Novo Acquires Stake in ASX-Listed GBM Resources Limited and Option Over Malmsbury Gold Project - Seite 2

However, following satisfaction by Novo of the Earn-In Amount during the Earn-In Period, and delivery to GBM of written notice of its election to increase its interest in the Malmsbury Project to an aggregate 60% interest and initiate a joint venture with GBM (the “Joint Venture Date”), GBM will be required to elect to (i) retain its 40% interest in the Malmsbury Project by contributing to 40% of exploration and development expenditure incurred subsequent to the Joint Venture Date, or (ii) dilute its interest in the Malmsbury Project to 25% upon delivery by Novo of a preliminary economic assessment (the “PEA”) disclosing at least a 1 million ounce gold resource, of which at least 60% must be in the Indicated classification, within 3 years from the Joint Venture Date. In such case, Novo will pay all development expenditure incurred commencing from the Joint Venture Date, but if a decision to mine is made, GBM will reimburse Novo as to 25% of any such development expenditure from a maximum of 80% of Malmsbury Project cash flows.

Novo and GBM will negotiate a royalty arrangement whereby, subsequent to a decision to mine, GBM will be entitled to receive a maximum 2.5% net smelter returns royalty (the “Maximum Royalty”). The Malmsbury Project is encumbered by certain pre-existing royalties; where such an encumbrance is present, GBM will only be entitled to an adjusted royalty, being the Maximum Royalty less any pre-existing royalty amount.

The Malmsbury Project is located in the prolific Bendigo Zone of the Victorian Goldfields that has historically produced in excess of 60 million ounces of gold from alluvial and hard rock production and is contiguous with ASX-listed Kalamazoo Resources Limited’s (“Kalamazoo”) Castlemaine project. Novo acquired an 8.17% interest in the issued and outstanding ordinary shares of Kalamazoo on January 14, 2020 (please see the Company’s news release dated January 14, 2020: https://www.novoresources.com/news-media/news/display/index.php?conten ...). Please refer to Figure 1 below for a map of the Malmsbury and Castlemaine projects.

The Malmsbury Project displays many of the characteristics of the epizonal orogenic gold deposit class that includes Kirkland Lake’s Fosterville Mine. The cumulative 8.5 km strike extent of historic pits and mines, and evidence of high-grade gold mineralization are indicators of a large, fertile mineral system. The 1 km long Leven Star Trend has only been drill tested to relatively shallow depths, with very limited modern exploration across the remainder of the goldfield. This highlights the Malmsbury Project as an underexplored project that is a priority for renewed exploration by GBM and Novo.