I've been writing about Novo Resources Corp. (NVO:TSX.V; NSRPF:OTCQX) for four years. I have visited the Western Australia flock of lands owned by them three times now. In the first piece I wrote I discussed Quinton Hennigh's theory of how gold got into the Great Oxidation Event, the chemistry of water began to change. Gold precipitated out in the presence of carbon. Gold has an affinity for carbon. I have explained this before in all of my first articles. You should take the time to revisit them if you are not familiar with the theory. And go here. And here.
I've been pretty quiet about the company for most of the last two years. That isn't because things weren't happening of interest; it was because they would have been interesting to the wrong people. In August of 2014 Novo released the first of their BLEG results talking about gold in Beaton's Creek and Marble Bar. Alas, when Novo got all of the BLEG results back the highest indications of gold weren't on their projects, it was to the east of them.
If Quinton Hennigh had made a big deal of how rich the gold indications were to the east of their projects, he would have made the owners of those tenements very happy and very rich. I didn't want to be touting the results for others to see and appreciate. I wanted to give Quinton the time to see if he could do deals on the ground. So Quinton was moving the short-term production forward at Beaton's Creek at Nullagine but working on acquiring the new projects in the background.
Beaton's Creek should have been in production at least on a test basis last March. But everything costs more and takes longer than you anticipate. In the background, Hennigh was doing deals on the high-grade deposits east of Nullagine but permitting the mining and mill for the 30,000-tonne test production took far longer than he anticipated.
The mining permits finally came in and Novo began mining the 30,000 tons of near surface gold bearing material at Beaton's Creek a few weeks ago. At the same time, Novo was doing sampling at the new high-grade Blue Spec shear zone east of Nullagine.
I'm going to quote from that last press release an important concept for investors need to fully understand.
"Novo controls approximately 450 square km of the Mosquito Creek basin that measures approximately 65 km east-west and 30 km north-south and is comprised of a thick sequence of sedimentary rocks that were deposited approximately 2.92 billion years ago. The Mosquito Creek Formation correlates in time with the Lower Central Rand Group of the Witwatersrand basin, South Africa, the most prolific gold district on earth. This is important because it is within this window of time, around 3.0-2.7 billion years ago, that photosynthetic life evolved and the first whiff0s of oxygen it produced triggered precipitation of gold resulting in the formation of the vast accumulation of gold in the Witwatersrand Basin".
The Mosquito Creek basin includes the Mosquito Creek and Blue Spec deposits held by Novo. Results in the past from both drilling and surface samples were outstanding. Recent samples indicated Novo has found some 22 high-grade veins with one ultra-high-grade sample of 525 grams of gold per ton. Other assays indicate 149.5 and 71.4 g/t gold in surface grab samples. The Australian company that Novo did the deal with for the project showed a JORC (similar to 43-101) resource of about 218,000 ounces of gold.
Novo announced on the 17th of August a 10,000-meter program of drilling that will last 3-4 months to test the Blue Spec and Gold Spec portions of the Mosquito Creek Basin. Drilling will begin at the first of September. Expect results to start coming out in October and continuing until the heat of summer in Western Australia stops field work in December for three months.
I was satisfied to learn that the bulk sample of 30,000 tons had been mined and was ready for processing. And that processing would begin in a couple of weeks. My guess is there will be between 1.5 and 2 thousand ounces produced in the test. It will be some of the cheapest gold mining in the world. Novo is literally scraping away the overburden over the near surface reefs and loading the reef material containing the gold into trucks to move to the holding pad. Quinton has designed a small and simple gravity circuit that will recover the gold. That's high-grade project number one.
And the 10,000-meter drill program for the Mosquito Creek Basin will give a substantial test of the truth detector used in a bonanza grade district. That's high-grade project number two.
Don't expect any 130 meter intercepts of 1.5 g/t material but don't be surprised with 1 ounce or higher intercepts of gold over 2 meters. It's a very high-grade shear/vein system and I suspect the intercepts will be significant.
But I mentioned a high-grade trifecta in the title of this piece and I've only told you about two. Number three was a shock to even me and I didn't find out about it until last night.
Someone wrote to me on Thursday the 17th after reading the Novo press release. He wanted to know what the deal was on the Tuscarora project in Nevada. I had to scratch my head because I didn't know anything about it or why Novo was planning a 4,500-foot drill program there starting in a few days.
Quinton literally just got back from Australia and I caught him at the Denver airport on his way home while he was waiting for the shuttle. We chatted for about twenty minutes. When I raised the issue of Tuscarora and drilling in Nevada he explained that he didn't want to shell shock investors into thinking the company was doing some sort of U-turn and bailing out of Western Australia so while Sedar documents did mention him doing a deal on the Tuscarora gold project for $100,000 for 100% ownership, he didn't say anything about it on the website.
When Quinton worked for Newcrest Mining Ltd. (NCM:ASX) in the 1990s he drilled the project on a vein system than had been mined back in the days of the Lone Ranger. The results that Newcrest reported were incredible. Hole TN38 showed one section with more than 368.3 g/t gold over 5 feet. That's greater than ten ounces. The entire mineralized zone was 4.5 meters with the lowest 1.5 meters showing 5.15 g/t gold. Someone had staked the project knowing that Quinton wanted it and made Quinton an offer he couldn't refuse. Drilling is still cheap so Quinton figured it was time shareholders deserved some nice results.
In my humble opinion all of the three immediate programs will deliver more than satisfactory results. Novo's share price has been crippled by a lack of results over the last year and existing shareholders were starting to get nervous. After all, when ordinary Vancouver/Toronto mining lottery tickets are going up hundreds of percent, investors want to see some action.
Any of the three projects, the gold processing of the 30,000 tons in WA, the 10,000-meter Blue Spec drill program and the 1,500-meter drill program in Tuscarora have the potential for moving the peg for investors. Should all of them hit, Nova shares will go a lot higher. This fall is going to bring some interesting news from Novo.
I am biased since Novo is my largest investment position. I have participated in almost every placement the company has ever done including the just concluded one. Novo is an advertiser. I highly suggest visiting their website and reviewing all of the material. Expect to see some blurb about Tuscarora shortly. Do go over the company presentation; it is excellent even if the charts in the back are a little hard to read. Do your own due diligence.
NVO-V $.95 (Aug 22, 2016)
NSRPF OTCQX 88 million shares
Novo Resources website
Bob and Barb Moriarty brought 321gold.com to the Internet almost 14 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 820 missions in Vietnam. He holds 14 international aviation records.
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