Noveder sells Nugget Pond stake to Richmont

Rouyn-Noranda, Que.-based junior Noveder (ME) has signed over its 40% interest in the Nugget Pond gold project to partner Richmont Mines (TSE).

Situated on Newfoundland’s Baie Verte Peninsula, Nugget Pond has passed the feasibility stage en route to a March 1997 production start. Minable reserves stand at 389,000 tonnes grading 13.76 grams gold per tonne.

Noveder received $600,000 from Richmont and, on June 30, will be paid a further $1 million. Richmont will also deliver 200,000 shares to Noveder on Dec. 31, 1996, and an additional 200,000 shares one year later. Richmont will compensate for any decline in the value of its shares, and pay Noveder a royalty of $1.50 per tonne of ore processed at the mill Richmont is to build on site.

If Richmont decides against putting the property into production by June 30, its original 60-40 joint venture with Noveder will be revived, no further payments will be made, and Noveder will give Richmont 2 million Noveder shares in consideration for the $600,000 already paid.

The deal also gives Richmont the right to acquire half of Noveder’s interest in any Newfoundland property upon payment of all of Noveder’s expenses on that property.

Noveder has also granted Richmont irrevocable options to buy 500,000 Noveder shares on, or before, Dec. 31, 1996, for 75 cents each, and an additional 500,000 Noveder shares on, or before, Dec. 31, 1997, for $1 each.

Noveder President Alain Morissette says his company sold its interest in the mine in order to focus on exploration in the vicinity of the Nugget Pond mine. In essence, he says, “Richmont is the mining operator in Newfoundland, and Noveder is the exploration partner.”

Morissette says the cash that Noveder will receive under the deal is key to that company’s growth potential. “We want to be sure that Noveder is a well-financed, healthy company.”

Meanwhile, a normal course issuer bid made by Richmont has been accepted by the Toronto and Montreal stock exchanges, allowing the company to buy up to 720,000 common shares (5% of the total issued and outstanding) of its own stock. In a release, Richmont management said the bid “is justified by the fact that the common shares are undervalued on the market in regard to the company’s financial position and future prospects.”