Novo Resources – Answering your questions on production and exploration this year
Quinton Hennigh, President and Chairman of Novo Resources (TSX:NVO – OTCQX:NSRPF) joins me today to provide a quick update on what the Company up to right now and how the progress towards production is going. We then get into questions that have been sent to me over the last couple weeks. These questions range from exploration this year, production, and the move to the main board TSX.
Please keep sending me your questions to Fleck@kereport.com.
Click here to visit the Novo website and review the recent news releases.
I own both Kirkland Lake and Novo and was shocked and confused like many others by Kirkland’s decision to sell out of its Novo position at a HUGE loss. I asked myself, what would make Kirkland so impatient where it couldn’t wait another 18 months for a higher Novo stock price? Why did Kirkland chose to sell during the seasonal down period for mining and exploration stocks?
I now believe since Kirkland has essentially forecasted zero production growth (not to be confused with dollar sales growth) for year 2021, Kirkland needs the cash to return to Kirkland’s shareholders in the form of dividends and a share buyback, and for their own exploration costs (not controlled by others). My decision now is to put in place a Kirkland sell order and a further Novo buy order. That being said, the overall U.S. stock market is so overvalued (parabolic) that I expect U.S. stocks will correct by March, and based on this belief I would be viewed by others as very timid with my further Novo purchases. And lastly, will a coming correction in the U.S. stock market greatly affect a foreign stock like Novo, as was the case in March 2020?
I’m old and I have learned in life that smart people like to ask lots of questions. So keep asking questions…
Hi Sach…Welcome in….Hopefully , Ex / Matthew , / Glenfidish , will spot your post , & give their oppinions.
Sach. Good post regarding Kirkland Lake and Novo.
My perspective is that KL and Sprott owed Q.H. a debt of gratitude for his exploration work at their Australian operations and they bought into his Novo when the potential grew so large. Since then their investment criteria and business strategy has shifted after buying Detour Gold, and that doesn’t have much bearing on Novo’s future. I agree that yes they wanted to shift towards more dividends and share buybacks for the larger institutional and other hugh net worth individuals parking money in their stock.
I’m a Novo shareholder BTW and excited about their future.
Long term holder. Ever upward.
I’m a holder too.
From the recent pullback in Novo share levels, it should be mostly ever upward, with corrective moves along the way. 🙂
I look at KL and Novo like McEwen and Great Bear. McEwen pulled his personal investment in GB to move to his interests in other projects, best I can remember.
A solid point David. Yes, Rob McEwen and McEwen mining liquidated their Great Bear positions (which ended up going up much higher after they sold) to keep the lights on at MUX.
Hi Ex, I think Kirkland Lake sold Novo to get cash because there will be a consolidation of properties in The Kirkland Lake Mining Camp. That is their turf and it makes sense for them to be ready to acquire juniors that are in the process of drilling on the two fault zones that run through their property and beyond much like Pure Gold and GoldON. Mistango Resources and Orex comes to mind. DT
That makes sense as another factor as well DT.
Let’s not lose sight of Kirkland Lake’s position in Bonterra and Osisko Mining in the Windfall Lake / Urban-Barry area play which is quite ripe for a consolidation, or Wallbridge mining all around their Detour Lake mine & properties.
Kirkland Lake is far more likely to acquire those companies (Bonterra, Osisko Mining, or Wallbridge) than Novo at this point, as Australia isn’t their growth focus… Canada is.
That isn’t a flaw with Novo, just a strategy and focus change for KL, so they sold their Novo Res shares to raise funds for a different acquisition, stock buybacks, and dividend payments.
I’d much prefer to see Novo go it alone and use the organic growth from Beaton Creek and their new mill to fund exploration and developments at Egina and Purdy’s Reward.
Check out the expanded land position that (WM) (WLBMF) Wallbridge Mining now has under their umbrella; due to their acquisition of Balmoral Resources in the spring of 2020. What Wallbridge has amassed is a YUGE mineralized land position, and unlike Balmoral, the team at Wallbridge seems really focused on moving those properties forward.
https://cdn-ceo-ca.s3.amazonaws.com/1fvgbp2-Detour-Fenelon%20Gold%20Trend%20Map.JPG
Ding, ding, ding….
(WM) Wallbridge Signs Option Agreement with (KL) Kirkland Lake Gold on Detour East Property
23 Nov 2020
“Under terms of the Option Agreement, Kirkland can earn a 75% interest in Detour East by making expenditures totaling $35 million on the Property, as described below…”
(WM) (WLBMF) Wallbridge Mining – Corporate Presentation:
https://wallbridgemining.com/site/assets/files/1634/wallbridge_mining-20201130.pdf
Soon as the excitement of the TSX listing wears off, this thing is going back down the gurgler.
Not likely, with Beaton’s Creek going into production and revenues beginning.
Very interesting insights Sach. Thanks for posting!
They put out press releases for every useless little scrap of information and are featured here far too often. Is it a marketing company or a gold miner?
Terry, maybe you haven’t realized that Novo Resources is a KE Report sponsor, and so their regular news updates are covered to keep investors up to speed on all the different developments at their various properties.
Novo Resources is a large gold developer and explorer about to graduate to become a producer (something only 1% of exploration companies will ever achieve). Their move into production already elevates them head and shoulders over the vast majority of Gold Jrs.
If there are other companies you feel deserve more attention then there is nothing preventing you from sharing those companies or their news with the community here.
Novo is pretty much the poorest choice amongst its peers, on just about any time frame.
Terry, you’ve been pretty tough on Novo on 3 different posts in a row on this thread, and I’d be interested to get your insights and reasons why you feel it is, in your words:
“pretty much the poorest choice amongst its peers, on just about any time frame. ”
Personally, I’ve been following it since late 2015, and finally positioned in early 2016. I was initially invested mainly on the Beaton’s Creek development story, but then sold on the large share-price runup when the metal detector videos surfaced of finding all the gold nuggets in the conglomerates out in the Pilbara.
Since then I’ve followed the news of the company closely, and all their different land acquisitions, ore sorting trials at Commet Well/Purdy’s reward, and their acquisition and exploration of Egina. In particular, their research into the ore-sorting strategy looks really promising and could be a game changer for how to mine those kinds of nuggety deposits (similar to how the diamond industry uses ore sorting).
>> In addition it was encouraging to watch Novo Resource forge a strong relationship with a strategic investor like the Japanese powerhouse Sumitomo.
When earlier this year Novo announced buying Millennial Minerals Limited for their land & in particular their permitted and build processing mill, then that got my attention. The reason I was personally interested in following their story back in 2016 was for the development thesis of Beaton’s Creek to move into production. Back then gold was still coming out of it’s 5 year bear market from 2011-2015, and investors were dubious that Novo would be able to raise the funds and get their project into production. Then suddenly, in a wild exploration breakthrough on how the conglomerates hosted a massive amount of gold in their other Karatha projects, the focus radically shifted.
Fast forward to today, and now the Novo team has advanced their understanding of those projects more, acquired new land and projects like Egina, and ultimately come back around full circle to now putting Beaton’s Creek into production and they have the biggest thing is that they now the mill and path forward in generating revenues. Those production revenues will help to grow organically and continue moving forward their other potentially massive exploration/development projects. When the news broke about acquiring the mill from the Millennial Minerals acquisition, I decided to get start getting positioned again. Then towards the end of last year, when the corrective move in the share-price played out from the KL shares being sold, hurting recent investor sentiment, then it seemed like a good time to add to the position. I added a second tranche on 12/11/2020, and if things push out of the gate well for them once going into production this year, then I may add another tranche for a full position.
That’s my personal thesis for investing in (NVO) (NSRPF) Novo Resources, and I believe they will appreciate as they morph from a Gold developer/explorer into a producer over the next 2+ years.
Here is an updated (NVO) (NSRPF) Novo Resources Corp – Corporate Presentation for January:
https://www.novoresources.com/_resources/presentations/corporate-presentation.pdf
Well said Ex. The thing that really gets me excited about Novo is their cost structure. Their deposits are all shallow so extraction costs will be lower than most miners. This is only going to get better as they incorporate ore sorting technology. Their profitably/cash flow is going to surprise a lot of people. I was in for the run in 2015/2016 which was spectacular. I have increased my position four fold since then. I expect when the stock breaks out next it is going to make the 2015/2016 run look like child’s play.
+4 Charles. Agreed amigo!
I think the spelling of the OTCQX Novo symbol above is incorrect. It should be NSRPF, not NSRPH.
Excelsior
Taylor Dart wrote a good article about Novo at Seeking Alpha, claiming there is much better value elsewhere.
Yeah, I saw that piece from Taylor Dart, but part of that is T.D. has an agenda and is bearish on it because he went into the Novo Resources room over at ceo.ca under 2 different aliases and got his tail-end reamed out critiques dismantled by dozens of investors including geologists, and large investors in the company that knew a lot more about the fundamental reality and had actually been to Novo’s properties like Erik Wetterling (the Hedgeless Horseman) & Bob Moriarty, and few others that have actually been on site visits out to Austalia with Quinton Hennigh. Taylor continued to press his point under his first alias until he got booed out of the room. He’s come back and been in some epic tussles with Bob Moriarty over the last few months (where Bob was cracking me up), and so T.D. has a chip on his shoulder about Novo. I take everything he says with a grain of salt on most companies, but think overall he’s on the conservative side of reviewing company valuations. He also often leaves out key value drivers for a company or assigns them little mean, and often later writes they performed better than expected, and then calls them overvalued. He did that much of the way up in Pure Gold over the last year, and was kept saying Jaguar Mining was over-valued the whole time is has been rising.
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Terry, what other fundamental reasons or rationale do you personally have to come to the conclusion that (in your own words): Novo is “ipretty much the poorest choice amongst its peers, on just about any time frame.”
I curious how you analyzed the other 90+ Gold Developers and came to the decision that Novo was the poorest choice on any time from of that whole group?
Sounds like “Buy Novo” is in order. (Do your own DD)
On one side we have Dart and Huebert. In the other corner we have Quinton, Eric W., T Rex, Moriarity, Excelsior, and Bonzo. Place your bets.
Bonzo when you put it that way, I’m glad to have a long position in Novo Resources. 😉
I have just retired from gold mining in the Pilbara having worked at Telfer a 30 year mine life and about to start another 35 kilometers away. Back in the 60’s when I was a young fellow and wanted to go metal detecting an old timer said go to the Pilbara. I asked where and was told any where. Nova will never know how much gold they have due to the style of gold and the vastness of the Pilbara. They may be still working it out and mining in 50 to a hundred years. Hang on as I am for a golden future.
Great comment Kal, and nice to see you posting here at the KE Report.
Yes, the amount of gold that Novo Resources has may be so vast that it will decades to mine it all, and that is why Bob Moriarty believes Quinton may have developed one of the largest Gold production stories of the next generation, with their prominent land positions, experimentation with the best methods of mining the conglomerates using the ore sorting, and the simple extraction process of digging out the conglomerates, doing gravity recovery/ore sorting, and the replacing the conglomerates and top soil. It will be a fascinating story to watch develop this year and for many years into the future, and relatively speaking is still pretty “early days.”
Cheers!
My daughter is an archaeologist contracted to the government to go snooping around that area. Soon as they find an old bone she’ll be all over them like a bad rash. It’ll take her six months to study that bone and approve further digging. Has Quinton considered that problem?
That is a unique and interesting concern to have, but their land positions are massive, and the old bone and rash will likely be concentrated to a very small area. I don’t believe Quinton is losing any sleep over that concern.
Novo is -38% this past year. I’m not tough on Novo, they are tough on themselves and anybody who invested in their shares. SBB, SKE, MOZ, MZZ and many others are way up. Even MUX was only -14% last year. I’m not tough enough on Novo.
Hey Terry. That’s the best you got?? sheesh
Dick Tracy, Kindly share additional comment on KL possible interest in Orex which I thought is concentrated on silver projects in Mexico and also has a gold project in BC, Jumping Josephine. Thanks.
I am betting on novo!
Obviously Terry is dart XD
Sounds good. Glad I bought more NSRPF@1.92 yesterday. Hope to live to see it go to 100.