JV Article: Nova Royalty offers a unique approach to investing in strategic mineral assets

Vancouver-headquartered Nova Royalty (TSXV: NOVR; US-OTC: NOVRF) is focused on securing royalties on the strategic mineral assets that enable the adoption of clean energy technologies underpinning the global energy transition.

Alex Tsukernik, Nova’s president and CEO, says that “from electric vehicles to solar and wind energy, every component of the world’s energy transition is driven by copper. Increased demand for copper, which is set to grow stronger as the world’s economies increasingly decarbonise, is positioning major copper projects as some of the world’s most important mineral deposits.”

“For Nova and its investors, the ability to acquire royalties on long-lived projects of such strategic importance with top-line exposure and no capital or operating cost commitments is a truly unique opportunity. And while copper is our primary focus, we are also eyeing potential royalties on strategic nickel assets that are critical to electric vehicle supply chains.”

Co-founded by Tsukernik in 2018, Nova has built a diversified portfolio of 21 assets in the Americas, including net smelter return (NSR) royalties on the producing Aranzazu mine in Mexico, seven development projects in Argentina, Canada, Chile, and the United States, and 13 exploration projects in Canada.

“We built the company with a focus on large-scale, high-quality tier-one assets,” said Tsukernik. “Our portfolio now includes deposits located in some of the world’s best mining jurisdictions and are being advanced by some of the industry’s leading tier-one operators who have established track records of building and successfully operating mines.”

In early February, Nova acquired a 0.135% NSR royalty on Hudbay Minerals’ (TSX: HBM; NYSE: HBM) Copper World and Rosemont copper projects in a cash and share deal worth about US$5.5 million. The royalty covers all metals mined from the projects, which are situated seven km apart in southern Arizona, about 60 km southeast of Tucson.

Tsukernik said that both projects lie within one of the largest and most strategic copper mining districts in the U.S. and “are expected to offer significant value for our shareholders, with the potential for generating decades-long cash flow streams.” 

An initial mineral resource estimate for Copper World in December estimated 272 million indicated tonnes grading 0.36% copper, 115 grams molybdenum per tonne, and 2.9 grams silver per tonne and inferred resources of 142 million tonnes grading 0.36% copper, 105 grams molybdenum, and 3.3 grams silver.

According to Tsukernik, the resource at Copper World lies on private land adjacent to the Rosemont project, providing Hudbay with “significant development flexibility.”

Shortly after listing on the TSX Venture Exchange in October 2020, Nova acquired a 0.42% NSR royalty on First Quantum Minerals’ (TSX: FM) wholly-owned Taca Taca copper-gold-molybdenum deposit in Argentina’s Salta province, about 230 km west of the city of Salta.

In March 2021, a feasibility study for the project indicated that it is amenable to conventional, large-scale, bulk-tonnage open-pit mining methods and has an expected mine life of 32 years with an average annual production of 206,000 tonnes of copper. A construction decision for the project is expected by 2023/2024.

In addition to the engineering study, an updated reserve estimate for Taca Taca showed proven and probable reserves of 1.8 billion tonnes grading 0.44% copper, 0.012% molybdenum, and 0.09 gram gold per tonne for 7.7 million tonnes contained copper, 214,000 tonnes molybdenum, and 5.1 million oz. gold. 

Tsukernik says that the key to Nova’s success in acquiring royalties on “world-class assets like Taca Taca has been our ability to transact with third-party royalty owners, not the mining companies themselves.”

This approach, he said, is the “only way to consistently secure royalties on top-quality projects because the mine operators are generally well-financed and typically don’t like to sell royalties on their key deposits.”

He noted that Nova’s relationships with third-party royalty holders across some of the world’s key mining camps “will allow us to continue to grow our portfolio of scarce, strategic assets.”

In addition to large-scale development projects, Nova is also eyeing royalties on assets with nearer-term cash flow. 

“These types of acquisitions not only add additional high-quality, long-life royalties to our portfolio but also provide balance and position the portfolio for long-term success,” says Brian Ferrey, Nova’s vice president of corporate development and strategy.

“One of the things that make the royalty model so compelling is the ability to diversify,” he said. “Diversifying doesn't just mean the number of assets in your portfolio, but also the type of assets and how they fit along the development curve.”

He noted that the company’s recent royalty acquisition on the Aranzazu mine in Mexico adds cash flow to complement its portfolio of royalties on top-tier development projects.

“We are actively looking to add more near-term cash-flowing assets to the portfolio as we continue to grow and scale the business,” Ferrey said. 

The preceding Joint-Venture Article is PROMOTED CONTENT sponsored by NOVA ROYALTY and produced in cooperation with The Northern Miner. Visit www.novaroyalty.com for more information.