The Novopoor are Crying Boo Hoo
Reality reared its ugly head on Friday November 24th. For brevity, let’s call it “Black Friday” for the Novopoor as Novo released a press release acknowledging that the idea of measuring grade by using a large diameter drill rig simply didn’t work.
Back in July when Novo showed the first video of people finding gold using a metal detector at Comet Well, I wrote a piece and said,
“It’s going to be a real bugger to get accurate grades due to the nugget effect. Given that the nugget found by the metal detector and pried out of the ground on the video is almost an inch in length it is going to skew any assay results if it is left in or if it is left out. The only way to determine true grade of this project is going to be either average a hundred random samples that represent the real distribution or to mine it.”
I continued in that vein in an interview I did in August just after I got back from Australia.
I seem to have hit my stride in a piece I wrote in late September.
I continued in October but I really doubt many people understood what I was saying.
Where is the richest gold?
Right! It’s at the very bottom of the gravel right on and in the bedrock.
Novo’s press release that started the bleeding had a number of interesting issues, some minor and one giant consideration.
When I read the press release, first of all I thought about cutting my wrists, then I went and puked for an hour and then I sat in a dark corner and cried all afternoon. Basically there is not any gold in the Pilbara, first assay results not withstanding. Novo is fucked, Artemis is fucked, De Grey is totally out of the picture. We are all going to have to get a real job or go on welfare. Listening to John Kaiser talk about how bad the news was made me even more depressed.
Except for the very most important part of the news release. I quote, “Novo wishes to advise that the company has recently been notified by Artemis that the Western Australian government's Department of Mines, Industry Regulation and Safety (DMIRS) has granted a 20,000-tonne excess tonnage permit for the extraction of a bulk sample from the Purdy's Reward tenement.”
I spent the entire night tossing and turning thinking about the problem. What would the Romans do if they couldn’t fall back on JORC? What would the Spanish do if they couldn’t translate 43-101 into Spanish so they would have someone to blame for not making money?
I know exactly what the Romans and Spanish would do. They would go down to Home Depot and buy 200-300 man portable crushing machines. They would round up some wetback labor and issue each of them one of the man portable crushing machines. They would crush the conglomerate that already comes to surface to ¼ inch minus and they would run it through a sluice box with some 65# expanded metal over miner’s moss.
I figure if Novo/Artemis hired a portable crushing machine and had someone spend two days building a nice man size sluice box they could be in production in a week for under $1 million for the yellow gear and plant. You would lose some gold but who gives a rat’s ass when you are doing 2 ounce plus material. Your all in costs would probably be in the $60 an ounce range.
Doing 500 tons a day (that’s 200 yards for those who think alluvial or placer mining) would take you 40 days to generate about $58 million USD or call it maybe $50 million profit all in split evenly between Artemis and Novo. If you got permits twice a year to do 20,000 tons each time you could justify the market cap of each stock even now and wouldn’t have to work very hard at all. You don’t need a big plant and while Artemis glosses over it, their Radio Hill plant is for sulfide ore, not nuggety gold. While they say they are putting in a gravity circuit, this gold is perfect for nothing more complicated than a sluice box. You don’t need a 30 year old rusted out plant.
What everybody in WA needs to do is pull their heads out of their asses and stop being stupid. Let me remind my readers of what I said in September, “This is an unconventional deposit. It has to be explored and tested in an unconventional way.”
There is no better way to test grade of any deposit than to produce. This is an unconventional deposit. Just because no one has ever run into this style of gold before doesn’t mean you have to measure it to produce. It’s so cheap to produce that that’s exactly what should happen.
Sure, the institutions are going to have to wrap their heads around the concept of a mining company that makes money and the mines department will have to realize that neither JORC nor 43-101 came down the mountain carried by Moses. In California during the gold rush, the prospectors used gold pans to measure gold. When they found it, they went into production. We were lucky enough in the Pilbara to have the prospectors stumbling through the desert waving metal detectors. What is the difference? If a gold pan finds gold and a metal detector finds gold, isn’t that enough?
But what do I know when there are so many experts around all of whom have the answer to every question?