Novo Update – Quinton Recaps The Trenching Results From Yesterday
Quinton and I recorded this interview last night so some of the questions I have received will be added to a list and brought up when Quinton and I chat again. Please keep the questions coming as Quinton is always very up front and happy to address them. Email me at Fleck@kereport.com.
Click download link to listen on this device: Download Show
Well I feel better now ater the drop yesterday, and will hold on through the summer with visions of sugarplums in my head. Good luck, Quinton!
Great follow up interview Cory. Quinton did a good job of addressing their new exploration methodology and what they hope to glean from taking the “panel” bulk samples down to the footwall.
A number of us mentioned yesterday privately and in various chat rooms that this was just the initial 2 samples and their are a number more coming out and that the market completely over-reacted yesterday. It was nice to hear the larger picture put into context in this interview.
I did see this re-posted a number of times over at ceo.ca so investors heard the message today and it likely helped with the share price rebound, and to bring expectations out of fantasy land and into the realm of reality.
Keep up the great work guys!
Here is a good visual to accompany the discussion on the conglomerates:
http://cdn.ceo.ca.s3-us-west-2.amazonaws.com/1dh2t77-NovoImg4.pdf
A nice comment today from Eric Coffin:
@HRA-Coffin – “Good $NVO comment Goldfinger. I don’t follow it closely enough to have an opinion on whether things are “on time” or not but I know Q better than most, perhaps all, of the people who post on the NVO channel day in and day out. Quinton is one of the nicest and most honest guys I know. He’s also a true believer in the model, and has been for a couple of decades. He not only drinks the Kool Aid, he invented the KoolAid. No way is he sandbagging. He is however, trying to be scientific about his approach. He always is. I still think that is a play where the best course of action may be to just put it in production. You’ll need close to production scale sampling to get repeatable grades anyway so, if you think it’s going to make money, why not just go for it if you have the capital, which NVO does?”
Not Smart To Short Eric Sprott’s Kirkland Lake And Novo Resources
June 1, 2018 – Jeb Handwerger
The Comet Well Confusion
By: The Hedgeless Horseman – (05/31/18)
“As we saw a huge reaction in the Novo Resources share price today I would like to give my take on the News Release and other developments as of late.”
“(In short; This is the biggest over-reaction we have seen in Novo so far. It even eclipses the “Purdy’s fake out” which I wrote about a couple of months back.)”
http://www.thehedgelesshorseman.com/novo-resources/the-comet-well-confusion/
For those that like the back and forth banter, conspiracy theories, well placed points, nonsensical hysteria, and range of opinions from seasoned investors to waffling newbies, then check out the last few hundred comments in the Novo room over at ceo.
(p.s. – you may want to have some popcorn, champagne, and time on the ready).
Don Durrett of Gold Stock Data has some interesting comments on ceo.ca to The Hedgeless Horseman. At least this latest press release got more people talking and thinking critically:
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@newager23 – (talking to @hhorseman)
“I was an investor in $nvo at 70 cents US before the blastoff. I bought it because they had a discovery at Marble Bar and were developing a mine. I thought the risk/reward made sense. I bought $dge.ax and $arv.ax after the $nvo blast off. Recently, I added $pac and $kai.ax. Today, I added some more $pac after the correction. So, I like the risk/reward of the Pilbara play.”
“My website is GSD (goldstockdata). As my members know, I generally avoid exploration plays, which I call lottery picks. I prefer to invest in gold/silver miners that already have the goods. I like to chase cash flow instead of drill results.”
“However, I do dabble in a few exploration plays. Mostly just to have some fun and because I know that one lottery pick will pay for all of my exploration losers. But I do this with small investments, looking for 25+ baggers.”
“As for the Pilbara, you may be right about it being the a huge discovery. However, I think you are a bit a ahead of the curve and are making some assumptions. I don’t think anyone can claim to know if the conglomerate has continuity. If it did, then stocks like $pac and $kai.ax would be trading much higher. The market is telling us that continuity in the conglomerate has not yet been determined. ”
“So, what we do know is that the conglomerate does have gold and that sections contain high-grade at surface. What has not been proven is the extent of continuity for these high-grade sections. If it had been proven, then Quinton would have told us already. He’s still trying to prove it.”
“I do get the fact that $KL likely believes in the continuity theory, and that they have some very smart geologists working for them. That’s the reason I added $pac and $kai.ax. This tells me that there is a good chance we will be mining a lot of gold in the Pilbara. But I still think we have to question the continuity theory until it is proven.”
“My biggest concern is the difficulty identifying where to mine, which could lead to mining areas with spare gold, which could lead to grade uncertainty. If they can’t drill to determine a resource area, then that makes it very difficult to know where to mine. They could end up mining in areas where there isn’t enough economic gold.”
“The key is going to be continuity, but even with continuity, you don’t know which direction the gold is trending. You can’t bulk sample huge areas. For this reason, they will inevitably be forced to guess where the gold is. If you can refute this, I’m ready to hear your argument.”
“Perhaps they will figure out an ideal method for determining where the gold is. They will likely have to bulk sample in patterns to determine where to mine, and then hope there is continuity between their samples. If there is continuity, then it will be very economic because it is shallow. If it isn’t, then they have a problem.”
“To give you an example of the challenge. Let’s say you have a 1,000 hectare area of conglomerate. In this area you find dozens of surface nuggets and do a bulk sample. The bulk sample proves out to be economic. Now what do you do? Do you mine the bulk sample area in all directions and see if the entire area has gold? If you do that, then there is no guarantee that gold exists in all directions. And if it doesn’t exist in all directions, which direction do you mine? Your only alternative is to bulk sample patterns and then follow those patterns. Then pray it is continuous.”
“The holy grail is that you do a pattern bulk sample in one direction and find continuous gold that extends for several miles. What concerns me is that Novo has had time to prove out my holy grail theory and has not done so yet. If the area had continuous gold, what you would do is create a large rectangle on a map over an area where you did the bulk sample. Then you would bulk sample all four corners first, then a few strategic areas within the rectangle. Now you are ready to mine. They haven’t done that, so it gives me pause. ”
“Although, I’m still a believer in the continuity theory, because of those numerous nuggets found on the surface. ”
“Some people think that this holy grail theory has already been proven, and just not released to the public. However, if it was, then I would have expected the share prices to be much higher for all of the players in the Pilbara. I’m going remain skeptical until their share prices start popping. I think these deposits will end being diverse shapes of all sizes, and they won’t be easy to identify using bulk sampling. If they do turn out to be easy to identify because of continuity, then these stocks should all start flying soon.”
“The one thing I am waiting for is Novo (or someone else in the Pilbara) to produce a map that shows a large area that is all considered mineralized conglomerate, including the grade. If that happens, then it is to the moon.”
“My guess is that the gold isn’t continuous over large areas. If it was, then the amount of gold would be enormous. I can dream, but that seems like fantasy. For this reason, companies will likley have to meticulously identify deposits using bulk sampling. These deposits will end up being all sorts of shapes and sizes. If this turns out to be the case, then you will have winners and losers, and not all of the Pilbara stocks will join in the fun. If we don’t have continuity over large areas, then hopefully the grade will be good enough to chase down these hard to identify deposits. My two cents. ”
“If you want to read my short analysis on each of the Pilbara stocks, go to GSD and send me an email.”
— from #nvo – 1 Jun 2018, 23:48
@HHorseman (reponse back to @newager23 – Don Durrett)
“First of all I like your site and work. One of the very first mining sources I found when I started out. I have addressed most of your points and I appreciate this kind of level headed discussion (we all do).
” As my members know, I generally avoid exploration plays, which I call lottery picks. I prefer to invest in gold/silver miners that already have the goods. I like to chase cash flow instead of drill results.”
– I would certainly not look at Novo like a lottery ticket that lives and dies by a few drill (bulk sample) results.
“As for the Pilbara, you may be right about it being the a huge discovery. However, I think you are a bit a ahead of the curve and are making some assumptions. I don’t think anyone can claim to know if the conglomerate has continuity. If it did, then stocks like $pac and $kai.ax would be trading much higher. The market is telling us that continuity in the conglomerate has not yet been determined.”
– Yes, I am looking way ahead. My bullishness does not only come from what they have now (or think they have) but how I expect the play to evolve in the coming years. IMHO, the market has never been able to efficiently value the R/R in this play. The market reaction we saw two days ago was a perfect example of how hard it is for most market participants to digest the information and its implications. If I thought the market was always right (especially in a play they have never seen before), then I would have no business being all in.
“So, what we do know is that the conglomerate does have gold and that sections contain high-grade at surface. What has not been proven is the extent of continuity for these high-grade sections. If it had been proven, then Quinton would have told us already. He’s still trying to prove it. ”
– The different sequences will differ depending on a lot things I think… Some sequences might be higher energy than others and at some places, there might have been paleo-highs and what not. One thing to keep in mind is that the forces of nature (winds, tides etc) were much stronger back then. It’s like everything was super-sized. At CW for example we have a circa 5 km “channel”… That’s a very wide channel and looks to be extending into the basin. Just think about how much material and gold that could have taken this watery high way. The drilling, the newly found outcrops and the fact that many companies are finding it basically wherever they have edges of Mt Roe tells me this is big, and continuity will probably be very good.
“My biggest concern is the difficulty identifying where to mine, which could lead to mining areas with spare gold, which could lead to grade uncertainty. If they can’t drill to determine a resource area, then that makes it very difficult to know where to mine. They could end up mining in areas where there isn’t enough economic gold.”
– This will be one of the problems we will have to solve. Novo and KL are fully aware of this and that is why they gather as much information as they can (like figuring out the CW footwall is indeed barren) and that the volcanic tuff might actually end up being a god sent geo-marker. Furthermore, the deeper it gets, the lower the depositional energy environment probably was… And that might mean we will indeed find drillable conglomerate gold down dip. Marindi which has found a lot of fine gold 250 km away from CW is a good sign.
“The key is going to be continuity, but even with continuity, you don’t know which direction the gold is trending. You can’t bulk sample huge areas. For this reason, they will inevitably be forced to guess where the gold is. If you can refute this, I’m ready to hear your argument.”
– I’m not 100% sure what you mean by “the direction the gold is trending”, but we have alluvial experts like John who is a paleo-current whisperer of sorts. There is no reason for the gold to disappear if we see that the same conglomerates are extending further into the basin. Maybe the cobbles will get smaller and such, and that would probably mean that lower weight gold is present (that got washed further than the larger nuggets at CW/purdy). One thing we will have to evaluate is if we have intrusive rocks that were uplifted before or after deposition (like Bellary Dome). If they were uplifted before, then we will have some barren highs with water, conglomerates and gold having been deposited around it.
– Main point is that I have no confidence at all in the market being able to value this play (these constant over-reactions makes it even more true in my eyes). The share structure is tight and lately volume has been very low. We will see what the “real” market values this play when we get more news of potential deals and production plans and such. The fact that Kirkland doubled down and that the Novo board already decided to go straight to production (with the green light from KL) is telling us that they don’t see this as a gamble anymore as to how much gold CW and Purdy’s will have, and that’s probably just the beginning since it looks to be widening as it enters the basin.”
Best regards,
HHorseman
— from #nvo, about 10 hours ago
@HHorseman – “@newager23 Also take a look at the recent post made by @mineralised . That and the fact that we seem to have a marker that we can use to correlate that we are indeed seeing the same conglomerates will probably help us prove up how large this system is (fine gold in core or not).”
@IslandLogger – “newager23 The flaw with the “KL is invested and has a lot of smart geologists, so that proves we will be mining a lot of gold in the Pilbara” logic is that none of Australia’s native successful miners have bought a stake. Who would know better whether it was a profitably mine-able deposit: the local experts, or a much smaller group from a deep vein miner in Ontario? Simplest explanation is that Sprott talked the KL board into taking a gamble. But in any case, it is illogical to cite KL’s support, nearly alone, while not considering the fact that the Aussie mining community is ignoring the Pilbara.”
@newager23 – “HHorseman & IslandLogger Nice discussion. I’m glad I posted last night.”
“First, IslandLogger. You are correct, my comment about correlating $KL ‘s investment as confirmation that the Pilbara will produce a lot of gold cannot be substantiated. That’s not what I was trying to convey – that is was confirmation. The $KL investment indicates their high degree of confidence in the Pilbara story. It’s a good a indicator that gold is going to be mined by $NVO. How much? We have no idea. My assumption is that it will be a lot, but I could be wrong.
I think the reason for the somewhat muted reception of the Pilbara story by the Aussies is for some of the reasons I stated in my post last night. They still see this a speculative story that has not yet been proven. Until someone proves up a large resource you won’t see big moves in most of these Pilbara stocks. For this reason, people getting in now are assuming more risk, but also more upside potential.
@HHorseman thanks for your reply. I thought your comments to my post were well said. Since I poked you a little bit, I was expecting at least a few exaggerations. But your comments were did not contain very much hyperbole. Plus, you educated us on some of the geological dynamics of the Pilbara.
I thought perhaps that you believed that the Pilbara is a can’t miss investment, but you conveyed some concern that this is still a mystery that needs to be solved. Your motivation seems to be to let people know about the potential in the Pilbara. That’s all well and good, but don’t forget to include the unknowns. Gold mining investing is always high risk, so it is always good to constantly question your assumptions.
I’ve been analyzing gold and silver mining stocks for more than a decade and I have 800 stocks in the GSD database, all of which I analyzed. Most gold and silver mining stocks I have analyzed multiple times. My biggest advice to gold/silver mining investors is to understand the risk associated with the stocks you own. If you understand the risk, then you are ahead of the game. If you don’t understand the difference in risk between the stocks that you own, then read my book. There is a link at the bottom of the home page on GSD.
I plan to continue following your @HHorseman comments and I will join in the discussion from time to time. I appreciate your input, especially after reading your reply to my post.”
Here are some further comments from a geo (Dunite) over at ceo.ca that has doubted the precipitation theory the whole time, and feels the tuff markers are proof it is a magmatic source versus a biogenic source.
** Cory, if you see this, it would be an interesting question or topic to pose to Quinton in a future interview, as there are many traditionalists that feel the source of the gold is underground and not from sea organisms.
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@Dunite – “Volcanoclastic tuff? This sure does not sound like Precipitation theory of Biogenic gold by Blue green algae to me. Sure sound like more traditional type sourced Orogenic gold resulting from a Magmatic source. I bet that tuff might even be a Rhyolite tuff. Which is derived from volcanoes blowing their top…..Sniff, sniff, I smell crow cooking in that volcano…..Sounds like thoughts and theory are now evolving towards a different conclusion for the source of the gold…..”
— from #nvo, 2 Jun 2018, 08:27
Interesting results. I look forward to the next samples’ results.