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Nova Royalty set to buy existing royalty on Chile copper project; increases debt facility with Beedie Capital

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Nova Royalty Corp (CVE:NOVR) (OTCMKTS:NVARF) revealed on Wednesday that it is set to acquire an existing royalty on Los Andes Copper Ltd‘s (CVE:LA) Vizcachitas project in Chile and that it had increased its convertible debt facility with Beedie Capital. 

The company has struck a deal with an affiliate of Resource Capital Funds over the net smelter return royalty (NSR) for 0.98% on open pit operations and 0.49% of underground operations on one concession that forms part of the Vizcachitas project, namely around 50% of the projected open-pit mine plan.  

READ: Nova Royalty increases royalty interest in world class Taca Taca copper-gold project to 0.42%

Among the terms, Nova must pay US$6.5 million in cash upfront on closing and up to US$9.5 million in its shares, upon the achievement of certain project milestones. Closing of the deal is expected to occur by March this year.

“Vizcachitas is one of the premier copper development projects in the Americas. We believe the project has all the necessary components to be a strategic development asset for a major producer and a critical part of the future supply chain,” said Alex Tsukernik, Nova Royalty’s CEO in a statement.

“We are pleased to become a royalty holder alongside Resource Capital Funds, one of the mining sector’s leading investors as it continues to support the project toward production. We look forward to welcoming them as a future shareholder.”

Vizcachitas is currently undergoing permitting for an expanded drilling program, the results of which, will be used to complete a pre-feasibility study, earmarked to be completed by the first half of 2022.

A preliminary economic assessment (PEA) in 2019, envisaged a 45-year open-pit mine life at a throughput of 110,000 tonnes per day (tpd).

At a copper price of US$3 per pound, the after-tax net present value (NPV), with an 8% discount rate, was pegged at US$1.8 billion, with an internal rate of return (IRR) of 20.7%.

The payback period was 3.4 years from initial operations, and 5.4 years from initial construction. 

Vizcachitas hosts a measured and indicated resources of 11.2 billion pounds of copper, 400 million pounds of molybdenum and 43.3 million ounces of silver. Production is expected to kick off by 2025 to 2026.

Also in Wednesday’s statement, Nova announced it had entered into an amended and restated convertible loan agreement with Beedie Capital, which increase the facility to C$28.5 million.

The loan is subject to customary closing conditions, including the acceptance of the Toronto venture exchange, and is expected to close on or about February 12 this year.

Nova Royalty is focused on providing investors with exposure to the key building blocks of the clean energy revolution, namely copper and nickel.

Contact the author at [email protected]

Story by ProactiveInvestors


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