Novo Scores Financing Coup
It’s been awhile since I have written about Novo. It’s not because there aren’t things going on or that I have forgotten them. It’s because Quinton is moving toward production and could put nothing in writing or on his website without jumping through 500 hoops for the TSX 43-101 people.
As an aside, the TSX finally sorted out Peter George, the geologist who claimed Barkerville Gold Mines had a 10.6 million ounce indicated resource in June of 2012. The report was total bullshit of course, it was a made to order scam on behalf of Frank Callahan. It took the TSX 3.5 years to determine that an appropriate penalty for doing $100 million in damages to investors should result in a giant fine. They nailed George with a $15,000 fine. So take that all you scammers out there, the TSX is on the prowl and looking for skullduggery.
Novo came up with a more accurate and far more interesting press release on Thursday January 14th. A little background first.
Quinton wants to get into production. He can’t talk about it because he hasn’t completed a feasibility study on the project. But it’s high grade, oxide near surface, it’s cheaper to mine than to plan. To go into production Quinton needs another $2 million. Rather than issue more shares at today’s dismal price, Quinton and Novo are going to copy something Freeport McMoran did 15 years ago; they are going to issue a convertible debenture.
The debenture will garner no interest but will mean investors are buying gold for delivery in a year at a 30% discount. Investors will have a redemption value one ounce of gold at a price of $1100 Canadian. Friday’s price for gold in Canadian pesos was $1590. Novo will have the right to repay investors in gold from Beaton’s Creek prior to December 15, 2016. Permits for a 30,000 tonne trial mine were submitted on December 1, 2015. The company expects approval by the end of the 1st quarter, 2016.
Investors may also choose to be paid in cash or shares at a conversion price of $.67 CAD per share.
So, it’s an option on the Canadian dollar, and on gold and the opportunity to buy gold at a 30% discount based on today’s prices. That’s pretty sweet.
Of course the naysayers will suggest that Novo is giving away gold way too cheap and that’s utter nonsense. Novo needs another $2 million for production and is one of a tiny handful of juniors with the credibility to actually be able to raise money. But today’s price is about 66% lower than it was two years ago. If you think that’s bad, compare it to Freeport down 90% in the same timeframe. Novo knows what their costs will be and can still make a nice profit even selling gold at a discount.
Quinton happens to be one of my favorite people and I think this is a home run for the company. When the company actually does start production shortly and can provide accurate numbers, I believe shareholders will be happy campers.
Novo is an advertiser, I’ve participated in several placements and I love the company and people. Naturally I’m biased so do your own due diligence and please take some responsibility for your own decisions.