With expected production from Beaton’s Creek coming up I thought it was a good idea to do another Q&A with Novo’s CEO, Rob Humphryson. Enjoy…
Great questions as always – I’ll do my best to provide an insight and answer
them within the usual constraints of confidentiality and not talking out of
school where it comes to exchange disclosure expectations. I hope folks will
gain a better insight into what we’re trying to achieve by the following
Q: Can Novo reach a production of 1MOz by using ore sorters and feeding the
enriched ore to the Nullagine mill..?
It’s way too early to speculate about how much production we could achieve
with sorters. What I will say is that I think sorters are ideally suited to
processing the deposits at Comet Well / Purdys / 47k (Karratha for
simplicity) and the very nuggety areas in the swales at Egina. I think that
over time, as we can demonstrate to the regulatory approval authorities that
sorting involves minimal water (dust suppression for mining and haulage
only), no chemicals, no tailings facilities and no major plant construction,
project approvals timelines should reduce significantly.
To answer the question fully presumes we know everything about all our
tenements in the Pilbara – given we have around 14,000 sqkm it will be ages
before we truly understand what we have beneath our feet. It is simply too
vast, however what I will say is that we are VERY encouraged by what our
geologists are seeing out in the field. The extent to which future gold
bearing material is sortable is something we intend to address in due course
– there will be degrees of ‘nuggetiness’ across our prospects and hence
degrees of effectiveness of sorting within the current limits of its
capability. Please also bear in mind that sorting still has to carry the full
cost burden of every aspect of extraction up to the creation of a concentrate
– ie costs to drill / blast / load / haul / crush / screen / sort. The
transport and subsequent processing costs once we have a concentrate are
where the magic should happen in terms of minimizing total costs and thereby
exponentially increasing the radius of influence of an existing processing
This field season we intend to deploy the Steinert KSS 100 sorter and plonk
it down at Purdys, within a pitching wedge of the 2017 Denver live feed area.
We’ll test up to 23 different sites, shifting around 80,000t under geological
control and sorting up to 20,000t of stuff that should have gold in it if all
goes to plan. The primary objectives are :
To test the productive capacity of the sorters at the different feed
size ranges (the test will be configured to allow us to feed very
rapidly and test the productive capacity of the sorter up to around
300tph – which is probably the max we could expect for the largest size
range). This will inform us of how many sorters we’d need to match a
certain sized operation. The concept of scale of operation is yet to be
determined and will also be informed by what we learn during the trial.
To ascertain the grade from a representative sample size, we’ve been
working with Dr Simon Dominy in the UK to determine what a
representative sample size is for this type of deposit – gold
deportment studies from previous bulk sampling have allowed this
science to move forward. As an aside, Dr Dominy’s work has shown us
that the 350kg samples originally taken from Purdys and the 5t SGS
samples out of Comet Well are indicative only and we’ll need much
bigger samples to say something meaningful about grades. This should
explain to people why we didn’t assay every Comet well sample back in
2018 – not out of concern about grade, just that as we learned about
gold deportment part way through we realized that results from 5t
samples would be meaningless for any resource calcs. Assaying all the
5t Comet well samples would have been a waste of shareholders $ and
possibly could have prematurely detracted from an otherwise very
exciting story owing to it not fitting the standard project development
pathway. Hence paused to let sorting technology catch up whilst we
focused efforts elsewhere, whilst behind the scenes it remains one of
our favourite projects in Novo HQ.
To replicate in the field the extremely high levels of recovery we’ve
seen in the lab. I can see no good reason why it won’t replicate at
higher throughputs – the scanners on these sorters can assess up to
4,000 rock particles per second across a belt moving at 2.8m/s and
carry out up to 180 calculations on each one of those 4,000 particles
to determine whether or not it needs a jet of air to direct it to the
good bin. And the technology is not getting any slower. The sorter
we’ve purchased has scanners with far higher resolution than anything
we’ve used in the lab and we’ve proven we can detect and eject very
reliably down to below 0.6mm (600 microns). This is still very coarse
gold compared to traditional systems but as I’ve said before, the
technology is only getting better.
Assess how we may treat a high grade concentrate at the Golden Eagle
Mill. Those that follow the Novo story carefully will know that as a
product of upgrading the Golden Eagle Mill we now have a ‘redundant’
20” Knelson concentrator and half tonne Acacia reactor that could now
be used to treat the Karratha concentrate. These units were replaced
with muscled up versions of the same kit to allow for the high levels
of gravity gold expected from Beatons Creek. Current plan for treating
the trial sorted concentrate from Karratha is to crush it with an
impact crusher to minus 2mm and direct feed into the 0.5t Acacia
reactor, likely with its own electrowinning circuit to keep production
and testwork separate (different headspaces in terms of production
being a continuous process and testwork requiring diligent flushing
between batch processes to ensure the QA / QC required to attribute
grades to discrete batches). Plus we don’t want to get under the feet
of productive people pouring gold bars if we can help it.
Learn to tune the sorter to the geology at Karratha.
Start to build algorithms that approximate in-situ grade following
extraction, given conventional grade control drilling approaches are
unlikely to be effective in such a nuggety system. We expect to use the
scanning capabilities (gold pixel count) plus concentrate mass, to
reconcile against the final concentrate grade from the Acacia at
Nullagine. This will help us to understand how we can use the sorters
to inform us of the approximate grade in the ground following
extraction. This has never been done before however our team is very
excited that we may have hit upon a solution to something that was seen
as an insurmountable barrier only a few short years ago.
So, we can’t wait to get started. It’ll take the majority of this field
season and won’t be a cheap exercise but well worth it in my view given the
potential upside and scalability. Now having somewhere to treat the sorted
concentrate enables us to move forward – imagine how long it would take a
laboratory to assay even 2% of 20,000 tonnes! We can now do this in a timely
manner and yield accurate and defendable grade results.
Over the past 6 months or so, we’ve had countless meetings attended by some
very high end brains to try to optimize the sorting trial program – minimize
cost, maximise learnings and try to anticipate every aspect of the trial to
ensure it runs as smoothly as possible. If shareholders were flies on the
wall in these meetings, I’m sure they’d be equally excited and derive great
confidence about what is to unfold.
A myth worth dispelling is that sorters are all on 6 month lead times. This
is false and there are a number of machines available at short notice in
Australia that we could configure into a production array should the trial
prove successful and approvals be granted in a timely manner. A few facts
here : the sorter we ordered is brand new, has higher resolution scanners
than the lab test units and has multiple capabilities (x-ray, EM, colour,
dust extraction, cameras etc) so that we can use it in future for any
application (ie we can test possible colour sorting at Talga Talga). In
addition to this, there was no point in immediately procuring an existing
machine when we knew approvals would take us out to around April / May 2021.
Q: Does Novo plan to sweeten grade to the mill, near term, via sorted ore?
I’d love to as soon as possible but unlikely from Beatons Creek, assuming
this is what the question relates to ……otherwise I’d dearly love to start
feeding high grade sorted concentrate from other sources to the mill ASAP and
ratchet potential production from our existing Nullagine processing asset. We
do strategise often about how to fast track material from Karratha and Egina
(and elsewhere) but as far as putting concrete dates around it the more
prudent approach is to prove the technology first this year whilst we work
behind the scenes to expedite all the necessary environmental and native
title approvals and agreements. It’s important to remember in all of this
that while 40 years ago we could have just dug this stuff up and turned it
into gold bars, the world has moved on in terms of needing to demonstrate
environmental stewardship and seeking the requisite approvals. Unfortunately
lifestyle gold seeker shows paint an unrealistic picture of how easy it is to
mine and make a profit and can cause misalignment of expectations when it
comes to professional mining operations. It’s taken us years of diligent
effort to get to the cusp of production and we have been moving at light
speed in the new enlightened environmental framework. We are operating in a
first world jurisdiction that ranks the highest in the Fraser Institute
global rankings as being mining friendly and has world class approvals
processes that ensure community acceptance of mining operations. But the
processes are rigorous.
We’ve demonstrated that Beatons Creek responds well to sorting, however there
are a few things to note about those tests. The first thing is that whilst
the grade of the concentrate increased around threefold, the grade of the
reject was also still high – so there is no point introducing an extra
process and cost for the Beatons Creek material only to put it all through
the plant, particularly given we are not mill constrained – the plant can
handle much more than we can throw at it from Beatons Creek so the imperative
to sort a concentrate is lessened. In due course there may be opportunity to
sort and upgrade some BC lower grade / mineralized waste but that’s a project
for later and a distraction at the moment from the bigger picture. The second
thing to note about the Beatons Creek sorter trials is that they were not
simply for the purpose of Beatons Creek – we have other prospective
conglomerates that show considerable promise west of Marble Bar and located
stratigraphically in the Hardey Formation (like Beatons Creek) that are at
early stages of exploration – these are Contact Creek and Virgin Creek. We
cannot yet take bulk samples from these prospects until we get the requisite
native title heritage clearances (in the pipeline) however we believe that
testing sorting on Beatons Creek could be a proxy for VC and CC and inform
how we might move these prospects forward – if they can effectively be sorted
and upgraded a circa 120km haulage route does not seem so far any more. Don’t
expect sorted upgraded concentrated mill feed from CC and VC for a few years
at least – they’re at early stages of project development and whilst the
scale of these prospects are tantalizing, they are still a fair way off
proving project viability.
Q: Are there any plans to drill any of the oxide ore tenements this year?
Yes. Having a processing plant now has straightened up our exploration
strategy significantly. Clearly the smartest way forward is to focus on those
targets that have potential to host a meaningful amount of gold within
trucking distance of Nullagine. Same effort to permit something small as
something big so we’re focusing on reward for management effort amid our
embarrassment of targets. We will still have to commit funding to tenement
preservation – some of the recently acquired ground around Nullagine was in
poor condition from a tenement spend perspective so we’ve embarked upon a
triage approach to preserve what we consider to be the best ground as a
priority. Tenements in Western Australia work on a ‘use it or lose it’ basis
so part of our spend over the past three years has been to preserve ownership
as we learn. Tricky business but the exploration team has done exceptionally
well in my opinion, particularly given the hundreds of tenements and
thousands of square kilometres we’re dealing with and starting from a
comparatively low knowledge base in a new style of mineralisation.
But to answer the question, mining lease applications have been sought and
programs of work have been submitted for the highest priorities – expect to
see drilling at BC Extended, Skyfall, Parnell, Sayshell trend area,
costeaning and drilling at Talga Talga, and ongoing works at Virgin Creek and
Contact Creek. In addition to this we’ll be taking s closer look at the
recovery issues that plagued Millennium at the Golden Eagle deposit and see
if we can’t squeeze some payable material from there now that the mill should
be operating more efficiently after the upgrades.
And all I’ve described above is a selection of prospects from the East
Pilbara within obvious trucking distance of the plant ……
Q: Is there now a firmer date for first pour? Many on the board here expect 2nd-
3rd week Feb. is there a better estimate than Q1?
Yes, but if I disclose it I’m on a hiding to nothing. We’re in cyclone
(monsoon/hurricane) season in WA and this can have a profound impact on
timing. Plus commissioning is fraught with niggly unforeseen bugs and issues
that can slow things down a bit and you need to be running the plant for a
while to fully load up the carbon. Then there’s the issue of confirming how
much gold reports to the gravity circuit versus leach tanks and stress
testing the elution columns, kilns and furnaces. If I say a date and we pour
a few days late, despite this stuff patiently laying in the ground for
hundreds of millions of years, Novo will lose credibility. Much better to
underpromise and overdeliver methinks. If we don’t pour gold by the end of
the first quarter this year I’ll walk to Nullagine from Perth in bare feet
(at the least the weather will be kinder by then ��). Beyond that, please be
patient and watch for the news release. Just a real shame that Quinton won’t
be able to make it to site to bask in the warm glow of the furnace tipping
out that first gold bar ……
Q: what are the key challenges for Novo over the next year or two?
We’re looking carefully at the types of things that could cause a
company meltdown – serious injury or worse, catastrophic plant failure,
lack of critical plant spares, tails dam failures, fires, floods,
meteorite strikes ��, key person loss, pandemics etc ….. Beyond the
usual safety and management systems, we’ve conducted critical control
risk assessments to ensure we’ve got critical controls in place to
minimize risks of any such catastrophic events. Happily I can report
that we’re looking pretty good on this front. Our people are all over
it and we’ve engaged top shelf switched on contractors to do our
mining, road haulage, and grade control drilling – and engaging them as
equals with a common goal of operating safely and successfully. Just
like with GRES and subbies refurbishing the plant – one minor injury
over 4 months undertaking a plethora of hazardous tasks – testament to
the site culture, GRES and Novo management and the calibre of people
Bedding down operational systems and culture. Great head start here
with excellent recruiting to our culture. No silos, no DHs, no
bullying, just cooperation and operational excellence. Great vibe on
site, hence recently purchased some stock – great teams will overcome
whatever is thrown at them.
Hitting our targets – more concerned about ounces than tonnes. Chasing
tonnes can drive dilutionary habits where if we can get the same ounces
by operating carefully and selectively we reduce haulage and processing
costs. Less hung up on tonnes than ounces.
Nailing the geology to enable us to mine selectively. This is going
extremely well so far – we have a great team in the field who are
undeterred by extreme heat and are determined to mine the paydirt, the
whole paydirt and nothing but the paydirt.
Progressing the next wave of projects as expeditiously as possible to
ensure we keep the mill full orders of magnitudes of years beyond the
current life of project.
Maintaining great relationships with Aboriginal groups across the
Pilbara, plus Nullagine townsfolk and nearby pastoralists.
But not currently losing any sleep on any of these fronts.
Q: Approximately how much material from previous bulk sampling at Karratha and
elsewhere is available to be crushed (if necessary), sorted and sent to the
mill and how long will that material last (e.g., enough for just a few days
worth of mixing in with BC ore)? What is the hoped for timeline for ramping
up new crushing and sorting to make more materials available to be sent to
the mill? Will Egina gravels play any role at all in the sweetening of BC ore
or will they see no action whatsoever at the mill? To what extent, if any,
will recent and near-term Egina sample results be able to offer the market a
grade estimate or other quantifiable result that the market can use to assign
value, at least in the area that has been/is being sampled? Or will the
market likely have to wait for us to mine Egina before it assigns any value.
Any updates on rough timeline for Egina mining? Give my best to the team!
Wow, lots of questions in there.
Assume there is currently no material from Karratha for processing at the
mill – our 5t sampling program from a few years back would represent less
than an hours mill feed. As discussed before when talking about the sorting
trials at Karratha, this concentrate will be treated very carefully and
separately to get an accurate grade for each batch / sample location so that
we can give ourselves the best chance of determining grade / economics at
Committing to timelines is fraught owing primarily to approvals that require
significant input of others. Native title negotiations and enviro approvals
can be protracted. Whilst there are government interventions for NT
negotiations dragging on, if you need to rely on government intervention it
just means the relationship is not great. Not a space we are in nor want to
get into. In terms of enviro and other such approvals, WA is in a resources
boom and these govt departments resources are stretched very thin at present
– there are moves afoot to increase approvals resources but this involves
training time and all the while the mining companies are cannibalizing the
govt departments to employ the enviro scientists that would be otherwise
issuing approvals. Tricky one. How we address these issues is to keep the
govt departments fully abreast of what we’re doing and maintain a dialogue to
make sure we hit the mark with our submissions and speed up the approvals
processes. When it comes to Aboriginal groups, we’re all about long term
relationships, being pragmatic and reasonable, building mutual respect by
doing what we say we’re going to do, looking after the land and taking a
personal interest in what matters to them long term.
And doing our best not to commit to timelines publicly for fear of
overpromising and underdelivering.
Egina gravels may end up being processed at Nullagine, but too early to say
yet. Really need to identify an area when the time and resourcing is right to
bulk sample an area to see how it performs. As opposed to Karratha where the
gold is contained within rock, at Egina whatever you pick up is either gold
or not gold, with very few exceptions. If sorters work cleanly enough I can
foresee a solution where gold could be direct smelted at site with no need
for travel / security etc to Nullagine. Please remember though that while
we’ve been busy Egina for about two years now this is yet another area for
which no other analogue exists – everything we do we are pioneering and
learning on the fly. Whilst we at Novo are all very enthused and tantalized
by what could be, it is still very early days and we are learning about gold
distribution and gold particle sizes / deportment on a daily basis.
I will give your best to the team !
Q: Another Q&A with Rob would be awesome and I’d like to add the questions below
to the list for consideration: Beaton’s Creek 1. What (if anything) keeps you
up at night when thinking about the next 12 months at Beaton’s Creek?
Karratha 1. What are your specific objectives for calendar year 2021? 2. Once
the sorter is installed/assembled at PR/CW, can you walk us through how you
intend to use it within the first 6 months or so? 3. If everything goes
according to your internal plans and you had to rough-guess the timing, when
would you ballpark that Karratha would be adding 50,000+ oz per year for
processing through the Golden Eagle mill? Is there a scenario where that is
possible in 2022?
More excellent questions – we are blessed to have some very astute
First Q1 – see one of the answers above. The only thing keeping me awake at
night is excitement about the year ahead and impatience to hold aloft a gold
bar and rid ourselves of debt ! We are not immune to something going pear
shaped (we are in the resources industry after all) but I’m comfortable with
where we’re at as a company and team. Should have ample cash to see us
through even if things take longer to ramp up than planned. Sleeping OK.
Second Q1 – objectives for calendar year 2021 :
Have fun and don’t hurt anyone
Produce a PEA so we can speak publicly about expectations
Achieve our internally set production targets that we can speak of post
Pay off debt
Successful sorting trials at Karratha
Fund Kas’ team to accelerate exploration plans across a stupendous
array of prospects, prioritised to get as much economic gold bearing
rock through our new mud factory ASAP
Build capability to leverage sorting off the back of success at
Q2 – I think is answered already elsewhere ? If need more clarification,
please sing out.
Q3 – for the reasons outlined around NT and enviro approvals, I’d rather not
commit to a date, suffice to say that we’re a VERY busy little organization
ramping up to production and pushing ahead with sorter trials at Karratha. I
will say that we took the bold move a few years back to advance some long
lead enviro studies at Karratha and put in water monitoring bores etc whilst
we were exploring at Karratha which should stand us in good stead over the
coming while in terms of speed of development. The prospect of not having to
spend years building a processing plant or camp or airstrip (got it already
50km away at Karratha) also works in our favour. Having said that if we get a
tailwind we could conceivably (best case and hate mail will not be
appreciated if it takes longer) be sending concentrate to Nullagine from
Karratha during 2022.
Q: Egina 1. The northwest corner of the Egina mining lease and sections of
Paradise had some highly encouraging MAK sampling results. What is the
general timing to hear more about Egina exploration and sampling results?
(More specifically, the July 8, 2020 news release indicated the plan for the
2020 field season was to process an additional 1,100 MAK samples across the
broader Egina region.) 2. In the same way that you have a sorter being
deployed to Karratha, is the thinking that you will try to get a 2nd sorter
delivered to Egina in 2021 to accelerate lag gravel testing? 3. If everything
goes according to your internal plans and you had to rough-guess the timing,
when would you ballpark that the Egina region would be adding 50,000+ oz per
year to company production? Is there a scenario where that is possible in
Yet more excellent questions …..
Egina 1 : Agree, these areas look tantalizing. As stated previously,
everything we’re doing at Egina is of a pioneering nature. There’s a great
deal of work to be done and lots to be learnt. Bit like for Karratha a few
years back – the first season or two is to learn about the gold deportment to
figure out what could be a representative sample size for the different gold
deportment regimes. We’re seeing some fascinating stuff across the Egina
project, with differing gold size regimes in different settings. Our
geologists are equal parts excited, intrigued and perplexed, with some very
smart people applying themselves to unlock the secrets of the area. What is
very clear to us all is that there is a lot of gold in the area. From our
exploration works, prospectors descriptions, basement sources such as Hemi
(Degrey) and closer to our camp – Station Peak, plus being skirted to the
south by gold bearing conglomerates – gold occurs in a variety of forms and
populations and if there’s a team out there to unlock the secrets, they will
be wearing Novo shirts.
Egina 2 : I’d love to throw a sorter or two at North West Egina and run a
large sampling exercise for a few years whilst we get our heads around the
bigger picture. Just a matter of priority and focus. As we move through this
year we’ll decide where our Karratha sorter ends up at the end of the year.
It could go to Nullagine as part of a complete lab that we can send hundreds
of tonnes from anywhere in the Pilbara (or globally …..) or we could deploy
it to Egina if we deem it the right thing to do and can get approvals in time
for 2022 field season. No decision locked in yet.
Egina 3 : way too many moving parts still to answer this, suffice to say that
Egina is one of our key projects and has huge potential like so many others.
It will progress as rapidly as priority and resourcing allows it to.
I hope you enjoyed this Q&A Part 3 and I thank Rob for taking the time to answer all the questions.
Erik / The Hedgeless Horseman