Novus Gold Corp.
TSX VENTURE : NOV.H

Novus Gold Corp.

December 02, 2009 09:35 ET

Novus Gold's Reactivation Now Characterized as a Change of Business Requiring Regulatory and Shareholder Approval

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 2, 2009) - Novus Gold Corp. (TSX VENTURE:NOV.H), in connection with the Issuer's application to graduate from NEX to Tier 2 of the TSX Venture Exchange, has undertaken a series of transactions that, taken together, meets the definition of a "Change of Business" as contemplated by TSX Policies. This news release has been prepared to fulfill certain disclosure requirements contained in those policies.

The Issuer sold its previous environmental business on December 6, 2007 and became an inactive company trading on NEX. In 2009, the Issuer changed its name to "Novus Gold Corp." and acquired three mineral exploration properties as disclosed in press releases dated March 27, 2009 and May 11, 2009.

During this year, and with regulatory acceptance of the NEX, the Issuer has also completed the following acquisitions and completed financing transactions pursuant to which the Issuer has become a mining issuer:

1. completed a financing that raised $300,000 by the sale of 3,000,000 shares at $0.10 each (see press releases dated February 2, 2009 and February 26, 2009);

2. acquired the La Paciencia Property and the La Yagua Property in the Dominican Republic (see press release dated March 27, 2009);

3. acquired the REN 1 & 2 Claims and the REN 3 – 14 Claims (collectively referred to as the "REN Property") in the Northwest Territories (see press releases dated May 11, 2009 and May 15, 2009);

4. completed a work program on the La Yagua Property for approximately $100,000 (see press releases dated August 12, 2009); and

5. entered into the an option agreement with Terra Ventures Inc., pursuant to which the Issuer granted Terra an option to acquire a 51% interest in the REN Property by incurring $1,500,000 in expenditures on the REN Property prior to December 31, 2009, which interest Novus has the option to buy back by issuing 7,500,000 shares of the Issuer to Terra (see press release dated September 16, 2009)

Pursuant to these acquisitions and transactions (summaries of which are set out below), the Issuer is seeking to reactivate as a Tier 2 Mining Issuer on the Exchange. As part of the Reactivation, the Issuer intends to complete a financing (the "Canaccord Financing") of up to $2,400,000 (see press release dated September 24, 2009) to fund, among other things, the work program recommended for the La Yagua Property.

Acquisition of Invercropolis, including the La Yugua and La Paciencia Properties, Dominican Republic

Pursuant to an agreement dated March 25, 2009 (the "Invercropolis Agreement") between the Issuer and Peter Bambic, of Quebec, the Issuer acquired Invercropolis SA, a company incorporated in the Dominican Republic, which owns the La Paciencia Property and the La Yagua Property. As consideration for the acquisition, the Issuer has issued 2,000,000 shares to the vendor, has agreed to pay him $100,000 out of the proceeds of the Canaccord Financing, and has granted him a 2.0% net smelter returns royalty on the Invercropolis Properties, 1.0% of which may be purchased by the Issuer for $1,000,000.

REN Property, NWT, Canada

Pursuant to an agreement dated May 10, 2009 between the Issuer and Mike Magrum, of British Columbia, and Lane Dewar, of the Northwest Territories, the Issuer has acquired a 100% interest in the REN 1 & 2 Claims in consideration for the issuance of 1,000,000 shares to the vendors (as to 500,000 shares each), the agreement to pay the vendors $50,000 out of the proceeds of the Canaccord Financing (as to $25,000 each), and the grant to the vendors of a 2.0% net smelter returns royalty on the Claims, 1.0% of which may be purchased by Novus for $2,500,000. In addition, an advance royalty payment of $100,000 per year must be paid with respect to the Claims commencing on May 10, 2010 until such time as commercial production commences on the Claims. Mike Magrum, the President and CEO of the Issuer, was one of the vendors of the REN 1&2 Claims prior to his becoming a director and officer of the Issuer. Consequently, he has and will receive one half of this consideration paid or payable by the Issuer with respect to this Property.

Pursuant to an agreement dated May 11, 2009 between the Issuer and Kalac Holdings Ltd., a corporation incorporated under the laws of British Columbia, the Issuer has acquired a 100% interest in the REN 3 – 14 Claims in consideration for the issuance of 2,000,000 shares to the vendor, the agreement to pay the vendor $50,000 out of the proceeds of the Canaccord Financing, and the grant to the vendor of a 2.0% net smelter returns royalty on the Claims, 1.0% of which may be purchased by the Issuer for $1,000,000.

The REN Property comprises 24,674 acres located approximately 320 kilometres north of Yellowknife in the Northwest Territories.

The Terra Option Agreement

Pursuant to an agreement dated September 16, 2009 between the Issuer and Terra Ventures Inc. ("Terra"), a company incorporated pursuant to the laws of British Columbia), the Issuer has granted Terra an option to earn a 51% interest in the REN Property. In order to exercise the option Terra must incur $1,500,000 in expenditures on the REN Property by December 31, 2009.

Once Terra has earned its interest, the Issuer will have the option to repurchase Terra's 51% interest by issuing 7,500,000 shares to Terra (the "Terra Option"). The Issuer may only exercise the Terra Option if it is a Tier 2 issuer on the Exchange at the time of exercise, and if the exercise will not result in the Terra becoming a Control Person of the Issuer. Assuming the Canaccord Financing is completed with no over-allotment, the Issuer, upon exercise of the Terra Option, will have in excess of 39,500,000 shares issued and outstanding. Exercise of the Terra Option would thus not result in Terra becoming a Control Person of the Issuer by such exercise alone.

There are three common directors of each of the Issuer and Terra, namely Mike Magrum, Robert McMorran and Gunther Roehlig, and one director of Terra (James Hutton) is an insider of the Issuer by virtue of the fact that he owns just over 10% of the issued shares of the Issuer. James Harris is the corporate secretary of both companies. The Terra Option Agreement was approved by the independent directors of each company.

Canaccord Financing

As previously disclosed in the Issuer's press release dated September 24, 2009, the Issuer has entered into an agency agreement dated as of September 23, 2009 with Canaccord pursuant to which Canaccord has agreed to sell on a commercially reasonable efforts basis up to 12,000,000 units at $0.20 per unit for gross proceeds of up to $2,400,000. Each unit will consist of one Novus Share and one half of one warrant, each whole warrant entitling the holder to purchase one additional Novus Share for $0.30 for a period of two years from closing. The proceeds of the financing will be used for, among other things, property payments and work programs on the Issuer's mineral exploration properties in the Dominican Republic and the Northwest Territories, and for working capital.

The Issuer has also granted Canaccord an option to solicit offers for an additional 1,250,000 units exercisable 48 hours prior to closing of the financing.

At closing, Canaccord will receive:

(a) a cash commission equal to 7% of the gross proceeds raised;

(b) that number of agent's warrants equal to 10% of the units sold, which will be issued on the same terms as the Warrants; and

(c) a corporate finance fee equal to $15,000 payable in cash or units at Canaccord's option.

On behalf of the board of directors of NOVUS GOLD CORP.

Mike Magrum, President

Completion of the transaction is subject to a number of conditions, including Exchange acceptance and disinterested Shareholder approval. The transaction cannot close until the required Shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Filing Statement to be prepared in connection with the transaction, any information released or received with respect to the COB may not be accurate or complete and should not be relied upon. Trading in the securities of Novus Gold Corp. should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Novus Gold Corp.
    Gunther Roehlig
    Director
    (604) 688-0335
    (604) 683-7161 (FAX)
    www.NovusGold.com