I took the weekend to digest the latest information regarding Novo and trying to work out how I believed the latest pieces of the puzzle affected the investment case. When going through the material multiple times I thought it might be worth it to make a post about it. since Novo is a very “information heavy” case and a lot of people are having a hard time staying up to date since most have regular jobs. Took about a day to transcribe, find sources and summarize the info etc. Note that this post includes my own thoughts, speculations and even some rumours that cannot be guaranteed to be correct. Enjoy! 

Background

 

Summation of New Information

 

1. Purdy’s Reward

  • Modest grades below and above the high grade Purdy Pay Zone (PPZ)
    • Not ONLY in the PPZ.
  • Recently put together a budget with Artemis Resources.
  • Discussing work plan with Artemis ATM.

 

2. Comet Well (Powerline)

  • A continuation of Purdy’s Reward.
    • Same conglomerate package seen at Purdy’s Reward sitting directly below Mount Roe basalt.
  • A second unit below the Purdy’s Reward conglomerate sequence.
  • In aggregate we have 30-35m of conglomerates, true thickness.
    • Circa 15m of Purdy’s Reward conglomerates
    • Circa 15m of the new conglomerate package underneath
  • “The conglomerate below it is where we are seeing a lot of gold, that we did not see at Purdy’s Reward
    • Note that he said “seeing a lot of gold” and then emphasized that “we did not see at Purdy’s Reward”.
    • Suggests it’s quite a bit richer going by what they have seen so far.
  • Currently stepping out, drilling down dip and expanding the foot print of the drill area.
    • “Finding more and more and thicker conglomerates”
  • Gold detector strikes not only along the basal surface. (Unlike Purdy’s Reward)
    • “There’s gold well up in the conglomerate sequence in this lower unit”
    • “We see disseminated nuggets”
    • “I think we might have multiple horizons in this total 30-35m thick package where we are seeing gold being derived”
  • “The presence of considerable pyrite tells us this is indeed a different section of rock”
    • “Most is detrital”.
    • Rounded pyrite Pebbles.
    • “Like little pigeon eggs”
    • “These are kinda the textures we see as say at Beaton’s Creek and even in the Witwatersrand in certain reefs”
    • “This is a different beast”
    • “The pyrite itself could serve as a guide to help clue us into where does gold rich horizons are”
  • Core from Beaton’s Creek:
Pyrite

Beaton’s Creek drill core with pyrite “pebbles”. Source: 321gold.com

  • Core from Purdy’s Reward:
Core from Purdy's Reward.

Core from Purdy’s Reward.

  • “Pyrite tends to get concentrated in the same location as gold”
  • “The pyrite itself could serve as a guide to help clue us into where does gold rich horizons are”
  • “What we see is a well packed, well organized conglomerate comprised of very large boulders”
  • “We have several alluvial experts working on our team”
    • One is expert on marine alluvial gold systems.
  • “We have come to the conclusion that we have found a new near shore marine horizon (marine alluvial system).
  • The important take away, this Isn’t just a small alluvial channel“…
    • “These can be large, sheet like…. Continuous over a large distance”
  • “Start working on sampling on Monday”
  • “It’s a coarse gold system”.
    • “A little more challenging to define a resource”
    • “Australian rule of law allows for things like this”.
    • We feel very confident that we can demonstrate that there is economic mineralization on this property
    • “We are well aware of the frame work”.
  • Working with the mine department of Western Australia has been very good, very constructive”
    • “We see a lot of support there”
    • Post from Rhino10 at Stockhouse:
Rhino10

Rhino10. Source: Stockhouse.com

  • Eric Sprott: “The chances for the whole precipitation thing to play out has increased dramatically”
    • “Early, early, early days!”

Key take aways

  • New conglomerate sequence found at Powerline is very different to Purdy’s Reward.
    • Looks to be about 15m thick.
    • Located directly under the Purdy’s Reward sequence.
    • Gold detecting suggest multiple gold bearing horizons (unlike Purdy’s).
    • Has considerable amounts of pyrite in different forms, some which looks similar to what is present at Beaton’s Creek (pigeon eggs).
  • Powerline seem to have have both Purdy’s Reward type conglomerates as well as the new conglomerate sequence.
    • About 30-35 m true thickness in total.
  • Geology is evolving as they are stepping out.
    • “Finding more and more and thicker conglomerates”
  • The importance of the “significant pyrite”
    • “The pyrite itself could serve as a guide to help clue us into where does gold rich horizons are”
    • “These are kinda the textures we see as say at Beaton’s Creek and even in the Witwatersrand in certain reefs”
  • Quinton believes that proving up an economic resource won’t really be a problem.
  • The Western Australia government seem very keen on supporting and moving this project forward (high priority).

From Moriarty’s article in 2014 regarding Beaton’s Creek:

 

Bob-Beaton's

Bob Moriarty. Source: 321.gold.

From Novo’s latest NR:

 

Weathered rock

Weathered rock at Pipeline (Comet Well).

 

Older video from Comet Well

Highlights

  • Looks to be a CW conglomerate boulder.
  • “I reckon we have pulled at least 1/2 ounce” (from that boulder).
  • “There is gold in the rock itself”.

Comments

Mineralization looks to be different from purdy’s (as already stated by QH). Rob Beaton states that he pulled gold from “the guts” (matrix?) of what looks to be a big rounded boulder and that “there is gold in the rock”. This looks very different from Purdy’s Reward indeed.

In Novo’s latest video depicting the bottom sequence, one can see hard rock dominating vertically for at least a couple of meters. In the video above, the Comet Well style boulder seems to be sticking up and is surrounded by what seems to be more Purdy style bedrock. If so, this might suggest that the 15m Comet Well conglomerate (that has been confirmed by drilling) at Powerline  has detectable gold starting already at the top (unlike at Purdy’s where the nuggety PPZ is located at the bottom, on top of the basement).

 

Video From Comet Well That Was included in The Latest NR

Highlights

  • Probably around 2-3m in elevation difference between the detector marks found at the lowest level of the trench vs the highest.
    • Compare that to the videos from the mafic PPZ at Purdy’s reward.
  • Still looks to be extremely nuggety mineralization.

Comments

If the old video from Comet Well does indeed show a boulder from the top layer of the CW conglomerates and Novo’s latest video shows the lowest part and upwards (as stated by QH), then one certainly can see what Quinton meant when he said they are getting detector hits from multiple horizons in this CW conglomerate at Powerline.

We still don’t know how high the gold mineralization goes in the new conglomerate sequence. QH said they have opened up about 7-8m so far.

 

Revisiting The Old CRA Hole

I thought it would be interesting to revisit the data from the old CRA drill hole in light of the recent developments at Comet Well. This hole was drilled much further into the basin and possibly encountered what was believed to be some mix of Mount Roe conglomerates over 2km down. This section was estimated to be 51m thick:

CRA hole

CRA hole

This is the same hole that has been mentioned to not actually having hit basement. Also, the fact that they hit spotty gold in the Cliff Springs (Hardey Formation), that sounds a bit like Beaton’s Creek mineralization. This might be a positive sign in regards to how widespread the gold bearing conglomerates could be in the Pilbara given the fact that the CRA hole was located very very far from Beaton’s Creek. Note that this is some high level speculation.

CRA hole.

CRA hole.

 

 

Closing comments

With the discovery of another thick sequence of conglomerates beneath the Purdy style conglomerates at Powerline, that also appears to be even richer, one could certainly argue that the odds of this area having economical gold has jumped quite a bit. Blue sky scenario would be the PPZ being present at Powerline, and that this lower 15m sequence is even richer. In that case the PPZ, which was the jewel at Purdy’s, might actually be the little brother here.

What is also interesting is the increase in pyrite and that the drill core is showing the presence of “pigeon egg” type pyrite which is similar to what Novo found at Beaton’s Creek. Beaton’s Creek is nuggety, but nowhere near as nuggety as the PPZ at Purdy’s Reward. Hopefully this opens up to some hope in regards to less nuggety gold being present on top of what is probably extreme nuggety mineralization being detected at the detector marks.

The presence of weathered pyrite would suggest the conglomerate sequence having been exposed to oxygen at some point in time. This leads me back to Quinton’s hypothesis that started it all:

 

cyanobacteria-death

Cyanobacteria.

 

Now, we haven’t found a “carbon seem” etc, but the following infographics regarding Witwatersrand which was posted by Iskyhigh on Stockhouse.com springs to mind:

Witwatersrand.

Witwatersrand: fluvial fan model.

IF this comparison is relevant, then what we are seeing at Powerline might be the geology heading into the [Au+++] zone from the [Au+] zone since Powerline seems possibly much richer than Purdy’s Reward. Also, according to this slide, the “algal mats” are located around and in between the conglomerate “fluvial fan”.

Another slide (note the scale!):

Witwatersrand

Witwatersrand: fluvial fan model.

 

 

Panel sampling Comet Well is probably a bit lackluster in terms of efficiency since there are such large boulders present etc. What could be interesting is if these samples could show the presence of some more disseminated gold mineralization in the matrix (kinda like Beaton’s Creek). Ultimately I think we really need trial mining in this area, even more than at Purdy’s Reward. Suffice to say, this will take time to prove up, but it will hopefully be very well worth it.

One thing that I personally believe is important in the case that this new zone is richer and widespread is that the “deposit” as a whole will reach critical mass quicker, ie need less m2 to be proven up before one can say that this is a solid open pit/strip mine. The bigger/richer this gets, the looser the rules and regulations will be I believe. WA government is already keen in helping Novo advance… Are they going to let a (potentially) very big, near surface and extensive gold system just sit there because it hasn’t got a typical JORC resource?

 

Rumour Mill And Some Bayesian Inference (Reading Between The Lines)

[Bayesian inference is a method of statistical inference in which Bayes’ theorem is used to update the probability for a hypothesis as more evidence or information becomes available.]

Disclaimer:

  • The following section includes highly speculative statements and “rumours”.
  • Very much trying to “read between the lines” and infer intention/motivation based on loose information.
  • I just included it because it is something I personally take into consideration.
  • This is the highest level of speculation and is certainly not investment advice.

 

EVENT A: Purdy’s Reward trenching and the discovery of the gold being pretty much limited to the 0.5m high grade PPZ (Purdy Pay Zone).

  1. Newmont having been snooping around in Pilbara. (RUMOUR)
  2. NxGold which is headed by the Nexgen energy team moving into Karratha, north of Purdy’s and Comet Well.
  3. Buyout RUMOURS for a certain company.
  4. Kirkland Lake Gold listed on the ASX.
  5. CSIRO AND ARTEMIS TO INVESTIGATE CONGLOMERATE HOSTED GOLD”
  6. WA government seemingly processing (at least some) permit applications at lightning fast speed.
  7. No insider selling.

EVENT B: Comet Well (Powerline) trenching and the discovery of  another new conglomerate sequence with multiple (nuggety) gold bearing horizons.

Bayesian inference discussion

HYPOTHESIS:

Comet Well and Purdy’s Reward along with more areas in Karratha has a large and economic gold system present.

QUESTION:

In light of the actions and rumoured actions taken by certain parties during/after [EVENT A], how does [EVENT B] affect the probabilities of the HYPOTHESIS being true?

 

 

Disclaimer: I am a shareholder of Novo Resources and it has been my biggest position for the last two years. I am thus biased. Be aware that this article is speculative and contains some rumours. Always do your own due diligence and do not base any investment decision purely on rumours etc. This is a volatile and risky exploration story across the board. I have gotten no compensation from any party in order to write this. If you found this article valuable, then please feel free to let others know about it!

Best regards,

The Hedgeless Horseman

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One thought on “Novo Resources: Summing up The Latest Information

  1. jim says:

    Great analysis. I never could have figured this out on my own.
    jim

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