Novo banks $11.5m from surprise partial sale of unlisted investment

Novo Resources surged 60% to touch 14.5c in intraday trading after the market got a good look at the value of its shareholding in unlisted Canadian miner San Cristobal. Novo offloaded 38% of its holding in San Cristobal for $11.5m, valuing the remainder of its shareholding in the private company at $19m.

The investment, that was previously not valued or understood by the market, will contribute to Novo’s bank balance of $16.7m, albeit the company will use $3m of those funds to partially pay down a $15.6m debt on the 2020 acquisition of Millennium Minerals’ mothballed gold mine purchased by Novo under previous management.

Management says the part sale of its stock in San Cristobal will give it continuing exposure to that company’s massive zinc, lead and silver mine in Bolivia which is one of the largest mineral deposits of its kind in the world.

The funds will also allow it to focus more aggressively on its exploration portfolios across Western Australia and Victoria.

This transaction enhances our cash holdings, providing critical support for our 2025 exploration programs. It also underscores the substantial value of our investment portfolio, which continues to deliver significant returns.

Canadian-based Haywood Securities acted as financial advisor for the transaction with Owen Bird Law Corp providing legal counsel.

Novo’s primary focus is gold, particularly at its flagship Egina Gold Camp in the Pilbara and the Belltopper project in Victoria.

It has been an interesting week for the West Pilbara gold explorers.

With the seemingly intractable rise in the gold price showing no sign of easing – and currently trading at US$2647 (A$4115) per ounce – Northern Star has made a $5 billion all-scrip lunge at Novo’s neighbour, DeGrey Mining, which owns the 10-million-ounce plus Hemi gold deposit in WA’s Pilbara region.

Apart from the deal dramatically resetting the value of exploration ounces in the ground, De Grey is also in several joint venture (JV) partnerships in the region with multiple notable parties including Novo, Kalamazoo Resources and industry veteran and stalwart explorer Mark Creasy.

With so much corporate activity in play, the spotlight could start to shine on Novo’s collaboration with De Grey, known as the Egina JV, which was set up to focus on the grounds immediately south of Hemi.

Under the terms of the agreement, De Grey - and possibly now Northern Star - will spend up to $25m within four years to earn a 50 per cent direct stake in the relevant tenements.

Notably, De Grey already owns 10 per cent of Novo, giving Northern Star a big head start on its register if it decides to grab the reins at De Grey.

With its wallet bulging with cash from an asset sale most thought was worthless, a fresh $5b monster gold explorer takeover in its backyard and plenty of gold exploration work to be getting on with, it appears Novo may be on the cusp of some positive momentum.

With the share price settling 30 per cent higher on the ASX close today at 11.5c, it appears the punters are starting to take notice.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au