Nullagine GOLD Project Operations Update Key Points
Suite 880, 580 Hornby Street
Vancouver, BC, Canada V6C 3B6
P: +1-416-543-3120 E: [email protected] www.novoresources.com
June 14, 2022
NULLAGINE GOLD PROJECT OPERATIONS UPDATE
KEY POINTS
• Production to pause at the Beatons Creek gold project (“Beatons Creek”) and the Golden Eagle
processing facility (“Golden Eagle Plant ”), with mining of the Oxide mineral resource at Beatons
Creek ending in Q3 20221 followed by a phased wind-down of operational activities finishing by the
end of October 2022
• Novo is committed to supporting and honouring commitments to staff and contractors during this
transition period
• H1 2022 production still expected to achieve guidance of 25 – 27 koz Au2
• Q3 2022 production forecast of 9 – 1 1 koz Au, with drawdown of inventory expected to add an
additional 1 koz Au in Q4 2022
• Beatons Creek Fresh mineral resource feasibility study (the “Feasibility Study”), including mineral
resource extension drilling, is underway, with targeted completion in mid-Q4 20223
• Novo expects to transition to Phase Two mining of the Beatons Creek Fresh mineral resource upon
receipt of requisite approvals from relevant Western Australian regulators and a final investment
decision (“FID”) post receipt of results of the Feasibility Study
• Novo made an initial submission to the Western Australian Environmental Protection Authority
(“EPA”) in March 2022 and is awaiting a response on the required approval pathway
• Phase Two Fresh mining is expected to deliver higher grades and lower unit costs, with production
expected to commence in approximately 12-18 months, assuming successful completion of the
Feasibility Study and receipt of all required approvals
• Current cash balance of approximately C$ 77.5 million, which will support on -going explo ration
programs and completion of resource and extension drilling at the Beatons Creek Fresh mineral
resource during the operational pause
• A fund managed by Sprott Resource Lending Corp. (“Sprott”), Novo’s senior secured lender,
supports Novo’s operational plans and has waived any event of default in anticipation of full
repayment of the US$40 million (approximately C$51.4 million) senior secured credit facility (the
“Credit Facility”) by August 2022 , upon completion of the Company’s sale of its shares in New
Found Gold Corp. (“New Found”)4
VANCOUVER, BC – Novo Resources Corp. (“Novo” or the “Company” ) (TSX: NVO, NVO.WT & NVO.WT.A)
(OTCQX: NSRPF) provides an operations update for Beatons Creek.
In December 20211, Novo released a three-phase mine plan for Beatons Creek which comprised of:
• Mining of the Beatons Creek Oxide mineral r esource through Q2 2022, with the expectation that
low-grade stockpiles would be processed through Q3 2022
• Thereafter, transition to mining of the higher-grade free -milling Beatons Creek Fresh mineral
resource, subject to approvals, expected to provide production through 2026
1 Refer to the Company’s news release dated December 13, 2021.
2 Refer to the Company’s news release dated May 24, 2022.
3 Refer to the Company’s news release dated April 7, 2022.
4 Refer to the Company’s news releases dated April 12, 2022 and April 27, 2022.
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• Mining of the Golden Eagle deposit (“ Golden Eagle ”) commenc ing and continuing through the
transition from Beatons Creek Oxide to Fresh material, depending on timing of Beatons Creek Fresh
mining approvals
Despite optimi zation activities for the Oxide mineral resource, mined grade continues to deliver marginal
cashflow and grade control drilling has defined the extent of economic Oxide material which could be mined.
Novo believes that economic mining and processing of the Oxide mineral resource can be extended for an
additional quarter from the three-phase mine plan outlined in December 20211 and will now continue to the
end of Q3 2022 . However, the transition to Golden Eagle and the Fresh mineral resource cannot occur
immediately as previously anticipated. As such, following completion of Oxide mining, the Company will pause
production operations at Beatons Creek and the Golden Eagle Plant, with a controlled and phased wind-down
of operational activities.
The Company expects production to recommence in approximately 12-18 months , following receipt of
required approvals for the Fresh mineral resource and completion of a FID post receipt of the results from the
Feasibility Study. Importantly, Novo has developed a detailed development and exploration plan during this
period, which includes further definition and extension drilling of the Fresh mineral resource and resource
definition drilling of near-mine targets, with a primary focus on the Mosquito Creek Oxide and Sulphide targets
to extend the greater Nullagine gold project (“Nullagine”) beyond Beatons Creek.
Commenting on the production update and path ahead at Nullagine, Executive Co -Chairman, acting Chief
Executive Officer, and director Mike Spreadborough said, “Confirmation of grade of the Oxide mineral resource
has been a challenge. The team at Beatons Creek has done an excellent job in optimizing the mine plan and I,
along with the Novo b oard of directors, commend them on their attention and focus. We now turn our
attention to Phase Two mining of the Fresh mineral resource, where we expect operations to be supported by
higher grades and lower mining costs. We will complete the Feasibility Study to validate the mining approach
and economics prior to commencement of mining and in parallel we are seeking requisite environmental
approvals.”
“Unfortunately, we expect a 12 –18-month gap in production as we seek formal approval to mine the Fresh
mineral resource. While this pause is far from ideal, we will continue to focus on Novo’s core strategic
exploration programs across the Company’s 11,000 square kilometres of premium Pilbara tenure.”
“We will also focus on the efficient execution of the extensive work program we have developed over this
period, with key activities planned across the Fresh mineral resource that will both optimize the economics and
reduce future development and operational risks. This includes a 12-month drill out of the known Fresh mineral
resource, exploration for extension opportunities, and completion of the Feasibility Study, which we expect to
complete mid-Q4 2022. Further resource definition drilling of the Mosquito Creek Oxide and Sulphide targets,
which comprises several exciting targets and provides excellent upside to extending production from Nullagine
beyond Beatons Creek, is also planned.”
“I would like to take this time to thank all the staff and contractors at Beatons Creek for their hard work and
determination. We will honour our commitments to staff and contractors during the pause in operations and
continue to support the local community and our Traditional Owner partners.”
“Importantly, Novo remains in a strong financial position and we believe the plan in place provides the best
platform for the Nullagine operations to become a consistent 100 koz/year gold operation and for Novo to
deliver on its longer -term strategy of becoming a 250 koz/year gold produce r through existing operations,
exploration and other opportunities.”
PHASE TWO – FRESH OPERATIONS AT BEATONS CREEK
The Fresh mineral resource accounts for 65% of the total Beatons Creek mineral resource estimate1. Phase
Two of operations, which is forecast to start in the next 12-18 months and is subject to approvals, is expected
to be supported by higher grades and lower unit costs.
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Delivery of Phase Two production will be underpinned by completion of key workstreams over the next 12
months, which include the following:
• Feasibility Study, which is underway and scheduled for completion in mid-Q4 2022:
o Expectation to report mineral reserve based on updated mineral resource
o Study focused on optimizing life of mine costs for haulage, power, water and tailings storage
o Metallurgical and geotechnical diamond drilling programs have recently been completed
o Other key studies underway and progressing as planned
• Completion of Phase One of a reverse circulation (“ RC”) drilling program to deliver an upgraded
mineral resource:
o Results to be used in a mineral resource update, which will form the basis of the Feasibility
Study
• Resource definition and extension drilling programs for the Fresh mineral resource . Programs have
commenced and will continue for the remainder of CY 2022 and into H1 2023
o Program to be completed in stages, targeting higher priority areas in the first instance and
progressing to lower priority targets
o Significant assay results to date provide Novo with an excellent platform to plan future
stages of drilling
o Focused on growing inferred mineral resource, informing further studies and life -of-mine
planning
Delivery of Phase Two will play a critical role in executing the long-term vision at Nullagine, which should see
production of the Fresh mineral resource between 2023-2026, with extensional drilling focused on extending
production post 2026, along with exploration and development work at Mosquito Creek. Mining of the Fresh
mineral resource is subject to receipt of approvals and a FID post receipt of the results from the Feasibility
Study.
GOLDEN EAGLE
Novo has completed confirmatory resource drilling and metallurgical testing to evaluate the potential to
expand the historical Golden Eagle pit. Unfortunately, this work confirmed the geological complexity of Golden
Eagle mineralization and also confirmed historic studies that Golden Eagle material requires the Golden Eagle
Plant to be expanded to include a flotation circuit and associated components. The Company’s review has also
confirmed that a mining restart of the Golden Eagle pit requires approval from relevant Western Australian
government agencies. A decision has yet to be made whether the Company will progress further resource
drilling and technical studies.
LONG-TERM PRODUCTION POTENTIAL AT MOSQUITO CREEK
Novo has developed and is implementing a r efractory ( Sulphide) strategy at Mosquito Creek to target
production at Nullagine post-Phase Two mining of the Fresh mineral resource.
Historical work completed by Millennium Minerals Limited (prior to being acquired by Novo 5) successfully
identified extensive Sulphide mineralization at Mosquito Creek at several targets and importantly, the majority
of Sulphide mineralization is accessible by expansion of existing Mosquito Creek Oxide pits including Golden
Eagle and Golden Gate. Historical work also indicated good gold recovery using fine grinding and flotation,
which would require expansion of existing Golden Eagle Plant.
5 Refer to the Company’s news releases dated August 4, 2020 and September 8, 2020.
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Exploration programs have been developed to identify potential Oxide mill feed to the Golden Eagle Plant
from the Mosquito Creek basin, with follow-up RC drilling programs to commence in H1 2023 at Genie, Parnell-
Vulture and Daisy Central, where current drilling has intersected significant, high-grade results6.
NOVO FINANCIAL POSITION & GUIDANCE
Novo’s current cash balance is approximately C$77.5 million.
In addition to its existing cash reserves, the Company expects to complete the sale of its investment in New
Found in August 20224. The funds from this sale are expected to be used to repay the Credit Facility, leaving
Novo debt free. Although the operational pause constitutes an event of default under the Credit Facility, Sprott
has waived any consequence in anticipation of the Credit Facility repayment.
Novo expects to produce 9 – 11 koz Au in Q3 2022 prior to the operational pause at Beatons Creek and the
Golden Eagle Mill, with an additional 1 koz Au expected to be produced in Q4 2022 as part of inventory draw
down.
QP STATEMENT
Dr. Quinton Hennigh (P.Geo.) is the qualified person, as defined under National Instrument 43-101 Standards
of Disclosure for Mineral Projects , responsible for, and having reviewed and approved, the technical
information contained in this news release. Dr. Hennigh is the non -executive co-chairman and a director of
Novo.
CAUTIONARY STATEMENT
The decision by the Company to produce at the Beatons Creek Project was not based on a feasibility study of
mineral reserves demonstrating economic and technical viability and, as a result, there is an increased
uncertainty of achieving any particular level of recovery of minerals or the cost of such recovery, including
increased risks associated with developing a commercially mineable deposit. Production has not achieved
forecast to date. Historically, such projects have a much higher risk of economic and technical failure. There is
no guarantee that anticipated production costs will be achieved. Failure to achieve the anticipated production
costs would have a material adverse impact on the Company’s cash flow and future profitability.
The Company cautions that its declaration of commercial production effective October 1, 20217 only indicates
that Beatons Creek was operating at anticipated and sustainable levels and it does not indicate that economic
results will be realized.
ABOUT NOVO
Novo operates its flagship Beaton s Creek gold pro ject while exploring and developing its prospective land
package covering approximately 11,000 square kilometres in the Pilbara region of Western Australia. In
addition to the Company’s primary focus, Novo seeks to leverage its internal geological expertis e to deliver
value-accretive opportunities to its shareholders.
Shareholders and Canadian media are to contact Leo Karabelas at (416) 543 -3120 or e -mail
Australian media are to contact Cameron Gilenko (Citadel-MAGNUS) at 0466 984 953.
6 Refer to the Company’s news release dated January 28, 2022.
7 Refer to the Company’s news release dated October 12, 2021.
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On Behalf of the Board of Directors,
Novo Resources Corp.
“Michael Spreadborough”
Michael Spreadborough
Executive Co-Chairman and Acting CEO
Forward-looking information
Some statements in this news release contain forward -looking information (within the meaning of Canadian
securities legislation) including, without limitation, that Phase Two of operations of the Beatons Creek Fresh
mineral resource is expected to commence in 12-18 months, that the sale of the Company’s New Found shares
will complete in August 2022, that Novo is expected to repay the Credit Facility subsequent to the sale of the
New Found shares, that Novo expects to produce 9 – 11 koz Au in Q3 2022 and an additional 1 koz Au in Q4
2022, that approvals to mine the Beatons Creek Fresh mineral resource will be obtained, that the Feasibility
Study will be completed in mid-Q4 2022 and a FID will follow, and the expectation of production of the Fresh
mineral resource between 2023 -2026, with extensional drilling focused on extending production post 2026,
along with exploration and development work at Mosquito Creek. These statements address future events
and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by the statements. Such factors include, without
limitation, customary risks of the resource industry and the risk factors identified in Novo’s management’s
discussion and anal ysis for the three-month period ended March 31, 2022 , which is available under Novo’s
profile on SEDAR at www.sedar.com. Forward-looking statements speak only as of the date those statements
are made. Except as required by applicable law, Novo assumes no obligation to update or to publicly announce
the results of any change to any forward-looking statement contained or incorporated by reference herein to
reflect actual results, future events or developments, changes in assumptions or changes in other factor s
affecting the forward -looking statements. If Novo updates any forward- looking statement(s), no inference
should be drawn that the Company will make additional updates with respect to those or other forward -
looking statements.