Fine then back to NVO
Goldfinger: Yeah, so we kind of went off on a tangent there from the question about Novo Resources (TSX:NVO). And I do want to talk about the vaccine and the virus, but let’s talk about Novo a little bit more because you were very bullish on it early in the year, and obviously it had a tremendous run from 60 cents to over $8. The Pilbara projects were such a focus of the company for a couple of years and now those seem to have really been put on a back burner.
And they’re trying to basically mine this so-so project at Beatons Creek which is having startup issues. What happened to the Pilbara nuggety gold story?
Bob Moriarty: It’s very interesting that you ask that because I was going to get into it. My point about two thirds of the people who are sick in this bakery, the single biggest problem with Novo right now, and every small resource company in Western Australia, is COVID. Now, it’s not the flu that’s the problem. It’s the government reaction. Australia has literally been closed for the last 18 months. Quinton hasn’t been over there for 21 months.
One of the things that Quinton wanted to do a lot of years ago, and Novo should have been in production five or six years ago when I wrote about it. It’s in the book. They had an opportunity to pick up the Jundee Mine and they would be a near $2 billion company right now if that deal had actually gone through, but it didn’t.
The iron ore companies are throwing money at people and because Australia’s been totally locked down, nobody can go into the country, including Australians. The labor problem is absolutely enormous. It’s gotten so bad that even the people working for the government departments are quitting and they’re going to work for the iron ore companies.
Well the iron ore price, I think, shot up to $188 or something like that and it’s below $100 now. The reaction to COVID has caused total chaos in the world. Three weeks ago, the price of natural gas in Italy went up 30% in one day. It’s up threefold in Europe in the last year. There are shortages of food, there are shortages of truck drivers, there are shortages of energy, and Novo has gotten absolutely whacked by this.
They lost their grade control guy, who was a good guy and doing a professional job. And they were right on track up until July. He quits, goes and gets a job at 50% higher pay with the iron ore companies. They had to bring in a couple of brand new, young geologists, who unfortunately didn’t have the background or the skill or the training to be able to do grade control, so they lost control of what they were feeding to the mill and they went from producing eight or 9,000 ounces a month to 4,000 ounces a month.
Now, again, it’s a startup. This is when you’re supposed to screw up. And if you’re a young geologist and they throw you in the sht, you have to get your act together PDQ, and they will. I’m absolutely confident of it, but one of the things that everybody needs to remember is that there’s a relationship between banded iron formations and gold.
And if you have the largest banded iron formation in the world, which the Pilbara does, you’re also going to have the largest gold operation in the world, which the Pilbara does. So yes, they haven’t moved nearly as fast as I would love to see them, but it’s not a function of bad management. It’s a function of bad government.
NVO.TO (Daily)
Goldfinger: So Novo is definitely a tax loss opportunity candidate here in the next few weeks. I’m going to ask you a tough question. If you had to just choose three tax loss, silly season stocks to buy in the next month, what would they be?
Bob Moriarty: Irving (CSE:IRV) , same situation with them. 100% of the problem is the government’s reaction to COVID. Novo Resources, which is the cheapest they have ever been in real terms, and Labrador Gold (TSX-V:LAB), which is another New Found Gold, but it’s six months behind New Found Gold.