RCKS Talk

17-Sep-2018

Novo Resources Corp.

Novo Eyes Egina Region for Conglomerate Gold

Impact: Mildly Positive

Novo Resources has announced that it has entered into two property transactions in the Egina region of Western Australia, expanding its dominant land position, and bringing a new conglomerate are within the Pilbara into focus.

  • Both land packages were acquired following in-depth research into the potential conglomerate gold-bearing nature of the Egina region, where gold nuggets have previously been discovered similar to those at Comet Well and Purdy’s Reward
  • For the 100% interest in the Farno-McMahon proprery, Novo plans to pay A$2.5M in cash and A$5.5M in shares (deemed price of C$4.107/sh)
  • For the ability to earn a 70% interest in Pioneer Resources (ASX:PIO) Kangan gold project, Novo plans to pay A$200,000 in cash and issue 100,000 shares to Pioneer, along with subscribing to a A$1M in Pioneer shares
  • We view these transactions favourably as, Novo is expanding its already dominant land position in the Pilbara; however, we believe the market is likely to remain focused on bulk sampling results from the Comet Well and Purdy’s Reward projects
Now that the company has overcome the processing challenges encountered for the first large tonnage bulk samples, we expect steady news flow from bulk sampling going forward (24 samples currently in the queue). We continue to believe that Novo is worth between C$4.70-17.90/sh, suggesting upside from the current share price.

 

17-Aug-2018

Novo Resources Corp.

Conglomerate Continuity Supports our View on Scale Potential

Impact: Mildly Positive

Novo Resources has provided an exploration update based recent surface mapping and trenching at the Comet Well and Purdy’s Reward properties in the Pilbara.

  • Recent exploration at Comet Well indicates that the upper gold-bearing conglomerate appears to be continuous with the basal gold bearing conglomerate at Purdy’s Reward, the Novo - Artemis Resources 50-50 joint venture, for a current explored strike of 3.4km
  • The apparent continuity of the gold-bearing conglomerates which are generally shallow and accessible for bulk sampling is an encouraging sign and 5-10 tonne bulk samples are currently being collected from newly opened areas
  • Novo and Artemis have re-commenced exploration activities at Purdy’s Reward, which includes infill diamond drilling to collect data on the depth and thickness of the gold-bearing conglomerate
Now that the company has overcome the processing challenges encountered for the first samples, we expect steady newsflow going forward (24 samples currently in the queue). We continue to believe that Novo is worth between C$4.70-17.90/sh , suggesting upside from the current share price. 

16-Jul-2018

Novo Resources Corp.

Novo Exercises ROFR on Half of Comet Well Royalty

Impact: Mildly Positive

 

Novo Resources has exercised its right of first refusal (ROFR) to purchase half of a 1% NSR royalty on its Comet Well property in the Pilbara, matching the terms of an offer made by International Prospect Ventures Ltd. (TSXV:IZZ).
  • Payment to the holder of the NSR includes $1,750,000 cash payable in three increments ending 1 year from the approval date, as well as Novo common shares equivalent to 9% of IZZ’s issued share capital at the date of execution
  • Additionally, Novo has agreed to pay a sub-royalty to the holder based on announced resources or mined resources of gold, of $0.50/oz up to 5,000,000oz and $1.00/oz for over 5,000,000oz
  • Novo stated that the use of the company’s ROFR was to minimize potential profit dilution from future operations
Now that the company has overcome the processing challenges encountered for the first samples, we expect steady newsflow going forward (24 samples currently in the queue). We continue to believe that Novo is worth between C$4.70-17.90/sh, suggesting upside from the current share price.

 

10-Jul-2018

Novo Resources Corp.

Heritage Agreement Paves the Way for Regional Exploration

Impact: Mildly Positive

Novo Resources has announced that the Ngarluma Aboriginal Corporation (NAC) has signed a heritage agreement including 37 exploration licenses covering 6,645sq km in the West Pilbara region (Figure 1), which represents over half of the company’s total land package in the Pilbara of Western Australia.
  • With the execution of the agreement, Novo’s exploration license applications should be granted without undue delay, which clears the way for exploration on the company’s wider land package in the Pilbara
  • A strengthening relationship with the NAC allows for a smooth transition to commence negotiations to enter into a Native Title agreement with respect to mining, which we highlight is essential in obtaining an exploitation license
  • Novo has previously highlighted that there are 24 samples (120-168 tonnes) at SGS waiting to be processed and additional samples at a secure yard in Karratha. The company expects to be able to process 50 tonnes per month now that the processing challenges have been ironed out. We expect the next set of results to be released within the next few weeks
Now that the company has overcome the processing challenges encountered for the first samples, we expect steady newsflow going forward (24 samples currently in the queue). We continue to believe that Novo is worth between C$4.70-17.90/sh, suggesting upside from the current share price.

28-Jun-2018

Novo Resources Corp.

Work-to-Date Suggests Upper Conglomerate is Continuous over ~2.5km of Strike

Impact: Positive

Novo Resources continued drilling and fieldwork has identified the Upper Conglomerate over 2.5km, which supports our view that a large gold deposit is possible at Purdy’s Reward and Comet Well. Key highlights from this release include:

  • Geologic markers have been identified (Mafic tuff bed and chlorite alteration) which should help guide future exploration
  • Results support our view of that a large gold deposit could be found
  • Aggressive bulk sampling continues with a goal to generate sufficient data for trial mining
We expect ongoing exploration of the upper conglomerate horizon and further bulk sampling results to be important catalysts for the stock. We continue to believe that Novo is worth between C$4.70-17.90/sh, suggesting upside from the current share price.

28-Jun-2018

International Prospect Ventures Ltd.

IZZ Acquires 0.5% NSR on Comet Well

Impact: Very Positive

International Prospect Ventures has entered into a non-binding letter of intent to acquire a 0.5% net smelter royalty (NSR) on Novo Resources Corp. (TSXV:NVO) Comet Well Property, located in the Pilbara region of Western Australia.

  • As consideration, the company has agreed to pay the third-party vendor an aggregate of C$1.75M, as well as an issuance of common shares equivalent to 9% of its issued share capital
  • Additionally, the company has agreed to pay a discovery bonus (cash or shares) based on announced resources or mined resources of gold, within 10 years of the deal, of $0.50/oz up to 500,000oz and $1.00/oz for over 500,000oz
  • We have previously noted that Comet Well could be a significant new gold discovery, which suggests this royalty could end up being of significant value. Our thoughts on Comet Well’s potential scale can be found here
This acquisition reflects the significant potential of Novo Resources discovery at Comet Well and represents a positive step forward for IZZ whose share price is likely to be sensitive to Novo’s ongoing exploration results.

05-Jun-2018

Novo Resources Corp.

NVO Continues to Progress; Still Early Days in Karratha

The recent conference call with Novo Resources management has supported our views that it is still early days and that company continues to progress towards identifying a very large gold system at Karratha. We have summarized our takeaways from the call below and provided a link to the audio below. Our key takeaways were:

  • Lots of samples pending; news flow expected to become more regular
  • Increased sampling size suggested to be more representative; samples spread over 3km
  • Working towards trial mining, management highlights steps needed to go mining
Now that the company has overcome the processing challenges encountered for the first samples, we expect steady newsflow going forward (24 samples currently in the queue). We continue to believe that Novo is worth between C$4.70-17.90/sh, suggesting upside from the current share price. 

03-Jun-2018

​Novo Resources Corp.

Good Initial Bulk Sample Results but Below Expectations

Impact: Neutral

Novo Resources announced the first complete assays from its large (>5t) bulk sampling program at Comet Well, which includes 10.4g/t Au in bulk sample KX157. We expect there is likely to be a steady stream of bulk sample results to follow.

  • Very good grades at surface, but below our rough estimates and market expectations
  • Results do not change our thesis on a significant gold system being present
  • Steady stream of results expected
First results have demonstrated a lower-grade, thicker system than expected, however it is still early days and it does not change our thesis on the potential for a very large gold system. We continue to believe that Novo is worth between C$4.70-17.90/sh, suggesting upside from the current share price.

13-May-2018

RCKS Charts

Catalysts are Key

In this edition of RCKS Charts, Keith has evaluated Toachi Mining Inc. (TSXV:TIM), Avidian Gold Corp. (TSXV:AVG), Aurania Resources Ltd. (TSXV:ARU), Novo Resources Corp. (TSXV:NVO), Golden Arrow Resources Corp. (TSXV:GRG) and NxGold Ltd. (TSXV:NXN).

11-May-2018

Pilbara Update

Kirkland Lake Increases Investment in the Pilbara

Impact: Positive

Kirkland Lake Gold (TSX:KL) announces its third investment in Novo Resources Corp. (TSXV:NVO) by acquiring 4 million shares from Artemis Resources (ASX: ARV) at C$5.00/sh to bring the company’s total investment to 29.83 million common shares of Novo at an average price of C$3.18/sh.

  • Kirkland Lake announces third investment in Novo Resources
  • Kirkland Lake continues to back a Pilbara discovery
  • Novo Resources and De Grey Mining remain our preferred companies for making a Pilbara discovery 
Kirkland’s continued investment in the Pilbara district indicates its ongoing confidence and commitment to a potential world-class discovery. We expect the next catalyst for Novo in addition to other Pilbara players to be Novo’s large bulk sample results expected at the end of May.

25-Apr-2018

Novo Resources Corp.

Preliminary Results from Larger Bulk Sample Look Good; Grade Expected by End of May

Impact: Positive

Novo Resources announced preliminary results from its larger bulk sample program at Comet Well, and while the market appears to have expected grade, a rough estimation of grade and location of the sample are very encouraging in our view.

  • Based on the limited data provided sample is likely to grade ~15-40 g/t, excluding the fine gold component
  • Good results, off the basal contact important resource development and mining
  • Final grade results expected end of May; results likely to be steady after that
Despite bulk sample grades and widths being towards the top end of our expected range it is only one sample, so we continue to believe that Novo is worth between C$4.70-17.90/sh, suggesting upside from the current share price.

05-Apr-2018

Industry Report

Pilbara Playbook

We recently visited 5 conglomerate gold projects and a conglomerate gold conference over a two-week period in Australia. Based on our site visits and the recent conference, these are the three key names that we like based on the work to date and the next steps planned by each company:

  • The Technical & Financial Leader – Novo Resources (TSXV:NVO)
  • One Step Behind with Hardrock Assets to Underpin – De Grey Mining (ASX:DEG)
  • An Impressive Newcomer – NxGold (TSXV:NXN) 

01-Jan-2018

Novo Resources Corp. (TSXV:NVO)

RCKS Talk Blog Archive

We updated the look & feel of our RCKS Talk Research Blog in March 2018.

To access the historical archives of our original blog format, please click on the link(s) below to be re-directed. Please note that we no longer update those archive blog pages.

Click here to access the RCKS Talk Blog Archive for Novo Resources Corp. (TSXV:NVO)


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