- Royalty company focused on clean energy metals
- Invests in high-quality assets with long life
- High-quality base metal mines have track record of resource growth and extended mine life
What Nova Royalty does:
Nova Royalty Corp (CVE:NOVR) aims to build a leading royalty company focused on copper and nickel - commodities, which it says, are key to global society's transition to clean energy from fossil fuels.
Copper is used in wind and solar energy and in electric vehicles (EVs). According to reports, the building of a low-carbon energy system capable of supplying the world’s electricity needs in 2050 will require an additional amount of copper equivalent to between two and ten years of current global output.
In super-alloys, nickel is used in turbines, vital for power generation, aerospace and military applications. Nickel is also a vital component for electric car batteries. Annual nickel demand from electric vehicles is expected to grow by a multiple of 20 by 2030.
Vancouver-based Nova Royalty was founded in 2018 and now has a portfolio of royalties on some of the world’s leading copper and nickel development projects, which are being advanced by major miners, including Teck (NYSE:TECK), Newmont (NYSE:NEM), First Quantum Minerals (TSE:FM) and Rio Tinto (LON:RIO).
Its business model is typical of a royalty company. It acquires, mostly from third parties rather than the miners themselves, royalties on producing or exploration assets. This gives the firm exposure to copper/nickel price and optionality on production, while it is protected from direct operating, carrying, exploration or development costs.
The company currently has a portfolio of 19 royalties, five of which are on development assets, including a 2% net smelter royalty (NSR) on NuevaUnión, a Teck/Newmont Joint Venture, one of the world’s largest undeveloped copper projects, which it purchased in February, 2020.
How is it doing:
Nova Royalty has had a busy time so far in 2021.
Significantly, in June, the company announced that it had acquired a 1% net proceeds royalty on the West Wall copper-gold-moly project in a US$4.2 million deal. The Chile-based project is a joint venture between mining titans Anglo American plc (LON:AAL) and Glencore plc (LON:GLEN).
The royalty covers the Lagunillas and West Wall Norte zones, which comprise the existing resource put out by Anglo American in 2020, showing an indicated resource of 861 million tons at 0.51% copper, 0.05 grams per ton (g/t) gold, and 0.01% molybdenum.
In February, 2021, the royalty firm announced that it was set to acquire an existing royalty on Los Andes Copper Ltd's (CVE:LA) Vizcachitas project in Chile, which it described as "one of the premier copper development projects in the Americas".
The net smelter return royalty (NSR) is 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.
The company also has a 0.42% net smelter royalty (NSR) on Taca Taca, one of the world’s largest copper development projects, owned by First Quantum Minerals. First Quantum has reported a maiden proven and probable reserve at Taca Taca of 7.7 million tonnes of copper metal. It has also updated the higher confidence measured and indicated (M&I) resource on the asset to 9.45 million tonnes of copper, an initial mine life of 32 years, and a timetable to consider a production decision in 2023 to 2024.
First Quantum filed an amended and restated NI 43-101 technical report for Taca Taca on March 29, which showed an after-tax cash flow model highlighting a post-tax Net Present Value (NPV) of US$2.4 billion and an internal rate of return (IRR) of 15.3%.
Last year, Nova announced the completion of the previously announced royalty acquisition from a subsidiary of Boart Longyear Limited (ASX:BLY) - an existing 2.4% net smelter return royalty on a portion of the Twin Metals copper-nickel-platinum group metals project located in Minnesota being advanced by copper giant Antofagasta PLC (LON:ANTO).
Nova Royalty began trading on the TSX Venture Exchange on October 1, 2020, having secured a C$15 million financing facility from major Canadian institutional investor Beedie Capital. In February 2021, Nova announced that it had entered into an amended and restated convertible loan agreement with Beedie, which increased the facility to C$28.5 million to fund further royalty acquisitions.
Also on the financing front, updating on its At-the-Market Equity program, Nova said it had sold nearly 1.6 million shares at an average price of C$3.60 for C$5.73 million gross, which meant it will be able to fully fund the acquisition.
And in February 2021, the group said it had brought in $5,587,686 gross proceeds following an earlier announced warrant acceleration exercise.
- More royalty deals/ acquisitions
- Nickel and copper price moves
- Royalty partner developments
What the boss says:
Updating on its assets in May this year, Nova Royalty CEO Alex Tsukernik said in a statement: "2020 was a transformational year for Nova. The company now owns royalties on several of the largest and most advanced copper and nickel deposits that will be critical in achieving global net-zero emission targets by 2050.
"With a rapidly diversifying portfolio, Nova has emerged as a natural partner for owners of royalties on the world’s most significant copper and nickel deposits. As we continue our growth, we look forward to providing an investment option for any investor looking to participate in the global energy transition.”
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