TXRogers wrote: Novo Resources: Year of The Comeback? Or is it the Final Year of The Incubation? Either way, the Market continues to await the birth of NVO’s positive business model. Consider the following statement:
“….So, either the market is right and the Egina type lag gravels have pretty much no value or the market is wrong and there is some- to a lot of money on the table. Well, let’s look at some hints why I believe that Quinton is more likely to be correct than the market…” Wow…..It sounds like a battle between Dog and Darling.
Well, I own a lot of valuable things. Maybe too many. And I have owned dogs. Once again, very valuable ones at that. Nevertheless, I believe that a less polarizing reality exists and that we’re actually in between the extremes stated in the quote above. Novo Resources is being valued at a respectable $336 million Canadian with no confirmed positive economic model. The current Market valuations seem to be quite generous IMO. In addition, I hold many other promising junior explorers which the market is treating much harsher these days.
I always wonder about comments in general regarding the “market being wrong”. To experience a significant reduction in your equity position because you’re “right” and the market is “wrong” is not a financially astute strategy. It’s always better to assume the market is actually correct in the present, and to understand its concerns. The job of any listed company is to convince the market that it can build value, and exhibit a positive growth rate into the future. And to alleviate all those nagging concerns in the process. One is investing on the premise that the company can achieve this ASAP.
My Thoughts on the Egina Prospect Egina is erosional gold at surface and “easy pickings” it appears. Appearances are always tempered by realities though. Mother Nature has performed an important task for us all by applying a grand milling operation over the millennia. It has reduced gold bearing ore into gravels so that we can easily scoop it up and process it. The economical advantage is self explanatory. But where has this taken place and what gold is being addressed?
For example, if the various coarse gold deposits of Karratha were not preserved within hard rock encasements, what would they look like after being subjected to millennia of erosion? And why would the resulting gravel plains be uniformly distributed with gold if surface topographical changes (even if minor) took place over such a time period?
If you were to lay 100 sugar cubes outside on a piece of wavy and warped plywood for a couple of days in the sun and humidity, what would you get? You would get concentrated mounds of granular sugar crystals spotting the plywood surface where the cubes once existed, as well as “run-off” migration flows to the lower surface depressions. High grades of sugar sand of course, and with each partially dispersed mound bordered by nothing. At lease nothing of significance in many places. Yes, Mother Nature has been our mill. But she has likely applied her own unique gravity circuit as well.
The Market may have suspicions that NVO may be a dog. So be it. But I love dogs with pedigree. And I respect people that also love such dogs. So, all fellow dog lovers should appreciate this photo:
https://image.shutterstock.com/image-photo/two-pretty-dog-puppies-profile-260nw-1359179171.jpg Both animals shown above are extremely beautiful and highly valued by their breeders and owners. But when purchasing a pure bred an investor must understand what they are buying to avoid disappointment. As well as know the breeder. So, do you prefer the beauty and consistency of a Golden Labrador Retriever’s coat? Or are you one that favors the unique and chaotic color distribution of a Dalmatian, whose strikingly beautiful spots are randomly distributed over its body? Based on everything to date, I suspect the latter breed is the one NVO investors should relish most.
Looking at Egina up to now, it appears to have been a “spotty” and mediocre gold region at best. We likely have pockets of
higher-grade surface gold distributed randomly across a lag gravel horizon that covers hundreds or even thousands of square kilometers, but it would be a real stretch to assume that the total area is actually economical. The area most likely features swaths of uneconomical ore gravel well below cut-off grade as well.
Therefore, an exploration plan is still required. The recent Novo NR basically touched upon it:
Novo Commences Pilbara Exploration Program. Using modern technology and new processes applied to this exploration.
“Novo also plans to undertake a ground penetrating radar survey of target areas to better assess thickness of the targeted terrace gravel horizon. Importantly, this work may help identify subsurface swales and depressions where gold may be trapped and better help focus bulk sampling efforts.”
And that’s exactly what you want to see as an investor:
Targeting the ultra-low cost / higher grades deposits for maximum returns on investment.
I don’t want to see or hear of NVO planning on mining anything near the scale of the land area it holds. I want to see the best of the best prospects prioritized, and exploited at the lowest cost / highest return possible. And I would like NVO to take the time to scope it out properly.
NVO can apply the additional new concepts it has been pursuing to extract its prize once it is targeted. As previously discussed in
The Concrete Nature of Paradox and Paradigms. Place your order and wait. NVO is a breeder of fine things, and it’s conducting business in “Rhino country”. My advice is to take time to understand the environment and the animal that you are purchasing.
Another Reality Worth Considering: In my opinion, the above view of Egina is not something that would excite Kirkland Lake. Kirkland Lake is a “high octane” operator. As ES has repeatedly stated – GRADE is EVERYTHING in their business M.O.
And for now, it may be just what NVO needs. There are 2 other
Galilean moons in the Jovian system that are generating much more excitement, both on the corporate and exploration fronts. Just look at the drill results and grades being announced by
Osisko Mining and
Bonterra Resounces in the Canadian Abitibi, and NVO and DEG fall into the rear view mirror quite fast.
Many continue to suspect that QH many have differences of opinion with members of his executive management team in regards to the company he wants to build in NVO. It comes up periodically on the blog boards and in past BM / JT webcasts. The dust seemed to have settled for now. And considering the activities with the other Galileans above, it appears there is time for QH and NVO to get its footing without immediate disruption. Especially in pursuing opportunities with other external parties that are in-line with NVO’s vision.
I believe (and hope) we have until Sept 2020 until we hear from Kirkland again regarding NVO.
General Summary. I am optimistic because the above exploration issues are the very issues being addressed by Novo in Egina. But the science, the reality, and the nuances of Mother Nature’s Ways have a little more to go before they bear fruit. Soon, we’ll be there. I am quite certain of that.
So, I am placing my money on the Pilbara – East, West, and Center - not because the market is right or wrong. I am doing so because I need much less convincing of the future value. And more importantly, I won’t suffer in any way if it all needs more time to bear fruit. I own a lot of fine things to keep me busy.
Tx
P.S. I have yet to purchase any music by The Hoff. Despite his stellar performance in Sharknado 3 and his battles with soggy cheeseburgers, he needs a little more time with the Gibson before he pens the NVO soundtrack.