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Novo Resources Corp
Symbol NVO
Shares Issued 213,136,245
Close 2020-09-24 C$ 3.43
Market Cap C$ 731,057,320
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Novo exercises option for 50% interest in Malmsbury

2020-09-24 10:06 ET - News Release

Mr. Quinton Hennigh reports

NOVO EXERCISES OPTION OVER GBM RESOURCES MALMSBURY GOLD PROJECT

Novo Resources Corp. has exercised its option to earn a 50-per-cent interest in the Malmsbury gold project held by Australian Securities Exchange-listed GBM Resources Ltd. Transfer of the interest to Novo is subject to approval from the Victorian Department of Jobs, Precincts and Regions and the Australian Foreign Investment Review Board. Please see the company's news releases dated March 30, 2020, and April 6, 2020, for further details.

"We are pleased to exercise our option over the Malmsbury project," commented Quinton Hennigh, chairman and president of Novo. "Although early stage, Malmsbury hosts one of the closest geologic analogues to the high-grade Fosterville gold deposit situated approximately 50 km to the north. Like Fosterville, Malmsbury is situated along the eastern margin of the prolific Bendigo zone. Mineralization is of classic epizonal orogenic-style displaying high-level vuggy quartz veins, elevated antimony and finely disseminated high-grade gold. Novo believes that it now holds one of the most prospective high-grade gold projects in the Victorian goldfields."

Upon satisfaction of the conditions, Novo will issue 1,575,387 common shares to GBM as consideration for the exercise of the option. The option shares will be subject to a statutory hold period expiring four months from the date of issuance of the option shares. The company will also reimburse GBM for validly incurred and documented exploration expenditures on the Malmsbury project of up to $250,000 (Australian) incurred from March 30, 2020, to today, with such reimbursed amount being credited against the earn-in amount.

Upon satisfaction of the conditions, Novo will have the right to earn an additional 10-per-cent interest in the Malmsbury project and form a joint venture with GBM by incurring $5-million (Australian) in exploration expenditure over a four-year period, as to a minimum of $1-million (Australian) during the first year and $1.25-million (Australian) in each subsequent year of the earn-in period. Any expenditure incurred during any year of the earn-in period which surpasses the minimum required amount will be credited against the subsequent year's commitment. If Novo does not satisfy the earn-in amount during the earn-in period, Novo's interest in the Malmsbury project will decrease to 49 per cent.

If Novo satisfies the earn-in amount during the earn-in period and delivers to GBM written notice of its election to increase its interest in the Malmsbury project to an aggregate 60-per-cent interest and initiate a joint venture with GBM, GBM will be required to elect to (i) retain its 40-per-cent interest in the Malmsbury project by contributing to 40 per cent of exploration and development expenditure incurred subsequent to the joint venture date, or (ii) dilute its interest in the Malmsbury project to 25 per cent upon delivery by Novo of a preliminary economic assessment (PEA) disclosing at least a one-million-ounce gold resource, of which at least 60 per cent must be in the indicated classification, within three years from the joint venture date. In such case, Novo will pay all development expenditure incurred commencing from the joint venture date, but if a decision to mine is made, GBM will reimburse Novo as to 25 per cent of any such development expenditure from a maximum of 80 per cent of Malmsbury project cash flows.

Novo and GBM are currently finalizing a royalty arrangement whereby, subsequent to a decision to mine, GBM will be entitled to receive a maximum 2.5-per-cent net smelter returns royalty. The Malmsbury project is encumbered by certain pre-existing royalties, where such an encumbrance is present, GBM will only be entitled to an adjusted royalty, being the maximum royalty less any pre-existing royalty amount.

About Novo Resources Corp.

Novo is advancing its flagship Beatons Creek gold project to production while exploring and developing its highly prospective land package covering approximately 14,000 square kilometres in the Pilbara region of Western Australia. In addition to the company's primary focus, Novo seeks to leverage its internal geological expertise to deliver value-accretive opportunities to its shareholders.

We seek Safe Harbor.

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