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Anova Metals Limited (ASX:AWV)

February 2017

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Anova Metals Limited (AWV)


ContentsPoised For Development ......................................................................... 1

Key Points ............................................................................................... 1

SWOT Analysis ........................................................................................ 2

Overview ................................................................................................. 2

Strategy ............................................................................................. 2

Financial Position ............................................................................... 3

Project Overview ............................................................................... 3

Big Springs Project ............................................................................ 3

Recent and Planned Operations by Anova ...................................... 12

Background - Mining in Nevada ............................................................. 12

History ............................................................................................. 12

Royalties .......................................................................................... 12

Permitting ........................................................................................ 13

Peer Group Analysis .............................................................................. 13

Capital Structure ................................................................................... 14

Risks ..................................................................................................... 14

Board and Management ....................................................................... 15

1Independent Investment Research

Note: This report is based on information provided by the company as at February 2017

Investment Profile

Share Price as at 2 February 2017 $0.12

Issued Capital:

Ordinary Shares (M) 451.9m

Options (M) 0.0m

Incentive Rights 3.75m

Fully Diluted (M) 455.65m

Market Capitalisation (M) $56.49m

12 month L/H $0.038/$0.19

Board and Management

Directors:

Mr Mal James: Non-Executive Chairman

Mr Bill Fry: Executive Director

Mr Alasdair Cooke: Non-Executive Director

Management:

Mr John Hasleby: VP (US Operations)

Mr Bruce McLarty: General Manager Operations

Mr Lauritz Barnes: Study Manager (Mining and Resources)

Mr Andrew McDonald: Project Manager

Me Steve Jackson: Company Secretary

Major Shareholders

HSBC Custody Nominees 12.72%

Mr Rex Harbour 5.61%

Mr Alasdair Cooke 5.51%

J P Morgan Nominees 5.26%

Top 20 55.33%

Board and Management 8.75%

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Anova Metals Limited (ASX:AWV)

February 2017

POISED FOR DEVELOPMENTWith final permits being received for their 100% owned Big Springs Gold Project in the Carlin District of Nevada, USA, Anova is set to commence the minimal development required for initial open pit production, expected in late Q2, CY2017. By virtue of a low initial capital cost of ~US$2 million and toll treating at the nearby Jerritt Canyon facility, financing and a mill are not required, thus resulting in the relatively short development time. Cash flow from the open pit mining will be used to develop underground operations – all in cash operating costs of ~US$850 - US$1,000/oz gold are expected. The Company has defined mineable resources of 142,400 oz in an overall resource base of 1.03 Moz, however is confident that further exploration will find significant resources to extend the mine life – since 1981 the nearby Jerritt Canyon mine has produced some 8 Moz of gold from an overall inventory of 11 Moz.

KEY POINTSFully permitted, simple, low capex start up: In the Big Springs Gold Project (“Big Springs” or “the Project”) Anova Metals (“Anova” or “the Company”), is looking at a simple and rapid start-up of it’s +1 Moz resource, commencing with an open pit followed by a three phase underground operation, with treatment through tolling at the neighbouring Jerritt Canyon Mine. A key to the proposed Big Springs operation is the low initial capital requirement – no mill is required due to the toll treating agreement, with only ~US$2 million start-up capex required for open pit establishment. The Company plans to use contractors for both open cut and underground mining, thus negating the need for purchasing mining equipment.

World Class Mining District: Big Springs is in the Carlin District of northern Nevada, a world class mining friendly region that produced approximately 73% of the US’s gold output in 2014. The state has produced over 150 Moz of gold, largely over the last 30 years.

Excellent Infrastructure: The region is served by excellent infrastructure, and given the well-developed mining industry, there is ready access to the facilities and skills required to service a new operation.

Low Operating Cost Jurisdiction: Another advantage of the US are relatively low mining operating costs when compared to Australia – this is largely as a result of cheaper labour, fuel and electricity. For example Australian labour costs in the mining sector are up to 50% higher than those in the US.

Well Defined Resource: The Project includes a well-defined resource of 16 Mt @ 2.0 g/t for 1.03 Moz, with a higher grade component of 3.1 Mt @ 4.2 g/t for 415,000 oz. The initial mining inventory includes 804,750 tonnes @ 5.50 g/t Au, for 142,400 oz of contained gold, with the 272,600 oz balance of the high grade component to be further evaluated.

Well Understood Mineralisation: The mineralisation, including metallurgy, is well understood, and hence will help mitigate start-up risk. Ore from Big Springs was previously processed through a 1,000 short tons per day trial roaster located at Big Springs, which was the precursor to the much larger 5,000 short tons per day Jerritt Canyon facility. Recoveries averaged 86% through the trial roaster. Jerritt Canyon has been treating similar ores for over 30 years, with good metallurgical recoveries of 85-90% expected, as confirmed by metallurgical test work on the Big Springs mineralisation. Geologically the mineralisation is well understood and defined.

Resource Upside: There is considerable potential to expand current resources, through extensions to the known mineralisation, and through new discoveries on the surrounding tenements. A number of the ore shoots that the Company is looking at mining are still open down plunge.

Strong and Committed Board and Management: The Board and Management have extensive industry experience in varied regions and commodities, including gold operations. In addition directors hold significant share holdings, and thus will be motivated to producing strong returns for shareholders.

The investment opinion in this report is current as at the date of publication. Investors and advisers should be aware that over time the circumstances of the issuer and/or product may change which may affect our investment opinion.

Senior Analyst – Mark Gordon

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SWOT ANALYSIS

Strengths

� Low capital cost: This is a key strength of Big Springs, in that the ~US$2 million start-up cost precludes having to source project finance and the subsequent time delay.

� Simplified permitting: This is due to the toll treating obviating the requirement to construct a treatment plant, which would require significant additional permitting than that required for mining operations alone.

� Proven mining destination: Nevada and the Carlin District are proven mining destinations and host to a number of world class deposits, with well developed mining legislation.

� Ready access to infrastructure, skilled labour and services: This is a result of the above.

� Experienced people with skin in the game: Company personnel have significant experience in the resources game, as well as significant share holdings.

Weaknesses

� Relatively high cost operation: The underground at Big Springs is a relatively high cost operation, and thus is sensitive to changes in operating costs and gold prices.

� Short mine life: Current mineable resources will only be sufficient for a relatively short mine life, and to keep momentum going and the market interested the Company will need to capitalise on the excellent potential to expand current resources and make new discoveries.

Opportunities

� Exploration success: There is good potential for exploration success at Big Springs – both in extending known resources and in new discoveries.

� Acquisitions and earn-ins: All going to plan, the Company will be generating significant cash over the next few years which places it in an ideal position to consider acquisitions that will have the potential to provide growth, in addition to that expected from exploration at Big Springs.

Threats

� Gold prices Adverse movements in prices is key threat to the operation, given the relatively high operating costs of Big Springs.

� Operating costs: As for the above, however unlike prices these can be actively managed to suit circumstances.

OVERVIEW

STRATEGY

� Anova is currently working towards bringing Big Springs into production; originally through a 24,500 oz open pit (pre-stripped by previous operators Independence Mining), and then three underground operations.

� The Company is looking at commencing open cut production late in Q2, CY2017 (with underground operations to commence shortly after), on current mineable resources of 804,750 t @ 5.50 g/t Au, for 142,400 oz of contained gold, with these figures including 10% mining dilution.

� This will be updated with the release of an updated Mineral Resource Estimate due in Q1, 2017.

� A key to the viability of the Project is the low ~US$2 million initial capex (for the open pit) by virtue of toll treating at the nearby Jerritt Canyon plant.

� This initial capital will be sourced from existing reserves, with cash flow then used to fund the underground development – cash flow will also be used to fund exploration over the highly prospective tenement package.

� The Company will also be looking at paying dividends to shareholders.

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FINANCIAL POSITION

� As of December 31, 2017 the Company had $8.88 million in cash and no debt.

� This is sufficient to fund ongoing activities, development capital, environmental bonds and expected working capital should all go to plan.

� The Company raised $11.8 million before costs in the twelve months to December 30, 2017. The major part of this was raised in the September quarter – this included an oversubscribed placement that raised $7.1 million at $0.13/share, and a rights issue, again over-subscribed, that raised $2.17 million at the same price as the placement.

� Over the same period the Company spent $1.83 million on exploration and $1.17 million on administration and staff costs.

PROJECT OVERVIEW

� Anova’s sole project is Big Springs, located in the Carlin District of Nevada.

Figure 1: Location plan of Big Springs

�Source: Anova

BIG SPRINGS PROJECT

Background and Tenure

� Big Springs is located some 80 km north of Elko within the Basin and Range Province of northern Nevada, USA, and 20 km north of the Jerritt Canyon Mine.

� The Project contains 702 contiguous unpatented Lode Mining Claims totalling 5,666 ha and 148.55 ha of Fee Land (private or freehold land) within and adjacent to the Company’s mining claims:

� The project was acquired by Anova (then Kimberley Rare Earths Limited) from Victoria Gold Corporation with completion in February 2013 and with the consideration being:

– ~A$4.65 million in cash,

– 20 million consideration shares, and,

– 30 million performance shares based on JORC-compliant resource milestones.

� There were also 15 million performance shares to be vested on a reserve milestone – these were cancelled as the hurdle was not met.

� A 3% Net Smelter Return (“NSR”) royalty is payable to the vendor – a US$100,000 prepayment has been paid with this to be offset against future royalty payments.

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Figure 2: Big Springs and Jerritt Canyon

Source: Anova

Geology and Mineralisation

� The Project is located on the Independence Trend, one of a number of gold trends within the Carlin District, with these shown below. Big Springs is a Carlin style deposit.

Figure 3: Carlin District gold deposits and major trends

�Source: Anova

� Geology is characterised by gently dipping thrust sheets of largely Paleozoic sediments, with numerous sub-horizontal thrust faults separating the allochthonous blocks - the area is structurally complex, with a number of other structures throughout the region.

� The geological history includes a number of igneous events, with the most recent being Late Eocene (~40Ma) in age, which is interpreted as driving the processes leading to the formation of the Carlin-style mineralisation - Eocene rocks include volcanics and intrusives.

� Gold mineralisation is both structurally and lithologically controlled, and is fine-grained (commonly <1µm), associated with pyrite and arsenopyrite.

� Preferential host rocks are calcareous sedimentary rocks, which have been altered by the circulating hydrothermal fluids, with reactions leading to the deposition of gold. Key mineralisation sites include the intersection of structures and suitable host sediments, with major structures acting as fluid pathways.

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� In the Big Springs area key structures include the north-south trending, steeply dipping Briens Fault, the shallowly NW dipping Argillic and Schoonover thrust faults, and a number of other steeply dipping east-west to NW-SE trending faults.

� Key mineralised areas include South Sammy (601 and 701 deposits), North Sammy and Beadles Creek

� At North Sammy, mineralisation generally occurs as a series of moderately NNW plunging shoots, controlled by the intersection of the footwall Argillic Thrust and east-west trending structures. Mineralisation at South Sammy is more complex, being controlled by a series of structures, including Briens Fault.

Figure 4: Deposit location and proposed mine layout (oblique view looking south)

Figure 5: South Sammy 601 deposit oblique section

Source: Anova

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Figure 6: North Sammy oblique view looking east, showing main high grade shoots

Source: Anova

Resources and Reserves

� Initial Mineral Resources were estimated in April 2013, with these updated to those shown below in June 2014.

� A further update is currently being estimated, with this due to be finalised in Q1, CY2017.

Table 1: Big Springs Mineral Resource Estimate

Big Springs Mineral Resource Estimate

Deposit Category Cut-off g/t Au

Tonnes kt

Grade g/t Au

Contained gold ounces

North Sammy Measured 1 346 7 77,900

Indicated 1 615 3.1 62,200

Inferred 1 498 2.8 44,100

Subtotal 1 1,458 3.9 184,100

North Sammy Contact

Measured 0.8

Indicated 0.8 443 2.3 32,400

Inferred 0.8 864 1.4 39,300

Subtotal 0.8 1,307 1.7 71,800

South Sammy Measured 0.8 295 4 38,200

Indicated 0.8 3,586 2.1 239,900

Inferred 0.8 3,721 1.3 159,000

Subtotal 0.8 7,602 1.8 437,200

Beadles Creek Measured 1

Indicated 1 119 2.2 8,200

Inferred 1 2,583 2.3 193,500

Subtotal 1 2,702 2.3 201,700

Mac Ridge Measured 0.8

Indicated 0.8

Inferred 0.8 1,887 1.3 81,100

Subtotal 0.8 1,887 1.3 81,100

Dorsey Creek Measured 0.8

Indicated 0.8

Inferred 0.8 278 1.4 12,900

Subtotal 0.8 278 1.4 12,900

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Big Springs Mineral Resource Estimate

Deposit Category Cut-off g/t Au

Tonnes kt

Grade g/t Au

Contained gold ounces

Briens Fault Measured 1

Indicated 1

Inferred 1 799 1.6 40,500

Subtotal 1 799 1.6 40,500

Total Measured 641 5.7 116,100

Indicated 4,762 2.2 343,300

Inferred 10,630 1.7 570,400

Total 16,032 2.0 1,029,900

Source: Anova

� Mineable resources of 142,400 oz of gold have been calculated, with these incorporating a 10% dilution:

– South Sammy 601 Open Pit – 185,800 t @ 4.1 g/t – 24,500 oz

– South Sammy 601 and 701 Underground – 94,300 t @ 5.51 g/t – 16,700 oz

– North Sammy Underground – 357,500 t @ 6.42 g/t – 73,800 oz

– Beadles Creek Underground – 167,150 t @ 5.10 g/t – 27,400 oz

Resource Upside and Exploration Potential

� There is significant resource upside potential, both through extensions to the known mineralisation and new discoveries within the licence area.

� This is demonstrated by the comparison between Big Springs and Jerritt Canyon:

– Jerritt Canyon – 11 Moz identified, 8 Moz produced since 1981.

– Big Springs – 1 Moz identified, 350 koz produced.

� Ongoing exploration at Jerritt Canyon during mining operations continued to discover new mineralisation (which occurs in a number of zones/deposits as is the case at Big Springs).

� The resource extension potential has been highlighted by the results of a 17 hole, 3018.9m exploration and geotechnical diamond drilling programme completed in late 2016 – this included drilling at North Sammy, South Sammy and Beadles Creek.

� At South Sammy hole AWV16-061 intersected an exceptional 10.7 m @ 30.9 g/t Au in addition to other intersections – this hole also identified additional shoots, and extended the strike length of a number of known shoots (Figure 5 above).

� Drilling at Beadles Creek intersected up to 12.2 m @ 8.5 g/t Au in hole AWVBC16-006 as well as a number of other intersections – this demonstrates that again here mineralisation is still open along strike and down plunge (Figure 7).

� Shoots at North Sammy are all open down plunge (Figure 6 above and Figure 8).

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Figure 7: Beadles Creek cross section showing drilling results.

�Source: Anova

Figure 8: North Sammy Thumb Shoot cross section showing drilling results.

�Source: Anova

� A review of historic exploration data has identified a number of prospective regional targets, with this shown up largely by surface geochemical anomalism - in addition some areas are masked by up to 30 m of glacial till, precluding effective surface geochemical exploration.

� Key targets include:

– A number of poorly tested geochemical anomalies in the vicinity of the known mineralisation,

– Golden Dome – extensive gold-in-soil anomalies possibly representing leakage up NW trending faults from a deeper lithological host, interpreted as being the Hanson Creek Formation at depth, with the Hanson Creek Formation being the host for the Jerritt Canyon mineralisation, and,

– Mac Ridge East – a large area of Hanson Creek Formation to the east of the Big Springs Mine, which has returned rock chips up to 2 g/t, with only limited soil grids and drilling completed.

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Figure 9: Geochemical targets – Big Springs mining area

�Source: Anova

Figure 10: Golden Dome targets

�Source: Anova

Planned Operations

� As stated earlier Anova is currently working towards bringing Big Springs into production; originally through a 24,500 oz open pit (previously pre-stripped by Independence), and then three underground operations.

� To reiterate, a four stage initial project with mineable resources of 804,750 @ 5.50g/t Au containing 142,400 oz of gold is planned:

– South Sammy 601 Open Pit – 185,800 t @ 4.1 g/t – 24,500 oz

– South Sammy 601 and 701 Underground – 94,300 t @ 5.51 g/t – 16,700 oz

– North Sammy Underground – 357,500 t @ 6.42 g/t – 73,800 oz

– Beadles Creek Underground – 167,510 t @ 5.10 g/t – 27,400 oz

� Open pit operations are planned to commence late in Q2, CY2017, with underground development to commence soon after.

� During the initial mining stages, the Company will be evaluating the potential to extract further high grade remnant ore (272 koz), as well as carrying out regional exploration on the highly prospective tenement package as discussed above – there is very good potential for significant resource, and hence mine life extensions.

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Open Pit Mining

� Initial mining will be from the South Sammy 610 open pit, with a planned life of mine strip ratio of 8.9:1.

� Mining will be carried out by contractors, obviating the capital requirements for a mining fleet.

Underground Mining

� Preferred underground mining methods include long hole open stoping (“LHOS”) or Alimak mining. A key advantage with these methods is that they require comparatively less development than other methods, thus helping the economics.

� Again it is planned to use contractors for the underground mining.

Toll Treatment and Metallurgy

� The Company has reached a toll treatment agreement with Jerritt Canyon Gold, with ore from Big Springs to be treated at the Jerritt Canyon mill some 42 km by road from Big Springs.

� The operation, including plant and mine, has recently undergone a US$250 million upgrade and refurbishment, and being only one of three roasters in the state, is considered a strategic asset, processes Jerritt Canyon ore, and has previously toll treated material from other operations.

� The operation has the capacity to treat 5,000 short tons (4,537 tonnes) per day.

Figure 11: Jerritt Canyon process facility

�Source: Anova

� Under the terms of the deal, Anova can deliver up to 1,000 short tons (907 tonnes) of ore per day to Jerritt Canyon, with the ore being milled in 25,000 short ton (22,700 tonne) lots - Anova retains ownership of the ore and gold through the process.

� The toll treatment charge is US$62/short ton (US$68.40/tonne), which is only payable after Anova has received payment for their gold.

� The use of toll treatment has two key advantages, firstly it significantly cuts down the capital cost, and secondly it greatly simplifies the mine permitting process.

� Another issue is the complex metallurgy – given the refractory nature of the gold, roasting is required, and hence Anova will be taking advantage of Jerritt Canyon’s experience in treating this type of ore. In addition there is a significant arsenic content in the ore – all potential environmental liabilities stay with the mill owner.

� Metallurgical recoveries of 88% have been used, with metallurgical testwork of Big Springs mineralisation confirming the suitability for treatment at Jerritt Canyon.

Capital Costs

� The key to the Project is the low start-up capital cost – the Company has estimated that this will be in the order of US$2 million for the initial open pit, which will mainly be for the regrading of internal roads, preparation of a ROM pad and the payment of rehabilitation bonds.

� Initial access to the underground operations will be paid out of cash flow – this again is low cost, given the short development required to reach first ore – 23 m in the case of the South Sammy 601 underground operation, and immediately into ore in the case of the South Sammy 701 mineralisation.

� For the later stage operations development distance to first ore is expected to be 260 m at North Sammy and 300 m at Beadles Creek.

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Operating and Underground Development Capital Costs

� The Company has obtained detailed operating and underground development costs for all planned operations, as shown in the tables below.

Table 2: South Sammy 601 Open Pit Estimated Operating Costs

South Sammy 601 Open Pit Estimated Costs

Item LoM US$/Tonne Ore LoM US$/Ounce Au

Mining (ore & waste US$20.90 US$181.05

Ore transport US$6.30 US$54.60

Processing & refining US$68.40 US$592.55

Administration US$2.92 US$25.30

Total US$98.52 US$853.50

Source: Anova

Table 3: Underground Mining and Development Unit Costs

Underground Mining and Development Costs

Item Cost – US Units Cost – Metric Units

Stoping - LHOS US$27.50/ton US$30.31/tonne

Stoping - Alimak US$32.50/ton US$35.83/tonne

Development - decline US$1,300/ft US$4,265/m

Development - access US$1,175/ft US$3,855/m

Source: Anova

� As shown in Table 2, estimated open cut operating costs are in the order of US$850/oz.

� From the underground quotes the Company estimates that total underground mining costs will be in the order of US$90/tonne for LHOS, or US$83 to US$93/tonne for Alimak stoping.

� Our analysis indicates that these result in total underground mining and treatment costs of ~US$168/tonne, which, based on a recovered grade of 5.21 g/t, results in total operating and development costs of US$1008/ounce produced.

� The NSR of 3% needs to be added to these figures - at current gold prices this will be in the order of US$36/oz.

� The above figures may vary with the upcoming resource upgrade.

Permitting

� The land is administered by the United States Forestry Service (“USFS”), which has clear permitting procedures in place.

� Final approvals for Stages 1 and 2 (South Sammy open pit and underground) are now in place, with the permitting process for Stages 3 and 4 (Beadles Creek and North Sammy underground) to commence once Stage 1 and 2 operations have commenced.

� Key permits include:

– The Environmental Assessment and Mine Plan of Operations – this was signed off by the USFS on January 30, 2017 – the draft ruling resulted in a decision of a “Finding of No Significant Impact”, with this followed by a 45 day exposure period, with no comments being received,

– The Water Pollution Control Permit – this was approved by the Nevada Division of Environmental Protection (“NDEP”) in April 2016, and,

– The Nevada State Reclamation Permit (“NRP”), which includes the Reclamation Cost Estimate (“RCE”) - this was approved concurrently with the environmental permits.

� All that is required now is the formality of the calculation of the environmental bond, and the posting of the bond by the Company.

� There are a number of other minor, but necessary permits that have been obtained by the Company.

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RECENT AND PLANNED OPERATIONS BY ANOVA

� In addition to the drilling, activities have been concentrated on permitting, which although now completed has taken longer than expected.

� Anova is undertaking detailed implementation planning, including final mine planning, logistical planning, site works and engagement with contractors and suppliers in preparation for commencing site works.

BACKGROUND - MINING IN NEVADA

HISTORY

� Nevada is the US’s largest gold producer, producing approximately 5 million ounces, or 73% of all gold produced in the US in 2014, and around 5% of estimated global production in that year.

� It is also the country’s number one ranked mining jurisdiction (ranking at number 3 globally and number 1 in the US in the 2015 Fraser Institute survey), producing significant amounts of silver and copper in addition to the gold.

� Mineralisation styles include Carlin gold, epithermal gold/silver, porphyry Cu-Mo-Au and poly-metallic vein and replacement (including skarn) deposits.

� The state has a long mining history, with the first “modern” mining in 1849 by ‘49ers on their way to the Californian gold fields - this early mining was however largely from small scale placer operations. The mid 1800’s also saw the discovery of the Comstock Lode, the first major silver discovery in the US, but also a significant producer of gold.

� This was predated by American Indians mining for materials such as turquoise. There have also been myths (possibly true) of Spanish mining activities in what is now Nevada.

� Initial gold discoveries in the Carlin area were first made in the 1870’s, however early deposits were generally small placer operations. The initial “Carlin” style mineralisation was found at Carlin by Newmont in 1961, and commenced operations in 1965, pioneering the method of large scale open pits treating low grade ore using heap leach cyanide processing.

� It was not until the rise in the gold price in the 1970’s that interest in the relatively low-grade Carlin-style mineralisation took off, and the coincident increase in gold production.

� Production has been concentrated along the Carlin and Battle Mountain/Eureka Trends.

Figure 12: Nevada gold production – 1978 to 2010

�Source: Nevada-outback-gems.com – extracted 28/09/14

ROYALTIES

� Nevada has no government royalties for gold production.

13



PERMITTING

� The main federal law governing minerals is the Mining Law of 1872, which declared all mineral deposits in lands belonging to the United States to be free and open to exploration and purchase – this excludes federal lands, such as National Parks, that are not subject to access for prospecting. Claims come under the jurisdiction of the Civil Courts – there is no mining court, and land management agencies, such as the BLM or USFS amongst others have no jurisdiction over the claims.

� What the land management agencies do have however is control over activities that may be carried out over claims, hence Anova is dealing with the USFS in getting permits and approvals. The USFS also coordinates with other agencies that have an interest in the areas covered by the claims.

� Federal agencies have clear time frames in which they must respond to permitting applications – this gives more certainty on overall time frames for project development.

� In Nevada, mining tenements include both “Lode Claims” and “Placer Claims”, with “Mill Sites” and “Tunnel Claims” being for support operations. As in Australia, claims do not give the holder surface rights. Lode claims are generally 20 acres in size.

� Claims can be transferred, and run in perpetuity as long as the annual maintenance fee (currently $155) is paid by August 31 each year – failure to pay will automatically lead to lapse of the claim. Once lapsed they cannot be revived, except by an act of Congress. Anova has no expenditure (other than the annual maintenance fee) or work requirements over their claims.

� The system of “patented claims”, where patents were issued so that the claim holder owned both the mineral and surface rights has been under moratorium since October 1, 1994. However there is the system of “fee land”, in effect freehold land with the landholder owning the mineral rights. Anova currently holds 148 ha of Fee Land in the Lower Mac Ridge and Golden Dome prospects.

PEER GROUP ANALYSIS � Our peer comparison includes largely TSX-listed North American developers and

producers; however we have included some ASX-listed developers and producers for comparisons.

Table 4: Anova peer group comparison

Anova Peer Group Comparison

Company LocationEV

(A$m)

Global Resource

(Mt)

Au Grade (g/t)

Company Equity Share

Contained Au Moz Coy

Share

EV/oz Au Coy Share

Project Stage

Pantoro Australia $161 1.0 6.52 100% 0.22 $737.87 Producing

Sumatra Copper Gold Indonesia $96 7.2 2.08 100% 0.48 $199.88 Producing

Golden Queen USA $151 105 0.52 50% 0.88 $170.38 Producing

Romarco* USA $720 91 1.65 100% 4.84 $148.75 Deemed sale value

Probe Metals Canada $83 9.2 2.60 100% 0.77 $107.51 Exploration

Atlantic Gold Canada $148 45 1.54 91% 2.01 $73.84 Development

Gascoyne Resources Australia $155 47 1.42 100% 2.14 $72.50 Feasibility

completed

Victoria Gold Canada $213 215 0.64 100% 4.45 $47.99 Permitting

Anova Metals USA $47 16 2.00 100% 1.03 $45.44 Permitting

Sabina Gold & Silver Canada $247 36 6.21 100% 7.19 $34.33 Feasibility

completed

Chalice Gold* Canada $24 24 2.05 100% 1.57 $15.44 Deemed sale value

Source: IRESS, Company reports

* Estimated values of asset sales or takeovers at time of the transaction

14



� We have also included the mid-2016 sale by Chalice Gold of the Cameron Gold Project to First Mining Finance Corporation (TSX-V: FF) – the consideration was 32.26 million FF shares, and a 1% NSR royalty – we have only included the share consideration in our estimate, with the price of FF shares being ~C$0.75 at the time.

� Corporate activities over the last few years have included the takeover of Romarco Minerals by OceanaGold Corporation – our calculations indicate that the deemed EV (allowing for cash and debt) of the mid-2015 transaction was A$720 million, or close to A$150/ounce for the then near development Haile gold project in South Carolina.

� We have listed the companies in decreasing order of enterprise value (“EV”)/company share of contained ounces of gold. This measure can be used as a proxy for relative value, but needs to be used with care – this figure can be influenced by any number of factors. In addition we have converted figures to Australian dollars using current exchange rates. As can be seen from the table, Anova is near the lower end of the table when using this metric.

� To ensure comparability, we have used resources and not reserves - some companies have not declared reserves.

� The EV used is the undiluted market capitalisation, less cash plus debt – the value of other assets has not been taken into account when calculating the EV of the gold projects that have resources.

� Pantoro, who are currently producing from their Nicolson’s Find operation in the Northern Territory may possibly be considered the closest analogue to Anova in terms of grade and tonnage for reserves or mineable resources.

� What is noticeable is the premium ascribed to producing assets – we would expect to see increase in value in Anova with development and demonstrated production.

CAPITAL STRUCTURE � Anova currently has 451.9 million shares and 3.75 million incentive rights on issue.

� The top shareholder at 12.72% is HSBC Custody Nominees, with company insiders holding ~8.75% of the stock

� The Company has over 1,760 shareholders, with the top 20 holding 55.33%.

RISKS � Operating costs – Controlling operating costs is a key consideration for the Big Springs

Project, given the margins at current gold prices, at least on the proposed underground operations. The project is strongly geared to both positive and adverse changes in operating costs. One positive is that unit operating costs are significantly lower in the US than they would be on a similar operation in Australia.

� Metals prices – This is a key risk for any resources project, and one which companies have little or no control over – given the expected margins, Big Springs will be sensitive to changes in the gold price.

� Development – There are a number of risks involved in taking a project through development into operation, however given the relatively simple nature of Anova’s proposed operations, low capex and use of toll treating we consider this risk somewhat mitigated.

� Operations: We see little risk in the proposed open pit operations, however, given that no previous underground mining has been undertaken at Big Springs there is always the risk of unforeseen challenges (both geological and operational) with a new mine.

� Exploration: There is always risk in exploration activities, and at Big Springs there will be risk in discovering and defining new resources to extend the mine life, although work to date does show the prospectivity of the Project, somewhat mitigating this risk.

� Funding: This risk is comparatively low, with the Company being well funded to cover the estimated US$2 million open pit start-up costs and working capital, with cash flow from operations expected to fund future development costs.

15



BOARD AND MANAGEMENT � Mr Malcolm James – Non-Executive Chairman: Mr James is a business graduate

of RMIT University (Melbourne) with over 30 years’ experience in merchant banking, engineering, manufacturing, mining, energy, financing, philanthropic and social ventures. Over the past 25 years he has had active roles in identifying, exploring, financing and developing a number of significant natural resource and energy projects in Australia, the former Soviet Union, the Middle East, Africa, Asia, South America and the USA.

Mr James has held executive and non-executive board positions on several Australian and London listed companies, business associations, sporting and not-for profit organisations. He has been directly involved in over A$2 billion of equity and debt financing and was a founding director of Resource & Capital Management – a boutique resource and capital management firm that was responsible for the identification, financing and listing of several projects/companies on the Australian and London Securities Exchanges.

Mr James is currently an Executive Director – Finance and Operations, for Peninsula Energy Limited, an ASX listed company; Non-Executive Chairman of Alecto Minerals plc an AIM (UK) listed company. Mr James is also a Fellow of the Australian Institute of Company Directors (AICD) and an Associate of the Australasian Institute of Mining & Metallurgy (AusIMM).

� Mr Bill Fry – Executive Director: Mr Fry has more than 20 years corporate experience in the mining and resources industry, specialising in accounting, management, business development and general corporate activities. He has vast experience in project evaluation and development, project funding, management, finance and operations. Over the past 15 years, Mr Fry has been a Director of several private and public companies with activities ranging from funds management, minerals exploration, mining and quarrying.

Mr Fry is currently a Director of Energy Ventures Limited, African Energy Resources Ltd, Anova Metals Limited and Mitchell River Group.

� Mr Alasdair Cooke – Non-Executive Director: Mr Cooke is a qualified geologist and has been involved throughout his career in mineral exploration and corporate development, including eight years spent with BHP Minerals Business Development Group and over fifteen years managing public resource companies.

Mr Cooke is a founding partner of the Mitchell River Group, which over the past fifteen years has established a number of successful mining projects and resources companies, developing greenfield mines in Australia, Africa and South America. Mr Cooke is currently Chairman of Energy Ventures Ltd, African Energy Resources Ltd and a Director of Anova Metals Ltd.

� Mr John Hasleby – Vice President - USA: Mr Hasleby is a geologist with over 29 years’ experience in the exploration and mining industries. He has an operational and managerial background in exploration, development and mining with Australian and international companies, in the successful search for oil & gas, uranium, platinoids, base metals and rare earths in Australia and overseas. He has a Bachelor of Applied Science degree and is a member of the Australasian Institute of Mining and Metallurgy.

� Mr Lauritz Barnes – Study Manager – Mining and Resources: Mr Barnes is a geologist with over 15 years’ experience, specialising in resource estimation, project evaluation and project development. He is a member of both the Australasian Institute of Mining and Metallurgy (AusIMM) and the Australian Institute of Geoscientists (AIG).

His initial roles were with for BHP Minerals (now BHP Billiton) at the Cannington Ag-Pb-Zn Mine in Queensland and with the exploration group based in Perth, Western Australia. He set up his own consulting company in 1999 and began working with Mitchell River Group as a Geologist. Specialising in resource estimation and project evaluation, he has consulted over the years to numerous ASX, TSX and AIM listed companies including Panoramic Resources (formerly Sally Malay Mining Limited), Albidon Limited, Mirabela Nickel, Wildhorse Energy and Valdera Resources. Recently, his primary consulting and advisory roles have been to ASX listed companies including African Energy Resources, Anova Metals, Exco Resources, Crusader Resources and Energy Ventures. Commodities covered in these various roles include gold, copper-gold, nickel, uranium, base metals, coal and rare earths.

� Mr Steven Jackson – Company Secretary: Mr Jackson is a member of CPA Australia who graduated from the University of Western Australia in 2008 with a Bachelor of Economics having majored in International Business Economics and Money and Banking.

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