Nova Royalty Corp. (CVE:NOVR) said on Thursday that it has struck royalty purchase agreements with private parties to acquire an existing 0.24% net smelter return (NSR) royalty on First Quantum Minerals Ltd’s (TSX:FM) Taca Taca copper-gold-molybdenum project, in Argentina for around US$12.75 million in a cash-and-stock deal.
In a statement, Nova CEO Alex Tsukernik said: "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.”
He added: “We are proud to add another world-class copper project with decades of future copper exposure and expansion potential for our shareholders."
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The royalty ground covers the entire mining plan outlined in the preliminary economic assessment technical report, prepared for the previous owner Lumina Copper Corporation in May 2013. The deal needs to be approved by First Quantum and the TSX Venture Exchange.
The aggregate purchase price for the transaction includes upfront US$8.5 million in cash and 2 million Nova shares. Nova will make additional cash payments of US$0.5 million, six months after closing, US$1 million 12 months after closing, and US$0.5 million 24 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, including the royalty holders. Nova said 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 on Taca Taca. The other parties in the 1.50% NSR are Franco-Nevada Corporation (NYSE:FNV), which holds 1.08% and other private entities which hold 0.18%.
Nova has agreed to pay a finder's fee totaling 2% of the transaction value at closing, based on a volume-weighted average trading price of the shares of the company prior to the date of closing.
The Taca Taca porphyry copper-gold-molybdenum project, in the Puna region of Argentina’s Salta Province, lies 55 kilometers east of the Chilean border and 90 kilometers east of Escondida, the world's largest copper mine.
Vancouver, British Columbia-based Nova looks to find royalties in the clean energy, copper, and nickel space.
Contact the author Uttara Choudhury at [email protected]
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