario, L6S 6H2,
attn: The Data Group of Companies, by email
at torbramwarehouse@datagroup.ca or by telephone at
905-791-3151 ext. 4312.
Nova first established a $25
million at-the-market program on February 26, 2021 (the "2021 ATM Program")
with BMO Capital Markets and PI Financial Corp. From inception to
September 30, 2022, the Company
distributed 2,033,900 common shares under the 2021 ATM Program at
an average price of $3.50 per share
for gross proceeds of $7,118,295 (of
which no common shares were sold during the three months ended
September 30, 2022), with aggregate
commissions paid or payable of $177,957, resulting in net proceeds of
$6,940,338. As of the date of this
press release, the Company has distributed a total of 3,002,600
common shares under the 2021 ATM Program for gross proceeds of
$8,612,326. The Base Shelf
Prospectus, when made final, will replace the amended and restated
base shelf prospectus previously filed by the Company. In
connection with this transition, the Company will terminate its
2021 ATM Program.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy securities, nor will there be
any sale of the securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of any such
jurisdiction.
Third quarter 2022 conference call and webcast:
Nova will hold a conference call and webcast with management for
investors and analysts on November 17,
2022 at 10:00 am ET. Analysts
and investors are invited to participate using the following
dial-in numbers or webcast link:
Participant Number (Local): 416-764-8609
Participant Number (Toll-Free): 888-390-0605
Conference ID: 92655824
Audience URL: https://app.webinar.net/3ZjeNP7WJEP
A replay of the conference call will be available until
11:59 pm (ET) December 1, 2022, and can be accessed using the
following dial-in numbers.
Encore (Local): 416-764-8677
Encore (Toll-Free): 1-888-390-0541
Encore ID: 655824#
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, Hudbay,
Anglo American and Glencore, among
others. The Company is headquartered in Vancouver, British Columbia and is listed on
the TSX Venture Exchange under the trading symbol "NOVR" and on the
US OTCQB under the trading symbol "NOVRF".
ON BEHALF OF NOVA ROYALTY CORP.,
(signed) "Alex Tsukernik"
President and Chief Executive Officer
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Notes:
|
|
(1)
|
Refer to Aura Minerals'
Management's Discussion and Analysis for the three and nine months
ended September 30, 2022.
|
(2)
|
Refer to Aura Minerals'
Annual Information Form for the year ended December 31,
2021.
|
(3)
|
Refer to First Quantum
Minerals Management's Discussion and Analysis for the third quarter
ended September 30, 2022.
|
(4)
|
Refer to First Quantum
Minerals 2021 Annual Report, Capital Markets Day Presentation dated
January 2022, and Capital Markets Day Call Transcript, dated
Tuesday, January 18, 2022.
|
(5)
|
Refer to First Quantum
Minerals' NI 43-101 Technical Report Titled "Taca Taca Project,
Salta, Argentina" prepared by David Gray (QP) BSc(Geology),
MAusIMM, FAIG), Group Mine and Resource Geologist, FQM (Australia)
Ltd, filed November 30, 2020, amended and restated March 30,
2021.
|
(6)
|
Refer to Hudbay's
Management's Discussion and Analysis for the three and nine months
ended September 30, 2022.
|
(7)
|
Refer to Lundin
Mining's Management's Discussion and Analysis for the three and
nine months ended September 30, 2022.
|
(8)
|
Refer to Lundin
Mining's NI 43-101 Technical Report Titled "Josemaria Technical
Report" prepared by Mr. Robert McCarthy, P.Eng, filed September 28,
2020.
|
(9)
|
Refer to the press
release titled "Los Andes Copper Project Update" published by Los
Andes Copper Ltd. on September 29, 2022.
|
(10)
|
Refer to the press
release titled "Los Andes Copper Appoints Santiago Montt as Interim
Chief Executive Officer" published by Los Andes Copper Ltd. on
November 2, 2022.
|
Technical and Third-Party Information
Nova has limited, if any, access to the properties on which
Nova holds a royalty, stream or other interest. Nova is dependent
on (i) the operators of the mines or properties and their qualified
persons to provide technical or other information to Nova, or
(ii) publicly available information to prepare disclosure
pertaining to properties and operations on the mines or
properties on which Nova holds a royalty, stream or other
interest, and generally has limited or no ability to independently
verify such information. Although Nova does not have any
knowledge that such information may not be accurate, there can be
no assurance that such third-party information is complete or
accurate. Some information publicly reported by operators may
relate to a larger property than the area covered by Nova's
royalty, stream or other interests. Nova's royalty, stream or
other interests can cover less than 100% and sometimes only a
portion of the publicly reported mineral reserves, resources and
production of a property.
Unless otherwise indicated, the technical and scientific
disclosure contained or referenced in this press re-lease,
including any references to mineral resources or mineral
reserves, was prepared in accordance with Canadian National
Instrument 43-101 ("NI 43-101"), which differs
significantly from the requirements of the U.S. Securities and
Exchange Commission (the "SEC") applicable to U.S.
domestic issuers. Accordingly, the scientific and technical
information contained or referenced in this press release may
not be comparable to similar information made public by U.S.
companies subject to the reporting and disclosure requirements
of the SEC.
"Inferred mineral resources" have a great amount of
uncertainty as to their existence and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that
all or any part of an inferred mineral resource will ever be
upgraded to a higher category. Historical results or feasibility
models presented herein are not guarantees or expectations of
future performance.
Qualified Person
Technical information contained in this press 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.
Cautionary Note Regarding Forward-Looking Statements
This press release contains "forward-looking information" and
"forward-looking statements" within the meaning of applicable
securities legislation. The forward-looking statements herein are
made as of the date of this press release only, and the Company
does not assume any obligation to update or revise them to reflect
new information, estimates or opinions, future events or results or
otherwise, except as required by applicable law. Often, but not
always, forward-looking statements can be identified by the use of
words such as "plans", "expects", "is expected", "budgets",
"scheduled", "estimates", "forecasts", "predicts", "projects",
"intends", "targets", "aims", "anticipates" or "believes" or
variations (including negative variations) of such words and
phrases or may be identified by statements to the effect that
certain actions "may", "could", "should", "would", "might" or
"will" be taken, occur or be achieved. Forward-looking statements
and information include, but are not limited to, statements with
respect to future events or future performance of Nova; the
existence of future business opportunities; ESIA approval for Taca
Taca and the expected timing thereof; completion of water supply
studies and pump tests by First Quantum and expected timing
thereof; the continuation of permitting work at Taca Taca
throughout 2022 and First Quantum's expectation to
engage with government regarding an investment into Argentina;
obtaining state and local permits for Copper World and expected
timing thereof; the development of the Aranzazu mine to access
higher-grade areas for productions later in 2022; Hudbay advancing
a pre-feasibility study for Phase I of the Copper World, conducting
a bulk sampling program, minority joint venture partner process and
feasibility study activities and expected timing thereof; Lundin
Mining's activities and the total expected spend for Josemaria;
LAC's plan to resume drilling and finalize the PFS and expected
timing thereof; statements with respect to entering into the
Distribution Agreement, filing the prospectus supplement, the
future issuance of Offered Shares sold under the 2022 ATM Program;
the aggregate gross proceeds of the 2022 ATM Program; and the use
of proceeds from any sales of Offered Shares under the 2022 ATM
Program; other potential developments relating to, or achievements
by the counterparties for Nova's stream and royalty agreements, and
with respect to mines or other properties Nova has, or may acquire,
a stream or royalty interest; estimates of future productions,
costs and other financial or economic measures; disclosure
regarding any payments to be paid to Nova by property owners or
operators of mining projects pursuant to net smelter returns and
other royalty agreements; and future expectations regarding
royalties and streams of Nova.
Such forward-looking statements and information are subject
to various known and unknown risks and uncertainties, many of which
are beyond the ability of Nova to control or predict, that may
cause Nova's actual results, performance or achievements to be
materially different from those expressed or implied thereby, and
are developed based on assumptions about such risks, uncertainties
and other factors set out herein, including, but not limited to,
risks associated with the impact of general business and economic
conditions; that Nova may not be able to enter into the Equity
Distribution Agreement; that Nova may not sell any of the Offered
Shares or may raise less than the maximum offering amount under the
2022 ATM Program; management has broad discretion in the use of
proceeds from the 2022 ATM Program; the absence of control over
mining operations from which Nova will purchase precious metals or
from which it will receive stream or royalty payments and risks
related to those mining operations, including risks related to
international operations, government and environmental regulation,
delays in mine development, construction and operations, actual
results of mining and current exploration activities, conclusions
of economic evaluations and changes in project parameters as plans
are refined; problems related to the ability to market precious
metals or other metals; industry conditions, including commodity
price fluctuations, interest and exchange rate fluctuations;
interpretation by government entities of tax laws or the
implementation of new tax laws; regulatory, political or economic
developments in any of the countries where properties in which Nova
holds a royalty, stream or other interest are located or through
which they are held; risks related to the operators of the
properties in which Nova holds a royalty or stream or other
interest, including changes in the ownership and control of such
operators; risks related to global pandemics, including the novel
coronavirus (COVID-19) global health pandemic, and the spread of
other viruses or pathogens; influence of macroeconomic
developments; business opportunities that become available to, or
are pursued by Nova; reduced access to debt and equity capital;
litigation; title, permit or license disputes related to interests
on any of the properties in which Nova holds a royalty, stream or
other interest; the volatility of the stock market; competition;
future sales or issuances of debt or equity securities; use of
proceeds; dividend policy and future payment of dividends;
liquidity; market for securities; enforcement of civil judgments;
and the risk factors set out under the heading "Risk Factors" in
the Company's annual information form dated April 29, 2022 and other filings available for
review on the Company's profile at www.sedar.com.
Such forward-looking information represents management's best
judgment based on information currently available. Except as
required by applicable securities laws, the Company undertakes no
obligation to update these forward-looking statements in the event
that management's beliefs, estimates or opinions, or other factors,
should change. No forward-looking statement can be guaranteed and
actual future results may vary materially. Accordingly, readers are
advised not to place undue reliance on forward-looking statements
or information.
SOURCE Nova Royalty Corp.