RE:NVO will breakdown?TheMiningEye wrote: Noticed this on the gold telegraph bullboard:
"Listen, I applaud the work the guys have done at getting the Novo story out there, but on a valuation basis, can someone please help me justify the capitalization? Like folks, this was 63 cents in July it peaked at $7.00. My questions are a) latest drill results showcase difficulty in exploring the coarse gold system, what makes you bull confident they can navigate around it? b) It is several years away from providing an economic resource… why is it worth half a billion? c) With so many other jrs, why is this trading like we are in a raving bull market? d) Companies with ACTUAL gold reserves are trading lower then this? WTF? What makes you want to believe in this then those companies?"
I have been long for a while, but these comments concern me if anyone bulls could make the case against this guy... would be appreciated (
https://www.goldtelegraph.com/board/novo/ )
If you have been long for a while you should know better, you've got some reading to do here. Good luck!
I'll take a quick shot at it:
A) Drilling works only to understand the geology, and later on they can use that as markers for where the most interesting targets are. Bulk sampling is the way to go in a nuggety system, and possibly trial mining next year.
B) Its not "severeal years" away from an economic resource. Even a few hundred thousand ounces are economic at surface. I am very confident they have many millions.
C) Because Novo has the potential for a few hundred million ounces. Others have the potential for a few million ounces.
D) There is no other resource company in the world with the potential novo has. Some have a few million ounces in resources. But none have the possible economics novo has. Only few have similar good management. None have the cash balance and almost none have the backing of the best mid tier gold producer. Besides that, Australia is a tier 1 mining jurisdiction.
Exploration is a dangerous business, very expensive and most explorers dont have cash.
If i choose to invest big time in an explorer (this is actually the first time i am in so deep in one), it has to have huge potential. If it isnt a potential 10+ bagger, and there is no need for a financing, you shouldnt invest in one because the risks are to big.