Kirkland Lake Gold Ltd. [KL-TSX, NYSE; KLA-ASX] said Thursday November 26 that it is selling $45.32 million worth of shares in Novo Resources Corp. [NVO-TSXV, NVO.WT; NSRPF-OTCQX], a move that will reduce its stake in Novo to 4.1% from 12.1%.
Novo is exploring and developing a land package covering approximately 14,000 km2 in the Pilbara region of Western Australia, an area that hosts the company’s flagship Beatons Creek gold project.
“The disposition of the Novo shares provides an immediate source of capital for Kirkland Lake Gold, the company said in a press release.
On Thursday, Novo shares fell 14.4% or 40 cents to $2.37 on volume of 915,795. The shares are trading in a 52-week range of $4.16 and $1.41. Kirkland Lake shares gained $0.49 to $51.97 on a volume of 191,500 shares traded.
Kirkland Lake Gold is a mid-tier gold producer with operations in Canada and Australia. The company expects to produce between 1.35 million and 1.4 million ounces of gold this year. All of its Canadian operations are located near Kirkland Lake, Ontario.
The Australian portfolio includes the Fosterville Mine in Victoria State, which produced 161,489 ounces of gold in Q3 2020, up from 158,328 ounces in Q3 2019.
On Thursday, Kirkland Lake said it has arranged for the sale of 18.5 million units at $2.45 per unit, generating gross proceeds of $45.3 million. Each unit consists of one common share of Novo and one-half of a Kirkland Lake warrant.
Each warrant is good to buy an additional Novo share, owned by Kirkland Lake at an exercise price of $2.80 for 12 months from the date of issue. In Canada, the sale of the unit shares will be made through block trades and the sale of the warrants will be made on a private placement basis.
In Canada, the warrants will be subject to a four-month and one day hold period. Upon closing, Kirkland Lake will have sold 18.5 million Novo shares as a component of the units.
Kirkland Lake said that if the warrants forming part of the units are exercised in full it will dispose of an additional 9.25 million Novo shares at $2.80 each, a move that will generate additional proceeds of $25.9 million. It will also reduce Kirkland Lake’s holdings in Novo to approximately 0.05%.