I've been writing about Novo Resources for over five years now. They are busy working in Western Australia. A number of other newsletter writers are spilling ink about them on an almost daily basis playing catch-up. I don't need to because I have covered it so many times before. But I had to pen a short piece because this week they pulled one of the most effective marketing coups I have ever seen.
The Gold Group holds the Denver Gold Forum every September. This is not for the retail chumps breathlessly waiting to hear more stupidity about how gold was suppressed from $252 to $1923. This is for the big boys and you have to have a lot of credibility or money to be invited. I don't bother going. I've never been invited for one thing and I wouldn't belong to any club that would have me.
By skipping the show this year I missed the sound of hundreds of jaws hitting the floor, all in unison, when Quinton Hennigh live streamed a video from the Karratha gold project in Western Australia.
Novo's team brought in an excavator to the Purdy's Reward JV with Artemis Resources and scrapped off the overburden so they could start with fresh and virgin ground. Novo has been following the footprints of the guys using metal detectors to find nuggets but they wanted some untouched and unloved piece of ground to demonstrate just what Quinton saw in February of this year that led to staking over 10,000 square km of ground in Western Australia.
Quinton was presenting at 11:15 AM Denver time, which is 1:15 in the morning in Western Australia so his crew had to set up floodlights to illuminate what they were showing.
The video starts. First of all they describe the size of the trench, it's thirty meters by ten meters. They have cleared off the overburden and gone in with a can of spray paint and marked every target shown by the metal detectors. In the pit, a very tiny pit, there are over three hundred targets found. Brad Smith works the metal detector and goes around the pit showing how the signal changes based on either how big a nugget is or how deep. Then a couple of guys step in with small jackhammers and pry out some gold. At 53:08 into the video, Brad picks up a nugget that probably weighed 20 grams. I am Novo's biggest fan. I was wowed by the video.
Based on the price of Novo going up by 27% on the day for a total advance of $1.39 Canadian, I'd say the video was a giant success. But my readers who have been following this story on 321gold for over five years will want to know the subtleties. They are subtle but also vital to understand.
Novo is not working the richest ground. Actually Novo has no idea of what or where the richest ground is. This spot was chosen because Purdy's Reward is permitted, not because it's somehow ideal. And Purdy's Reward is 25 square km and the surface exposure of the conglomerate bed hosting the gold is only 2 km. Comet Well, next door, has 6 km exposure but isn't yet permitted.
The viewer should pay attention to the number of marked targets in the video. That's a lot of gold, it's not deep, and they were only digging down a couple of inches. It's very rich. You don't need many 20 gram nuggets in a sample to show multi-ounce gold.
Novo will start drilling core to determine structure in a week or so. After the structure is better understood, he will bring in the large diameter RC rig and start taking samples. Here is what I want my readers to understand.
- This is an unconventional deposit. It has to be explored and tested in an unconventional way.
- The only purpose of drilling core should be to determine structure. There may well be multiple layers of conglomerate. They may or may not be mineralized. If it was I and I know I will be ignored, I wouldn't even assay for gold. All you need is three or four assays to come back without gold and the ignorant will sell in a panic as the ignorant always do.
- You will never ever know the accurate grade until you mine. The core holes will either miss the gold entirely or hit nuggets and show hundreds of ounces of gold per ton. Neither will be correct. The wide diameter drill will be more accurate but you will need hundreds of samples to even have a SWAG (Stupid-Wild_Assed_Guess) at what the real grade is.
- The difference in total cost to mine one ounce gold compared to three ounce gold is for all practical purposes meaningless. Therefore production should begin as soon as possible even on a small scale. I think the two-ounce material will be a lot more representative than either Quinton or John Kaiser or anyone else believes. The highest value is going to be in the nuggets, not the fine gold and there be a lot more of them spread out over a lot larger area than anyone but me believes. One hundred tons of two-ounce material a day is 72,000 ounces a year. Go back and memorize point 1 above. Think in an unconventional way.
- Rob Humphryson, the CEO of Novo, is a production guy. He and I chatted for a short time during my visit eight weeks ago. Quinton should fart around all he wants perfecting the exploration and developing the theory while Rob and I focus on perfecting the production. This is going to be a giant project and figuring out how to mine and mill is just as important as trying to figure out where the gold is and how it got there. You don't need to prove up 10 million ounces to make a production decision. Novo has $70 million in cash and a bunch more on call in the form of warrants. They should spend $30 million on a plant. Call it a test plant of a bulk sample. Do it now.
- The Pilbara is home to one of the world's largest and highest-grade iron deposits. The iron is in Banded Iron Formations that all geologists agree precipitated out of salt water. If salt water had the ability to contain between 1,000 and 10,000 times more gold than today, it logically follows that if the iron precipitated out of salt water in the presence of oxygen, the gold did too. And if you have giant BIF formations, you may well have giant gold mineralization.
- There is more danger in not owning Novo shares than there is in owning Novo shares. See point 1 above. There will be naysayers pointing out all the potential flaws all the way up until all gold shares go into a feeding frenzy. When the naysayers become believers or we go into a feeding frenzy in all gold shares, you should sell.
Novo has been my largest holding for over five years. They are advertisers and naturally I am biased. Do your own due diligence.
NVO-V $6.61 (Sep 26, 2017)
NSRPF OTCQX 142 million shares
Novo Resources website
Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.
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