The mining business is infamous for being very slow when it comes to technological improvements. I would assume a big part of that is the fact that an open pit and underground mine is a complicated endeavor where it’s very hard to change anything once work has begun. The first “brick” is laid down while having the last “brick” in mind. You can’t easily begin digging out pit slopes and then change course halfway through. Same goes for underground mining. Everything is pretty much set in stone before construction begins and long before the last ounce is supposed to be dug out. This makes it hard to incorporate new technology and not many miners can afford to experiment with new stuff given that the theoretical economics only work if all pieces of the pre-laid puzzle comes together in the intended way.
What would be the polar opposite of the above?
Egina type lag gravels comes to mind. Near surface gravels need no ramps, shafts or major stripping to access. The “mine entrance” is everywhere at the same time, sometimes hidden under just 20cm of top soil. There is no complicated mine plan that requires huge CAPEX and where the pieces must fit perfectly in a specific order. This allows Novo to “test mine” any configuration at the same time. Just because for example a specific continuous miner with a specific processing configuration is mining in a particular way at the Egina Mining Lease does not mean that a totally different setup can’t be mining the “Road to Paradise” prospect for example. No other mining project that I know of would have the same opportunity to explore new techniques and technologies like these near/at surface lag gravels.
Then we have another twist to the story. The potential use of ore sorting technology and the “shrinking” of ore. If a conventional mine would be able to sort or “shrink” its ore close to the preliminary numbers out of CW and Egina then these conventional mines could theoretically upscale their mining rate possibly up to 100X to fill the same mill that would be used if there were no ore “shrinkage”. How easy is it to do that? Not that easy since there are just so many trucks that can work at the same time in an open pit or UG mine. Thus, there is no way for a conventional mine to even make full use of such extreme ore sorting results. What could make use of it? A deposit that is near/at surface and where mining could take place over a huge area, at the same time. Yes, I am of course talking about Egina, and some of the long stretches of outcropping conglomerates around Pilbara. One could theoretically add countless continuous miners that would be mining the “same deposit” at the same time, without creating bottle necks as number of mining units go up. Again, very much UNLIKE any conventional mining activity. Furthermore, Novo could be testing countless mining or processing configurations on the go and simply update the entire fleet if warranted…
Tomra or Steinert develop a new unit with better recoveries or higher throughput? Well, then just replace the units and go back to work.
A new continuous miner is developed? Well, then just replace the units and go back to work.
The opportunity for testing, developing and updating the mining methods at such a deposit must be far beyond any gold mines known to date. Then add on the fact that ore sorters usually only play a part in a conventional gold processing scheme. There is no mining operation that I am aware of where ore sorting would pretty much make up the whole processing scheme. Thus, technological advances in ore sorting should theoretically benefit such a deposit more than conventional mining operations by an order of magnitude.
In essence: It’s not only how large of a part of the processing which might be done by ore sorting technology, but also the fact that any advancements could relatively quickly be translated to the field, which makes the Novo and ore sorting combo unique in my eyes.
Judging by Tomra’s stock chart I would assume that they are indeed creating more and more value to their customers:
- Do you see/hear many people discuss these topics? No? Good.
- Do you hear the run of the mill junior mining investor/analyst acknowledging or even be aware of these factors which might be the main value driver for Novo? No? Good.
- Did you see much mention of any of this in the latest “reports”? No? Good.
- MinTwit does not pay attention to it? Good. It’s not crowded.
- Sumitomo Corporation is a partner? Good. They know more than all of the above combined.
… Why is that good you ask?
Because it should mean that little to none of this potential is priced in. I don’t blame people for not accounting for it. This would be a world first in many respects if Novo can translate it into the field. No one has any prior experience with such a mining venture.
Note: This is not investment advice. Always do your own due diligence. I am a shareholder of Novo and the company is a banner sponsor.
The Hedgeless Horseman
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