Gold Nuggets and a Cosmic Theory

Novo Resources, one of my favorite stocks for some time now, has attracted the attention of Bloomberg’s writer Natalie Obiko Pearson, who titled her article “A Cosmic Theory and 2-Inch Lump of Gold Spur 500% Novo Surge.”

The article was very well written and I think it deserves to be read.  Here is an excerpt:

Quinton Todd Hennigh has spent 13 years scouring the Earth for clues to back a hunch: that the world’s biggest gold resource has lost siblings elsewhere on the planet.

Now the president of Novo Resources Corp. thinks he may have found a counterpart of South Africa’s Witwatersrand in the ancient red rocks near Australia’s northwest coast. In July, his company zeroed in on a gold find that’s confounded geologists and sparked a 500 percent surge in the explorer’s share price.

Gold in the red rocks of Australia’s northwest coast.
Source: Novo Resources

The first test on land south of the coastal town of Karratha looked good. Employing two men, a metal detector and a jack hammer, Vancouver-based Novo extracted gold nuggets as long as 4 centimeters (1.6 inches) from an exploration “trench” little more than a half-meter deep. That tiny sample hinted at ore grades that could be among the highest of any operating mine in the world.

Hennigh, 50, who’s worked as a geologist for Newmont Mining Corp. and Newcrest Mining Ltd., isn’t screaming bonanza yet. “Can I say 100 percent that this will turn into a mine right now? No, I don’t know,” he said in a phone interview, acknowledging hard work remains to determine if watermelon seed-like specks of gold can be economically mined.

Still, the potential upside is seen by some as huge.

‘Bunch of Nuggets’

“If it’s true, this is massive,” Brent Cook, a Rockville, Utah-based geologist and mining stock analyst who booked a flight to the site three days after Novo announced the discovery. For the moment, though, the company’s valuation — C$703.6 million ($559.5 million) — is “just absurd,” says Cook. “We’ve only got a concept, one small excavation, and nuggets scattered across hundreds of kilometers. It could turn out to be a bunch of nuggets that are only good for fossickers,” he says, using industry slang for prospectors.

Such caution has failed to damp the euphoria driving Novo, whose backers include the world’s second-largest gold producer Newmont and billionaire precious-metals investor Eric Sprott. Sumitomo Corp. is partnering with Novo to study a site further east in a deal that could lead to the Japanese trading house taking a stake in the company.


You can read the rest of the article at:

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.