SVH Tracker - September 22, 2017: Wits 2.0 confirmation could arrive in less than 6 months
Novo Resources Corp is scheming to steal the show at the Denver Gold Forum on Monday September 25 at 10:15 AM pst when it goes head to head with Hecla and Alamos Gold in a streaming Webcast Presentation in Room F that will include a live feed from the Karratha project. In a September 21, 2017 press release Novo contends that a live feed will be available, but the conference organizers indicate that the 2017 web cast presentations will not be available until 6 AM pst on Friday September 29, 2017. Novo also states that it will plug a live feed from the Karratha site into Quinton Hennigh's Denver presentation. That sounds mighty ambitious because when I was on a site visit with Quinton at Purdy's Reward-Comet Well project it was hit or miss that we had any cell phone reception. Furthermore, everybody knows that trying to plug any video into a conference presentation is a recipe for disaster. And what could possibly be interesting about a live feed from Purdy's Reward at 1:15 AM Australia time? A 35 tonne excavator illuminated by flood-lights stripping overburden off the conglomerate beds? Surely the gold producer executives and fund managers at the Denver Gold Forum have seen more than enough heavy duty equipment in action. But what if Quinton Hennigh thinks he can outdo the pair of videos that launched Novo into orbit on July 12, 2017?
It would be mind-blowing if the live feed camera pans a stripped and washed conglomerate bed dappled with gleaming orbs like spots of light thrown by a disco ball. You wouldn't see it by daylight but you just might at night. Novo is, after all, presenting in the "Gold Room", not the "Orange Room" like Hecla or the "Blue Room" like Alamos. When I talked to Quinton Thursday afternoon he told me to make sure I am watching. Since there is so much that could go wrong or be disappointing I am almost afraid to do so.
In its news release Novo indicated that a 35-tonne excavator is on site while a hardrock trencher is still awaiting approvals for an upgrade for the road into the site. Scout drilling of core holes to establish the depth and thickness of the conglomerate beds will start on September 27, with large diameter RC drilling (17.5 inch) to collect bulk samples beginning on October 15. So clearly the Denver Gold Forum delegates will not be seeing drills turning. The core drilling will delineate the conglomerate bed through a combination of petrography and assaying. A key milestone we should reach within a month is whether the fine disseminated gold observed in the 542.3 kg bulk sample (9.1 g/t gold) was a local aberration or is systemic throughout the conglomerate beds in addition to gold nuggets. If so, the gold grade will be the primary marker defining the target conglomerate. The thickness of the beds will be variable due to local topographical variations within the near shore basin environment, which is why in some places it may be only 2 metres thick, in other places up to 20 metres thick. Hennigh has tols me that there is little evidence of folding or faulting in this area which would make delineating the conglomerate beds difficult. The time horizon for the different thicknesses should be similar because "hollows" would have accumulated alluvial material at a faster rate. This is important in the context of the precipitation theory which argues that the gold dropped out of the water covering the basin where at that time between 2.6-2.7 billion years ago the solubility of gold is estimated to have been 12 parts per billion rather than today's 3-4 parts per trillion or 4,000 times higher. The precipitation theory, which hinges on a dramatic change in the solubility of gold in seawater corresponding with the deposition period of the gold bearing conglomerate beds, is important to the plausibility of the Wits 2.0 scenario where nugget style gold formed over a vast lateral area within the Hamersley Basin. Rather than coming from a specific bedrock hosted deposit from which it was eroded and gravitationally transported by water into the delta fans where rivers exited into the basin, the nuggets dropped out of solution anywhere and everywhere.
On the Purdy's Reward property the conglomerate bed daylights for about 2 km and possibly continues under cover for another 4 km. The "downdip" extent on Purdy's Reward is thus a 34 degree right triangle with a hypotenuse of 6 km and a base of 5 km defining the property limits which gives us an area of about 8.25 million square metres. If we assume a specific gravity of 2.6 the tonnage footprint is 21.45 million tonnes for each metre of thickness. If we have a conglomerate bed represented by the yellow triangle covering the Purdy's Reward claim and a thickness range of 2-20 metres we have a theoretical tonnage footprint range of 42.9 million to 429 million tonnes. The upper end is unlikely but an average 5 m thickness is not implausible, so we can say Purdy's Reward has a "target for future exploration" (TFFE as they call it in diamond exploration) of 107 million tonnes which we can round to 100 million tonnes. If the 67.08 g/t gold value obtained from the 542.3 kg bulk sample turned out to be representative, that would represent a staggering gold resource of 216 million ounces or 29 million ounces if the 9.1 g/t gold from the fines proved representative. If such numbers are delivered by exploration the "local freak show" would support the current valuation. The Comet Well property, although it has about 10 km of strike, would have a similar tonnage footprint because the conglomerate bed daylights closer to the southeast boundary. Novo will have 80% of the resource on Comet Well.
All of this is very good news for Novo which owns 100% of the exploration licenses to the southeast of Comet Well and Purdy's Reward. In fact, Novo has applied for claims covering all the available Hamersley Basin rocks at the edge of the older Pilbara basement rocks which only have potential for conventional lode deposits, which, incidentally, run 70%-90% gold in the Pilbara region while the Karratha gold nuggets have a purity of plus 96%. In other words, if they are the eroded and alluvially transported remnants of lode deposits, they are from a style of deposit that has not yet been observed in the Pilbara. Australian juniors have generally avoided the Hamersley Basin because the Fortescue Group sequence of sediments and flood basalts has not shown any evidence of mineralizing events. The Australian juniors have stayed near the edges where the older basement rocks are within reach of exploration tools. The gold bearing conglomerate bed seems to be at the base of the Mount Roe basalt, the oldest of the flood basalts, though more work is needed to establish where exactly in the stratigraphic sequence the gold bearing beds occur. Farther into the basin the cover rocks consist of the banded iron formations that were deposited after the "Great Oxygenation Event" post 2.4 billion years and which all owned by the big iron producers.
Novo managed to scoop much of the "worthless" gap between the iron deposit related claims in the southern part of the Hamersley Basin and the Pilbara basement straddling claims at the northern edge of the basin. Some Australian juniors such as Kairos Minerals Ltd are waking up and realizing that claims they staked for other adventures such as the lithium hunt sit on top of Hamersley Basin rocks that may be hiding gold bearing conglomerate beds such as those at Comet Well-Purdy's Reward. Unfortunately the Australians seem to have studied paper printing under Robert Mugabe of Zimbabwe. Keeping up with the fully diluted capitalization of an ASX listing is impossible because the Australian regulators suffer from a strange form of myopia where they force their listings to publish "cleansing" documents that list all sorts of figures other than what investors need: the resulting issued and fully diluted capitalization after the most recent paper creation. Subscribers have asked me why Artemis Resources Ltd has not responded more aggressively in the market, and, other than the fact that the power behind the throne is an individual called Mick Shemesian (Australian journalists have dubbed him Mick Many Names because his name has so many spelling variations in government filings), the best explanation I can offer is that investors have no reliable source for that fully diluted shares figure critical to any rational valuation attempt. I now estimate Artemis to have 550 million shares fully diluted following a financing of 60 million shares at AUD $0.20 of which $4 million is being placed by Sprott Capital Partners which represents the Global side of the former partnership between Rick Rule and Eric Sprott. That makes sense because if the "local freak show" is all that Karratha will prove to be about, Artemis offers better speculative value than Novo at respective stock prices.
The upside implications for the "local freak show" scenario are impressive, but if Wits 2.0 proves to be a reality, not just scientifically but at underground mineable orebody grades, the upside is staggering for Novo. When I talked to Quinton a few weeks ago he figured it would be another 6 months before the exploration licenses for which it applied 100% would be granted. That was fine with him because he recognized that it would take at least 3 months to understand the gold bearing conglomerate beds at Comet Well and Purdy's Reward sufficiently to be in a position to interpret the results of stratigraphic drilling targeting the Pilbara basement-Fortescue Group unconformity. That promised six months of churn for the Novo market as shareholders take the money and run between $5-$10 per share while new shareholders dig in for the $50-$100 per share Wits 2.0 scenario. This rotation in turn promised to function as the Bre-X Redemption if exploration in the second half of 2018 confirmed the Wits 2.0 scenario. We may have to shorten the time frame. Government records show that the Novo claim applications are starting to be approved in drips and drabs. Spec Value Hunters are urged to watch the video of my MIF Presentation on September 15, 2017 and be forewarned that Wits 2.0 validation may arrive much sooner than initially thought.