Beatons Creek Updated Mineral Resource Estimate
Suite 1100, 1199 West Hastings Street
Vancouver, BC, Canada V6E 3T5
P: +1-416-543-3120 E: [email protected] www.novoresources.com
November 2, 2022
BEATONS CREEK UPDATED MINERAL RESOURCE ESTIMATE
VANCOUVER, BC - Novo Resources Corp. (“Novo” or the “Company”) (TSX: NVO , NVO.WT & NVO.WT.A)
(OTCQX: NSRPF) announces an updated Mineral Resource estimate (the “2022 MRE”) for the Beatons Creek
gold project (“Beatons Creek”) located in the Nullagine region of Western Australia. The 20 22 MRE
incorporates extensive reverse circulation (“RC”) drilling completed between January 2020 and May 2022. The
effective date of the 2022 MRE is June 30, 2022. A Technical Report (as defined in National Instrument 43-101
Standards of Disclosure for Mineral Projects (“NI 43-101”)) in respect of the 2022 MRE will be filed under the
Company’s SEDAR profile upon its completion.
KEY POINTS
• The 2022 MRE for Beatons Creek reports an Indicated Mineral Resource of 3.05 million tonnes at
2.4 g/t Au for 234,000 oz Au, and an Inferred Mineral Resource of 0.83 million tonnes at 1.6 g/t Au for
42,000 oz Au, reported above a 0.5 g/t Au cut-off within an optimized open pit shell, which complies
with the principles of Reasonable Prospects of Eventual Economic Extraction (“RPEEE”).
• The Grant’s Hill mining area (Figure 1) accounts for approximately 78% of Indicated Mineral Resources
in the 2022 MRE.
• The 2022 MRE (illustrated by mineralization area in Figure 2) reports decreases in both open pit tonnes
and ounces, driven by revised mineralization wireframes which are based on a recent close-spaced
(10 m by 10 m and 20 m by 20 m) RC drilling program, along with mining depletion, compared to the
2019 Mineral Resource estimate1 (the “2019 MRE”).
• Mineralization remains open to the north -west, with additional resource development drilling
underway.
• Additional resource development drilling completed since May 30, 2022 will form the basis of a further
Mineral Resource update, which Novo expects to release during H1 2023.
• In June 2022 , the Company announced a pause in production at Beatons Creek, along with the
commencement of works to prepare an updated Mineral Resource estimate2. Mining ceased in August
2022 and processing finished in September 2022.
• The Beatons Creek Feasibility Study has been deferred due to current uncertain economic and
regulatory conditions affecting the project , and Beatons Creek is being transitioned into care and
maintenance as a result.
Figure 1. Beatons Creek Grant’s Hill area.
1 Refer to the Company’s news release dated April 30, 2021 and the report titled “Preliminary Economic Assessment on the Beatons Creek Gold Project,
Western Australia” with an effective date of February 5, 2021 and an issue date of April 30, 2021 (the “PEA”). Mineral Resources that are not Mineral
Reserves do not have demonstrated economic viability.
2 Refer to the Company’s news release dated June 14, 2022.
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In this news release, the terms ‘Mineral Resource’, ‘Indicated Mineral Resource’, ‘Inferred Mineral Resource’
and ‘ Feasibility Study’ have the meanings given in the 2014 Canadian Institute of Mining, Metallurgy and
Petroleum CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by CIM Council (the
“2014 CIM Definition Standards”).
2022 MINERAL RESOURCE ESTIMATE
The 2022 MRE for Beatons Creek (with an effective date of June 30, 2022 and which supersedes the PEA) has
delivered an Indicated Mineral Resource of 3.05 million tonnes at 2.4 g/t Au for 234,000 oz Au , and an
additional Inferred Mineral Resource of 0.83 million tonnes at 1.6 g/t Au for 42,000 oz Au as follows (Tables
1-3; Figures 2 and 3):
Table 1. Total Mineral Resources: optimized open pit oxide and fresh.
Cut-off Grade Tonnes Grade Troy Ounces Au
Classification (g/t Au) (t) (g/t Au)
Indicated 0.5 3,050,000 2.4 234,000
Inferred 0.5 830,000 1.6 42,000
Table 2. Optimized open pit oxide Mineral Resources.
Cut-off Grade Tonnes Grade Troy Ounces Au
Classification (g/t Au) (t) (g/t Au)
Indicated 0.5 815,000 1.3 33,000
Inferred 0.5 445,000 1.3 18,000
Table 3. Optimized open pit fresh Mineral Resources.
Cut-off Grade Tonnes Grade Troy Ounces Au
Classification (g/t Au) (t) (g/t Au)
Indicated 0.5 2,240,000 2.8 201,000
Inferred 0.5 385,000 1.9 24,000
Notes:
1. Open pit Mineral Resources contain oxide and fresh mineralization within a Whittle optimized shell and constrained within a mineralized
wireframe. A cut-off grade of 0.5 g/t Au was applied.
2. The pit shell was generated with the following parameters:
(a) A$2,600 / troy ounce (US$1,690 / troy ounce) of gold;
(b) Nominal process rate of 1.6 Mtpa for fresh mineralization with a recovery of 91%; and process rate of 1.8 Mtpa for oxide
mineralization with a recovery of 93%;
(c) Bulk densities applied: oxide mineralization 2.50 t/m3 (oxide waste 2.50 t/m3) and fresh mineralization 2.80 t/m3 (fresh waste
2.75 t/m3);
(d) A$5.15 / tonne (US$3.35 / tonne) mining cost for oxide and A$5.45 / tonne (US$3.54 / tonne) for fresh;
(e) A$37.47 / tonne (US$24.36 / tonne) oxide and A$38.37 / tonne (US$24.94 / tonne) fresh processing cost (incl. G&A);
(f) 25% dilution and 5% mineralization loss;
(g) Royalties 5.25%;
(h) Discount factor of 6%; and
(i) A$ to US$ foreign exchange rate of 0.65:1.
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Figure 2. Beatons Creek 2022 MRE plan showing extents of mineralization and mined areas to June 2022.
Figure 3. Cross-section through the Grant’s Hill pit (pink = 2022 RPEEE shell; blue = 2019 RPEEE shell). Inset shows the Grant’s Hill
2022 RPEEE shell and location of the cross-section.
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2022 RESOURCE MODELLING
The spatial extent of the 2022 MRE covers a surface area of over 2 .5 km by 2.5 km (Figure 2). Mineralization
exists as multiple sub -horizontal, narrow stacked conglomeritic horizons (referred to as “mineralized
conglomerate”), which are interbedded with un-mineralized conglomerate, sandstones, and grits with minor
intercalations of shale, mudstone, siltstone, and tuffs (Figure 3). The mineralized conglomerates vary from less
than 1 m to several metres thick , and are continuous for up to 2 km. Wireframed mineralized domains
differentiate between regionally continuous marine lags and localized stacked -channel conglomerates. A
weathering profile has further split the estimate into oxide and fresh components.
Grade interpolation was performed using a three -pass Ordinary Kriging (“ OK”) estimation me thod utilizing
Dynamic Anisotropy providing variable dip and dip -direction ellipsoids within modelled conglomerate
domains. All samples were composited to 1 m for estimation. Composites were analysed and top-cut (capped)
per domain using statistical and graphical methods. OK was informed by variograms per domain, although
some domains had too few samples to define an acceptable variogram. In such cases, the most appropriate
domain variogram was applied based on geological similarity. Variograms contained nugget effects ranging
from 35% to 68%. Three estimation block sizes were applied: 10 m by 10 m by 1 m; 20 m by 20 m by 1 m; and
40 m by 40 m by 1 m for relatively densely spaced data versus sparsely spaced data, respectively. All parent
blocks were sub-blocked to 2.5 m by 2.5 m by 0.25 m. The block sizes and number of samples applied in search
passes were chosen based on quantitative kriging neighbourhood analysis. Estimation was undertaken in three
passes, with passes one and two being no more than the range defined by the variogram. Search pass three
used up to three times the geostatistical range. The estimate was validated by visua l comparison of samples
and estimation block grade by domain, by moving window plots, and via global grade comparisons. Indicated
Mineral Resources were classified based on passes one and two, and Inferred Mineral Resources classified
based on pass three. As well as search passes, Mineral Resources were classified on the basis of geological
continuity, drill spacing, sample data quality , the mix of different sample types , estimation quality (Kriging
Efficiency and slope) and the quantity of bulk density data.
The 2022 MRE was reported within a Whittle optimized pit shell to satisfy the requirement for RPEEE criteria
described in the 2014 CIM Definition Standards. The RPEEE test is important to demonstrate the robustness
of a Mineral Resource estimate. As disclosed above, the input parameters for the Whittle optimization are:
• A$2,600 / troy ounce (US$1,690 / troy ounce) of gold;
• Nominal process rate of 1.6 Mtpa for fresh mineralization with a recovery of 91%; and process rate of
1.8 Mtpa for oxide mineralization with a recovery of 93%;
• Bulk density applied: oxide mineralization 2.50 t/m3 (oxide waste 2.50 t/m3) and fresh mineralization 2.80
t/m3 (fresh waste 2.75 t/m3);
• A$5.15 / tonne (US$3.35 / tonne) mining cost for oxide and A$5.45 / tonne (US$3.54 / tonne) for fresh;
• A$37.47 / tonne (US$24.36 / tonne) oxide and A$38.37 / tonne (US$24.94 / tonne) fresh processing cost
(incl. G&A);
• 25% dilution and 5% mineralization loss;
• Royalties of 5.25%;
• Discount factor of 6%; and
• A$ to US$ foreign exchange rate of 0.65:1.
Mining costs are based on a conventional open pit truck /excavator mining fleet and actual contract rates
scaled to planned future production, taking cognizance of the backfill requirement to cover any exposed fresh
material to meet expected environmental obligations imposed as part of the approvals process . Min ing
dilution and loss factors are derived based on the style of mineralization and mining methods. Processing and
G&A costs are based on real process ing costs at the Company’s Golden Eagle plant (“Golden Eagle Plant ”)
averaged over a 12 -month historical period. The oxide and fresh mineralization metallurgical recoveries are
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based on actual Golden Eagle Plant performance, and plant trials and test work, respectively. Royalties payable
include, but are not limited to, the Western Australia State gross gold royalty of 2.5% and gross Native Title
royalties totalling 2.75%.
A diamond core drilling programme was undertaken during May 2022, which resulted in nine metallurgical
holes (743 m). The metallurgical holes provided 21 fresh mineralized conglomerate intersections (M0, M1, M2
and M3 across Grant’s Hill and Edwards areas) , which were also PhotonAssayed for gold. Recovery and
comminution testwork on variability and composite samples provided similar results to the 2019 programme,
indicating that the fresh mineralization is amenable to gravity and cyanide leach recovery.
SUMMARY COMPARISON BETWEEN THE 2019 MRE AND 2022 MRE
In addition to mining depletion, the 2022 MRE incorporates updates to input assumptions which collectively
result in an estimate that the Company believes is more robust overall and which aligns more closely with
mining of the oxide Mineral Resource to date. The understanding of Beatons Creek mineralization controls has
been an iterative process over the past two years and has been informed by an expanded geological mapping
and drillhole dataset. Table 4 provides a global comparison between the 2019 and 2022 MREs.
Table 4. Global comparison between the 2019 and 2022 MREs.
Mineral
Resource
Classification
2019 MRE 2022 MRE
Tonnes
(t)
Grade
(g/t Au)
Troy ounces
(oz Au)
Tonnes
(t)
Grade
(g/t Au)
Troy ounces
(oz Au)
Indicated (OP) 6,645,000 2.1 457,000 3,050,000 2.4 234,000
Inferred (OP) 3,410,000 2.7 294,000 830,000 1.6 42,000
Inferred (UG) 885,000 5.3 152,000 - - -
Notes:
1. Open pit (“OP”) MRE reported at a 0.5 g/t Au cut-off grade.
2. The 2019 and 2022 OP MREs reported in different RPEEE pit shells.
3. Underground (“UG”) MRE reported at a 3.5 g/t Au cut-off grade.
Figure 4 provides a waterfall graph showing changes in contained gold ounces at Beatons Creek between the
2019 and 2022 MREs. The “Mining Depletion” portion is the quantity of ounces depleted from the 2019 MRE
using the June 2022 mined surface . The actual mined and processed mineralization from Beatons Creek was
2.51 Mt at 1.17 g/t Au for 94,248 oz Au contained3. The “Mining Depleted” ounces comprise the actual mined
and processed (as above); changes to the model due to the removal of the channel samples; mining loss; and
metallurgical recovery loss. The “Model” ounces in Figure 4 relate in aggregate to the ounces no longer
reporting to the model due to the matters listed elsewhere in this news release.
3 This figure differs from previously announced results because it excludes material processed from historical stockpiles which were available for
processing subsequent to the Company’s acquisition of Millennium. Refer to the Company’s news releases dated August 4, 2020 and September 8, 2020.
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Figure 4. Waterfall graph showing the changes in contained gold ounces at Beatons Creek from 2019 MRE to the 2022 MRE.
The 2022 MRE includes decreases in open pit tonnes and contained ounces. The update also sees the removal
of the underground Mineral Resource. These changes in the open pit Mineral Resource are driven by the
following:
• Significant addition of 3,238 new close-spaced RC drillholes, providing an additional 22,116 samples used
for estimation;
• Optimized “coarse gold” sampling protocol using PhotonAssay;
• Removal of 1,128 trench channel (costean) samples from the estimate;
• Inclusion of previously excluded RC data, adding 595 samples (only inform ing the Inferred Mineral
Resource area);
• Revised geological interpretation, featuring more constrained mineralized conglomerate wireframes with
local changes in width and position, based on drilling and experience from mining;
• Some changes in the location and orientation of faults that cut/bound the mineralized conglomerates,
together with additional faults identified by pit mapping;
• Different block model sizes, with smaller blocks (e.g. 10 m by 10 m by 1 m) informed by grade control
drilling (e.g. 10 m by 10 m);
• Updated variography based on the data set applied within new wireframes;
• Revised bulk density values based on additional data from the 2022 fresh diamond drilling programme;
• Updated oxide-fresh weathering surface based on drilling and pit mapping;
• Different pit shell based on new optimization parameters; and
• Depleted model based on mining activity to date.
The underground Inferred Mineral Resource included in the 2019 MRE (at Grant’s Hill, Grant’s Hill South, and
South Hill) has been removed in the 2022 MRE. The reasons for this include:
• Addition of close-spaced RC drillholes, resulting in a lower grade estimate;
• Removal of trench channel (costean) samples, resulting in a lower grade estimate;
• Inclusion of previously excluded RC samples, which provides more data at lower grades;
• Different geological interpretation, resulting in more constrained mineralized conglomerate wireframes
with local changes in width and position based upon drilling;
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• Some changes in the locations and orientations of faults that cut/bound the mineralized conglomerates,
together with additional faults identi fied by pit mapping , resulting in some higher -grade holes being
excluded by changes in fault block interpretations;
• A change in estimation strategy, where the search is now restricted to an individual domain and where
previously it searched across fault boundaries into the same domain due to limited data; and
• Some mineralization previously reported in the underground Mineral R esource now sit s within the
optimized pit shell.
Figure 5 shows the superposition of the 2019 MRE and 2022 MRE RPEEE pit outlines, together with the 2022
MRE data spacing. The 2021-2022 mined portion is also shown.
Figure 5. The 2019 MRE and 2022 MRE RPEEE pit outlines, together with the 2022 MRE data spacing. The 2021-2022 mined portion is
also shown.
The 2022 MRE was estimated from 26,041 samples (17,650 composites), comprising 54 bulk samples (57
composites); 580 diamond core samples from 60 holes (354 composites); 25,350 RC samples from 3,877 holes
(17,186 composites) and 57 trench ‘channel’ samples (53 composites). The pre -2020 assays used for the
estimate were determined using the LeachWELL (cyanide leaching) technique (13%). Some samples were fire
assay or screen fire assay (1% each respectively). Assays from 2020 onwards, and solely informing the
Indicated Mineral Resource, are based on the PhotonAssay technique (85% of total assays used) using either
a 2.5 kg (65% of PhotonAssays) or 5 kg (35% of PhotonAssays) assay charge, split into multiple individual 500 g
samples and averaged.
In comparison, the 2019 MRE was estimated from 3,909 samples (3,767 composites), comprising 302 diamond
core samples from 42 holes (229 composites); 2,422 RC samples from 481 holes (2,422 composites) and 1,185
costean ‘channel’ samples (1,116 composites). The assays used for the estimate were determined using the
LeachWELL technique (88%), with other samples by fire assay or screen fire assay (7 % and 5% each
respectively).
The Qualified Persons (as defined in NI 43-101) have applied the principles of RPEEE.
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Geostatistical analysis was undertaken using Snowden Supervisor [v8. 14.3.3] software and estimation was
undertaken in Datamine Studio RM P RO [v1.11.300] software. Pit optimi zation shells were generated using
Geovia Whittle [v4.5.1].
Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability; it is uncertain
if applying economic modifying factors will convert Indicated Mineral Resources to Mineral Reserves. The
estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation,
socio-political, marketing, or other relevant issues ; however, no issues are known at this time. The quantity
and grade of reported Inferred Mineral Resources in this estimation are uncertain in nature and there has
been insufficient exploration to define these Inferred Mineral Resources as an Indicated or Measured Mineral
Resources. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to
Indicated Mineral Resources with continued exploration. The Mineral Resources in this News Release were
estimated using current Canadian Institute of Mining, Metallurgy and Petroleum standards, definitions, and
guidelines.
FEASIBILITY STUDY UPDATE
As a result of numerous regulatory and economic factors including, but not limited to, the status of the
Company’s Beatons Creek Fresh project mining approvals submission4, the current inflated cost environment
in the mining industry, a tight Western Aust ralian labour market, and COVID -19 related supply challenges,
Novo has decided to defer completion of its Feasibility Study2 while it continues to review additional data from
Beatons Creek and optimize the project. Importantly, the Company intends to incorporate assay results from
RC drilling which occurred after May 2022 into an additional Mineral Resource update, expected in H1 2023.
The Company is awaiting an update from the Western Australian Office of the Appeals Convenor regarding a
reply to the appeal received in response to the Western Australian Environmental Protection Authority’s
(“EPA”) decision to not assess the Com pany’s proposed Phase Two Beatons Creek Fresh operations
submission5 (the “Submission”). The Company advises that the Appeals Convenor process may be protracted
which may ultimately cause final approval of the Submission to be delayed.
As a result of the above factors, the Company is transitioning Beatons Creek into care and maintenance until
it has more certainty around the timing of approval of the Submission and completion of the Feasibility Study.
QUALIFIED PERSONS DISCLOSURE
Ms. Janice Graham , MAIG, has undertaken the 2022 MRE for Beatons Cree k; she is independent of the
Company for the purposes of NI 43-101. Ms. Graham is a Qualified Person as defined by NI 43-101.
Dr. Simon Dominy, FAusIMM(CP) FAIG(RPGeo) FGS(CGeol), has overseen the 2022 MRE for Beatons Creek; he
is not independent of the Company for the purposes of NI 43-101. Dr. Dominy is a Qualified Person as defined
by NI 43-101.
Mr. Jeremy Ison , FAusIMM, has contributed to the 2022 MRE for Beatons Creek ; he is independent of the
Company for the purposes of NI 43-101. Mr. Ison is a Qualified Person as defined by NI 43-101.
Mr. Royce McAuslane, FAusIMM, has contributed to the 2022 MRE for Beatons Creek; he is independent of
the Company for the purposes of NI 43-101. Mr. McAuslane is a Qualified Person as defined by NI 43-101.
4 Refer to the Company’s news release dated October 11, 2022.
5 Refer to the Company’s news release dated August 8, 2022.