Novo Acquires Stake in ASX-Listed GBM Resources Limited and...

Novo Acquires Stake in ASX-Listed GBM Resources Limited and Option Over Malmsbury Gold ProjectVANCOUVER, British Columbia, March 30, 2020 (GLOBE NEWSWIRE) -- Novo Resources Corp. (“Novo” or the “Company”) (TSX-V: NVO; OTCQX: NSRPF) is pleased to announce that it has subscribed for 9,090,909 units (each a “GBM Unit”) of ASX-listed GBM Resources Limited (ASX: GBZ) (“GBM”) and has been granted an option and an additional earn-in right to acquire up to an aggregate 60% interest in GBM’s Malmsbury gold project (the “Malmsbury Project”) located in the Bendigo zone of Australia’s Victorian goldfields (collectively, the “Transaction”), with the possibility of the interest being increased to 75% interest, as described below.

The Transaction is subject to approval of the TSX Venture Exchange and other customary regulatory approvals for transactions of this nature.The GBM Units will be paid for by the issuance of 197,907 common shares of Novo which will be subject to a statutory hold period expiring four months from the date of issuance. Each GBM Unit will be comprised of one ordinary share of GBM and one-half-of-one ordinary share purchase warrant (each a “GBM Warrant”).

ach whole GBM Warrant will be exercisable to purchase one ordinary share of GBM at AUD $0.11 for a period of 36 months from the date of issuance. Immediately subsequent to the issuance of the GBM Units, Novo will own approximately 4.13% of the issued and outstanding ordinary shares of GBM.Novo will have a six-month period (the “Initial Period”) to confirm social license to explore the Malmsbury Project and conduct other due diligence while awaiting the grant of the Malmsbury Project Retention Licence RL6587 to GBM.

At any time during the Initial Period, Novo will have the right to exercise its option (the “Option”) to earn a 50% interest in the Malmsbury Project by issuing 1,575,387 common shares to GBM, which will be subject to a statutory hold period of four months from the date of issuance, and reimbursing GBM for validly incurred and documented exploration expenditures on the Malmsbury Project during the Initial Period of up to AUD $250,000, with such reimbursed amount being credited against the Earn-In Amount (defined below).If Novo exercises the Option, it will have the right to earn an additional 10% interest in the Malmsbury Project and form a joint venture with GBM by incurring AUD $5 million in exploration expenditure (the “Earn-In Amount”) over a four-year period (the “Earn-In Period”), as to a minimum of AUD $1 million during the first year, and AUD $1.25 million 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%.However, following satisfaction by Novo of the Earn-In Amount during the Earn-In Period, and delivery to GBM of written notice of its election to increase its interest in the Malmsbury Project to an aggregate 60% interest and initiate a joint venture with GBM (the “Joint Venture Date”), GBM will be required to elect to (i) retain its 40% interest in the Malmsbury Project by contributing to 40% of exploration and development expenditure incurred subsequent to the Joint Venture Date, or (ii) dilute its interest in the Malmsbury Project to 25% upon delivery by Novo of a preliminary economic assessment (the “PEA”) disclosing at least a 1 million ounce gold resource, of which at least 60% must be in the Indicated classification, within 3 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% of any such development expenditure from a maximum of 80% of Malmsbury Project cash flows.Novo and GBM will negotiate a royalty arrangement whereby, subsequent to a decision to mine, GBM will be entitled to receive a maximum 2.5% net smelter returns royalty (the “Maximum 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.