Novo Resources Through the Eyes of Brent Cook and John Kaiser

I was fortunate to interview Brent Cook and John Kaiser this past week on my radio show. The topic was about the prospects for Novo Resources’ most unusual but apparently legitimate gold exploration stories becoming, as John Kaiser calls it, Wits 2.0.  I hold both John and Brent in high esteem for their abilities to understand and analyze prospects for evolving exploration projects. After the interview, John passed along his thoughts and compared them with those of Brent Cook. I found John’s comments very interesting and so with his permission I am sharing them with you here.

On October 10, 2017, Jay Taylor did back-to-back live interviews on his Turning Hard Times into Good Times Radio Show with Brent Cook of Exploration Insights and John Kaiser about Novo Resources Corp. and where the Wits 2.0 story stands today. Brent Cook and John Kaiser have similar views about the potential of Australia’s Pilbara hosting a massive gold system whose scale and profitability could rival that of South Africa’s Witwatersrand Basin. However, Brent and John are at opposite ends of the gambling spectrum. Whereas John and Novo’s Quinton Hennigh sit at the optimistic “dreamer” end, Brent sits at the Joe Friday “just the facts ma’am” cautious end of the spectrum.

Brent is correct that the Wits 2.0 scenario is still missing answers to three key questions: (1) Is the average gold grade in the Pilbara conglomerate beds high enough to support underground mining; (2) Is the gold content of the conglomerate beds laterally and downdip extensive on a scale of hundreds of kilometers so that a widespread endowment in the billions of gold ounces is possible; and (3) Is there a reliable and cost effective way to measure the gold grade so that economic value of mining the beds can be quantified? With nearly 200 million shares fully diluted Novo has an implied value in excess of $1 billion for the 7,000 sq km plus of 100% owned ground, and double that for land subject to the 50:50 Artemis JV. This valuation is indeed “absurd” based on the available facts, but not if you make the leap of faith that these questions will deliver positive answers in the next 3-6 months. These questions are especially relevant to the dozens of juniors (and even majors) who turn out to own land on the Pilbara, especially where the 3 billion plus year old greenstone basement rocks have somewhat younger cover rocks, exactly those rocks every self-respecting junior studiously avoided unless looking for iron deposits.

The problem for the cautious rationalists is that the answers will emerge in small increments here and there, insufficient to be a definitive collective answer, but enough to coax somebody new from the sidelines, over and over again. The result is that Novo will probably never represent fair value, just as was the case with Dia Met and its Ekati diamond discovery in 1992-94 and the infamous Bre-X and its fictitious Busang gold discovery in 1995-97. Novo’s valuation will always be ahead of the facts Joe Friday seeks before deciding. Speculators should thus treat any investment in Novo or the area play juniors as being at total loss risk! When you get that urge to “back up the truck,” make sure you rewatch the Brent Cook interview. Furthermore, if the three questions get answered so as to confirm the Wits 2.0 scenario, don’t sweat missing the boat, because the inflow of capital and media attention will generate the biggest bull market ever for resource juniors engaged in discovery exploration and run by technically competent groups with vivid imaginations like that of Quinton Hennigh.

To help investors better track this evolving story KRO has created the Pilbara Wits 2.0 Resource Center, which includes a list of publicly listed companies that have property on the Pilbara. Because the mapped geology is not necessarily reliable at the property scale, and most of the juniors have done a terrible job providing detailed maps on their web sites, for now we are adding all juniors. As we get more detailed information we will highlight those with a shot at a piece of Wits 2.0, and get rid of those who have no chance at all.

Note: Links to my interview with John Kaiser and Brent Cook are available on the home page of www.Miningstocks.com,

as are major news releases for all the stocks covered in this newsletter.

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