TXRogers wrote: The general concept of entropy is accepted by the scientific community (the thermodynamic law that states the degree of disorder always increases with time). But great debates can occur centered around the paradoxical situations where order reveals itself and remains resilient within the chaos. Such examples like large scale urban communities, the Periodic Table, the wonderous emergence of life, the celestial ballets taking place in the heaven’s above us, etc.
Problem statements and viewpoints can emerge which make for interesting discussion. More the paradoxes than problems. For example, let’s examine the premise of a positive “Game Changing” investment event in the Pilbara and Novo Resources. But what exactly is the game changing property? And where is the positive economic revelation in such a claim?
Most of us realize that answer lies with the introduction of new technological solutions and the “rise of the machines”. Processes and machines that compress time and turn dust and gravel into economic value. But what has changed in the game? If one ever witnesses two computer programs playing chess against each other, a single factor becomes apparent almost immediately: The compression of time. The game is executed under the same rules and perplexing strategies that have been played out countless of times since the invention of the game. However, in the case of machine application, moves are executed in less than a second. Same game. No change except for an extreme acceleration in execution time. If a cash prize would be offered every time there is winner, money would be doled out very quickly.
The Effect of Time-Value The marine gravels of the Pilbara have generally remained in their current form since humans started walking upright on this planet. They have experienced very little physical change in this miniscule period of geological time. Explorers and Fossickers have walked across the flats for decades and extracted tens of millions of dollars in gold. But it has been a marginal to negative economic endeavor for one reason: The extraction has been incrementally drawn out for over a century.
However, there is now the emergence of a new reality pertaining to these gravels. A change applying to the game play execution time primarily. The fossicking activity is now grown to an industrial scale potential. Basically, same concepts in the physical extraction of gold that has taken place over a century, but now being compressed into months. Scooping, shifting, sorting, and discarding all unwanted material at an exponentially accelerated pace. The time value of money being explosively exposed as a result. Industrial Scale Fossicker has arrived.
Banking on a Mineralized Continuity Definition of Constant: Something invariable or unchanging such as:
- In Mathematics: A quantity or parameter that does not change its value whatever the value of the variables, under a given set of conditions.
- In Physics: A number expressing a relation or property which remains the same in all circumstances, or for the same substance under the same conditions.
Let’s move into the subterranean world. This is where the topic inevitably moves beyond the realms of the fossicker. And into the realm of the statistician and the mathematician. For those that cannot understand fully, these vocations can often be mistaken as being similar to that of a magician. But they are not, and there is no magic. No different that the statistical probability shells that define locations of charged electrons around the atom. They can never be physically observed but they have been brought into our reality by mathematics and physics. And as a result, atomic science exists and can be utilized in our Newtonian world.
For example, another paradox (seemingly layered with increasing economical obstacles) presents itself to us with the conglomerate hosted coarse gold. Starting with a simple premise, and then working down the logical levels to a seemingly insurmountable conundrum. As Novo likes to refer to it: A New Paradigm in Gold Exploration and Investing. Let’s examine how the paradox progresses and builds through the different levels.
Level 1: A Constant Gold Endowment - The Gold is There It has been discovered (with a high degree of certainty) that 50 one-kg pure gold ingots (1608 Troy ounces) exists right under our feet. A value at approximately $US 2.1 million. That’s a nice fortune for anyone.
Conclusion: We’re rich! Level 2: Fragmenting the Gold Endowment But before we claim it, let’s take our 50 one-kg ingots and break them up into 10,000 smaller pieces. No piece shall be of the same size or shape, but they all remain pure and uncontaminated in their various shapes and sizes. So, despite being in fragments, our fortune still remains intact.
Conclusion: We’re still rich. Level 3: Defining a Continuous Space Let’s now take these 10,000 bits of gold and throw them into a layer of freshly poured concrete (the very hard kind), the size of an American football field area and 1 meter in thickness. 57,600 square feet (5,350 m2) x 1 m thick or 5350 m3 volume. The concrete hardens and weighs 2.6 tonnes/m3, making for 13,910 tonnes of material. The resulting gold in our concrete slab would be approximately 3.5 gm/tonne
Conclusion: Acceptable Gold grade, we just have to extract it. And that will cost some money. But that’s fine because grade is acceptable. We have ourselves a mining opportunity. Multiply it by 10,000 football fields and we’re going to be even more well off! Level 4: A Continuous Space, with random fragments inside. Similar to Level 3, except this time the fragments are randomly distributed within the 5350 m3 volume of concrete. They may be distributed relatively uniformly, or concentrated in the middle of our slab, the top, the bottom, the sides, or in clusters throughout. Let’s be conservative and assume as random as random can be. The concrete rectangular slab remains as even, hard, and continuous nevertheless.
Conclusion: Acceptable Gold grade, but now we have to locate the gold before we can to extract it. And that will cost even more money if we want to find it. This could get expensive. Level 5: A Continuous Space Hidden from View. Now, take our gold endowed slab, tilt it diagonally in space, and place into another pool of different type but equally hard concrete. The original slab is now encased in yet another rock-hard environment (with the new concrete containing no gold). If lucky, there may an edge of our original slab exposed at surface but mostly likely it will all be completely subterranean and hidden from sight. Only narrow drilling can define the slab boundaries.
Conclusion: We cannot accurately locate the majority of the gold because it is not exposed at surface and hidden from sight. Are we sure we can afford the cost of finding all the gold fragments and processing them back into their original pure form? Level 6: Great News from the Edges of Space. It looks like a team of field geologists has traversed an exposed edge of our gold hosting concrete slab. And they have discovered more gold fragments. More gold can be seen than originally expected, at least in some spots.
Conclusion: Based on these observations, it looks like we could possibly have 5 times the amount of gold we originally estimated in Level 1. More ingots to be had! We’re all rich again! Maybe, even more so. Great news. Level 7: Great News with a Condition. But because the gold fragment discoveries in Level 6 seem spotty and in patches, it may be prudent to expand our mineralized concrete slab size to a 5-football fields in area and 1m thickness.
Conclusion: Isn’t this going to also cost 5X more to find all this gold and extract it? This is getting a bit confusing and looking even more risky. Seems like a lot of upfront costs and not a sound business case. Level 8: Economic Paradox. The Market Reluctance We arrive at a harsh market reality: If the gold cannot be accurately located, is it really worth searching for it? How can we accurately determine its location, and what is the recognized real grade per tonne? If one follows the leveled and logical paradox levels above, it becomes obvious that the mathematics will never solve the problem and diminish the risks. And that the risks are much too high to invest in such a wild speculative adventure. Money and Entropy do not go well together.
Conclusion: What in Heaven’s name are Novo investors thinking? It does appear that our Captain has led us all into an investment wilderness. With all the ups and downs associated along the journey. But this is only a perception by many investors, resulting from the inability to read the charts and instruments correctly. To understand the “big operation” in work.
The paradox above is what is really posing the obstacles. Gold is staring everyone in the face. But there appears to be no way to confirm a positive business model without an apparent leap into the unknown. The gold deposits are looking more and more like random events trapped in hardened continuous rock matrix layer that is only partially accessible.
So, back to the conclusion: What in Heaven’s name are Novo investors thinking? Maybe a hypothetical Q&A exchange may reveal some interesting viewpoints:
Question: As a problem solver, do you understand the paradox and see a way out this situation above?
Answer: I really don’t understand the paradox.
Question: So, I assume that you don’t understand the problem that is being presented?
Answer: I understand all the details that are described, but I fail to see an obvious problem.
Question: You do understand that there is no direction or a mathematical means of explaining the nature of coarse gold to be found, or where it may be accurately located within the selected field of buried concrete?
Answer: I understand. But you do claim to have a means of directing me to the field itself, and a statistical means of approximating how much gold is ultimately held within it.
Question: Yes, but can you explain why no problem exists in your eyes?
Answer: The only thing that really matters is the Level 1 gold endowment and the Level 5 reality. The rest of the discussion levels are pointless really. You stated that you can mathematically establish Level 1 with good confidence. So, your economic models are not measured in grams per tonne, or any other conventional means for that matter. They are measured in the amount of gold that the Powers-that-be have endowed within the boundaries of an average football field volume of rock. All you need to do is locate those fields of mineralized rock, place a cost on how to remove, crush, sort, and smelt the gold all back into the original ingot form. A lot easier than pointlessly trying to quantify the amount of gold bits in each ton of gold bearing rock.
Question: So, you’re basically saying that this is just a case of ignoring industry standards and changing the parameters on how exploration is applied and mine planning is formulated? If one knows approximately what gold will be found within a mineralized volume, then the priority is exploring for football fields and not the gold itself?
Answer: Correct. You have no issues with locating the mineralized fields at or below surface via conventional techniques, so I see no paradox or problem there either. Estimate how many fields, their orientation beneath the surface, and how much cost to extract the total gold. A practical approach for a situation such as this.
Question: Do you see a viable business here?
Answer: That depends on your where you want to hunt for the mineralized rock slabs and the conditions of their encasement. With 50 kg of gold, there is approximately $2 million of cost leeway per field (at today’s gold prices). That’s your cost limit in this situation. So, I recommend that you go explore for the most accessible field slabs first. Extraction of the more costly fields can become Optionality plays that come into effect with increasingly higher gold prices.
Chasing grade or ounces per ton is a diversion when you are trying to recover a determined quantity of gold from an identified volume of mineralized rock. It is the final cost AND time of extracting the mineralized volume itself that defines the business potential. Over the last couple of years, we see that Mother Nature may have once again revealed another trick in her game. The introduction of localized order within what appears to be a greater disorder. This is where Novo investors find themselves now. It is not a pursuit of positive economics around a Discontinuity that is sought. It is a case of identifying and costing out what can be defined: The extraction of an estimated prize randomly distributed within a defined Continuity. Consider these factors:
- The Prize: Determined by actual data and statistical processes. A science that will be further refined as data grows under actual mining. A 43-101 compliant process that will become more robust will each exploration and mining activity that occurs in the Pilbara system. As of now, Beaton’s Creek is the pin-point dot which is recognized with just under a million ounces. Comet Well / Purdy’s are tracking along a similar path and will eventually have resource figures applied. And so on.
- The Continuity: The rock strata where the Prize is hosted. A clearly definable matrix of both vertical and horizontal dimensions. It is the extraction of the Continuity itself that defines the cost. Depending on its spatial location, proximity to surface, nature of surrounding encasement, and the time to process will define the economic attractiveness of this Continuity. Or as Novo has always referred to it: “A New Paradigm in Gold Exploration and Investing”
- The Discontinuity: The seemly random distribution of varying sized fragments of coarse gold throughout the hosting matrix. The one variable that will likely remain forever. This is the Old Paradigm which has both the industry and market so deeply disturbed and reluctant to participate.
The previous Q&A example above clearly focuses on items 1 and 2. It is this focus that renders the 3
rd factor as minimal. The market has priced the whole NVO play at under $300 million US dollars, or about 7,400 one-kg ingots of gold. But under what mix of premises does the market value represent? Does the market lean more towards the 3rd factor more than the first two? I suppose it must before it decides to "boldly go where no man has gone before".
The Prize up for grabs is infinitely greater than the current value of NVO.
NVO is in the midst of determining what lies within a given mineralized space at or beneath the surface, with enough confidence to produce an industry recognized 43-101 compliant reports. The mineralized zones which host the gold are also being defined and costed out. These costs will vary. But they are very quantifiable. And that means business models can be constructed. In addition, new processes and machinery have been identified to compress uneconomical time spans into positive and economical business solutions. The process has just STARTED.
A final comment should be made regarding the “rebranding” of NVO from a more conventional exploration and discovery play to a new approach. Successful branding should never be neglected, and its impact varies considerably between cultures and markets.
We all know that the original Star Trek series announced the idealistic and bold “voyages of the Starship Enterprise, its five years mission, to explore strange new worlds…..”. However, in
Japanese the name for Star Trek, at least the original series, was ("uch daisakusen), which translates basically into “Big Operation or Battle in Space.”
The Paradoxes are yielding way to the new Paradigms. Just in time for a secular Gold Bull run.
Tx