The Novo Riche Get More Data
As of today, with 146 million shares outstanding and a share price of $7.70 Canadian, Novo Resources has a market cap of right at $1.1 billion based mainly on one assay result from Purdy’s Reward. As Brent Cook so appropriately points out, that’s absurd.
Nobody in history had a market cap of $1.1 billion in the gold business on the basis of one result. So if you need a lot of drill holes and data to determine fair value, Novo is absurdly overpriced.
If however you are in the club of Mark Creasy, Eric Sprott, Greg Gibson, Quinton Hennigh, Rob Humphryson, Kirkland Lake Gold and myself and you buy into the precipitation theory of gold deposition, you will think Novo Resources is absurdly cheap, given the potential. Already the company has made dozens of new millionaires.
On the 17th of October, as promised, Quinton Hennigh released the first drill results of a major core drill program. While the core is not assayed and may not be, the information in the press release is vital to the new Novo Riche.
Novo completed 12 core holes drilled on fifty-meter centers in the last two weeks. The core holes show the conglomerate to be between 4 and 14 meters in true thickness. The conglomerate is covered with a layer of basalt lava that shows it was deposited in near a shallow shoreline. Both the conglomerate layer and the basalt appear to be sheet-like as opposed to channelized, as many may have believed.
(Pillow lava near shoreline)
While metal detecting has been done at various areas in all levels of the conglomerate the most gold seems to be in the middle and lower portions of the conglomerate. Indeed, gold doesn’t float.
Buckshot pyrites such as found at Beaton’s Creek and in the Witwatersrand Basin have been located in the drill core. In addition fossil remains of a stromatolite were found in the conglomerate. So we have strong support of both bacterial remediation and Wits like pyrites.
Quinton made a very important statement in the press release and I’m going to quote it. “Gold-bearing conglomerates were clearly deposited in a shallow marine setting, an environment that can potentially persist over large lateral extents. These are not erratic, localized river-lain alluvial deposits.” That’s a BFD. This is not a typical placer deposit at all.
Novo is adding a second core rig in a couple of days. With two rigs turning Novo expects to complete 10-12 core holes a week. The large diameter 17.5-inch RC water well rig will start drilling soon.
Nagrom, the assay lab, has brought in a new Steinert sorting machine for processing the samples. Readers should remember that 82% of the gold was in 2% of the material. Nagrom will begin processing in a week or two but do not expect assays until late December and possibly January.
The conglomerates dip gently at a 2 to 20% angle to the southeast into the 100% Novo controlled 7,000 square kilometers along strike and down dip from Comet Well and Purdy’s Reward.
When I was in Karratha nearly two months ago I was not only interested in grade, I wanted to know conglomerate thickness and horizontal extent. At the time we could only guess thickness and the guess was close. But I wanted to know how far away similar gold has been found. While we were in town we stopped by the local gold buyer and bought some samples. One, identical to that found at Comet Well and Purdy’s Reward, came from an area 125 km to the east. That gave me a great idea as to horizontal potential. Since then there have been multiple releases from other companies claiming to have found “watermelon seed” gold in other areas near and far.
Indeed, the share price of Novo is absurd. But in which direction?
When I started buying Novo at $.25 when they first went public, the company soon became my largest position with an average cost of probably $.80. Now it’s bigger so I have to be biased. Novo is an advertiser, do your own due diligence.
Expect press releases out at least every two weeks for a very long time.