VANCOUVER – Novo Resources Corp. [NVO-TSX, NVO.WT, WT.A, NSRPF-OTCQX] said Tuesday it has agreed to sell its 15 million New Found Gold Corp. [NFG-TSXV] shares to a corporation controlled by Bay Street financier Eric Sprott for $125.9 million.
In a press release, Australia-focused Novo said the shares will be sold in two tranches. The first consists of 82.5 million New Found shares at $8.35 per share, generating gross proceeds of $68.9 million. The completion date is scheduled for April 27, 2022.
The second tranche consist of 6.75 million New Found shares priced at $8.45 per share for gross proceeds of $57 million. The second tranche is scheduled to settle on August 5, 2022.
Shares sold in the second tranche are subject to escrow provisions. The transfer of the second tranche requires the consent of the TSX Venture Exchange.
After closing, Sprott will control 51.6 million shares, representing approximately 31.4% of the outstanding shares, marking an increase of 9.1%.
New Found Gold is working to advance Canada’s newest high grade gold discovery on its 100%-owned Queensway project in central Newfoundland.
The company is backed by an investor group that includes Canadian financiers Robert McEwen and Sprott. Palisades Goldcorp., a resource-focused merchant bank founded by New Found CEO Collin Kettell, recently owned 31% of the shares.
On Tuesday, New Found shares jumped 7.4% or 57 cents to $8.25 on volume of 345,860. The shares are currently trading in a 52-week range of $13.50 and $4.67.
Novo shares also advanced on the news, rising 4.2% or $0.04 to $1.00 on volume of 672,110. The shares are trading in a 52-week range of $2.91 and 89 cents.
Novo said completion of the transaction will leave Novo debt free and with a pro-forma cash balance of almost $97 million, giving the company the flexibility to aggressively advance exploration efforts across Australia’s Pilbara and Victoria regions, while expediting a feasibility study on the Fresh component of its Beatons Creek project in Nullagine, Western Australia.
New Found is now fully focused on the flagship Queensway project where it is targeting the northern portion of the project with a 400,000-metre drill program. The Queensway project covers approximately 1,500 square kilometres with the initial exploration focused on areas that can be accessed by the Trans-Canada Highway, about 15 kilometres west of Gander, Newfoundland.
The company acquired the property rights by map staking mineral licenses and making a series of staged payments in cash and common shares from 2016 to 2019 under nine separate option agreements.
The project is divided by Gander Lake into Queensway North and Queensway South.
So far, New Found has discovered three robust structurally controlled high-grade deposits: Keats, Lotto, Golden Joint. These occur along an approximately 2.0-kilometre corridor of the Appleton Fault Zone on Queensway North.