Shares of Novo Resources Corp. (TSX-Venture:NVO) (OTCQX: NSRPF) are on the upswing on the back of the company announcing earlier this morning that it has entered into two property transactions in the Egina region of Western Australia.
The Company entered into a share purchase agreement whereby the Company will acquire 100% of the issued and outstanding shares of Farno-McMahon Pty Ltd, an Australian proprietary limited exploration company. The Company paid AUD $150,000 in cash to Farno upon execution of an initial agreement.
The Company will pay a further AUD $2.35 million in cash to the shareholders of Farno and issue AUD $5.5 million-worth of Novo common shares at a deemed price of CAD $4.107 per share to the shareholders of Farno.
The Company also announced that Novo and one of its Australian subsidiaries have entered into a binding memorandum of agreement (MOU) with ASX-listed Pioneer Resources Limited. Pursuant to the MOA, Novo will be entitled to earn, via farm-in arrangements, a 70% interest in precious metal rights on four exploration tenements in the Egina region of Western Australia which comprise the Kangan gold project. Novo will pay AUD $200,000 in cash and issue 100,000 common shares to Pioneer in accordance with the MOA.
"Egina has long been known as an important Pilbara gold district," commented Quinton Hennigh, President and Chairman of Novo Resources Corp.
"Gold nuggets have been found in modern surface gravels over a vast area around Egina since the late 1800’s. Upon researching the distribution and nature of gold nuggets earlier this year, Novo has concluded these are largely derived from weathering and erosion of basal Fortescue conglomerates similar to those at Comet Well and Purdy’s Reward. This makes Egina particularly intriguing.
"In our view, not only is there potential for the discovery of gold-bearing conglomerates, there is also very good potential for significant surface gold deposits occurring in modern lag gravels. Acquisition of the core tenements at Egina consolidates Novo’s position in this potentially very important gold district."
Clearly investors agree with Novo Resources’ Quinton Hennigh about the potential of the Pilbara gold district with shares rallying $0.35 or 9.59% to $4.00 for Canadian-listed shares in mid-afternoon trading. With shares in a long-term downtrend, perhaps news of this type will be the longer-term catalyst to re-energize the bulls and reverse the current share price trajectory.
