Barry FitzGerald: Garimpeiro charts the rise, fall and possible rise again of Novo Resources

The art of stock promotion was carried to dizzying heights in 2017 by Canadian explorer Novo Resources (ASX:NVO).

It was the lead company in what became the Pilbara conglomerate gold bubble, one that powered Novo to a market cap in its home market of more than C$1 billion, with more than 30 Aussie juniors hitching a ride while the good times lasted.

That the good times didn’t last is reflected in Novo – which dual listed on the ASX in September last year – now having a market cap of less than $32m. And those Aussie juniors who went along for the ride, well they’ve moved on to other things.

In the heyday of the bubble, the Canadian market in particular became infatuated with the idea that sedimentary conglomerate beds that had long yielded small patches of gold nugget finds by prospectors using metal detectors were in fact seriously extensive in the Pilbara.

A globally significant new gold province was in the making, it was suggested, and comparisons were made to South Africa’s fabled Witwatersrand, the source of one-third of all the gold ever mined.

In what was one of the greatest promotional efforts ever witnessed in the Aussie mining and exploration scene, Novo orchestrated a live cross from the Denver Gold Forum in September 2017 to its Purdy’s Reward conglomerate project near Karratha.

It was 1am at Purdy’s Reward where a patch of near-surface conglomerate had been exposed in a small pit that had previously been gone over with metal detectors, with sprays of pink paint outlining what could be nuggets the size of melon seeds.

Voila!

Vision of the marked ground being jack-hammered to reveal gold nuggets was beamed back to the Denver conference, one of the more influential on the conference circuit. It was remarkable stuff and carried Novo to new heights.

In the way of a good story

But the story and Novo’s market cap started to unravel when it became clear the concentration of gold nuggets in the undoubtedly extensive conglomerate beds was never going to support a commercial operation.

The Pilbara conglomerate gold nuggets story was championed by Novo’s chairman and president at the time, Quinton Hennigh, an economic geologist of some renown and for the right reasons too.

When the fizz was well and truly gone from the Pilbara nuggets story in 2019, at which point Hennigh blamed his brother for the over promotion of the story.

Hennigh said that while he tried not to be the promotional type, criticism from a friend in August 2017 that he wasn’t being promotional enough hit home.

“I thought about it for a bit and then I made the mistake of asking my brother to come visit me in Australia,” Hennigh said.

“And when my brother and I get together, nothing good happens.

“So we were sitting around having a few beers and he said that you have that (Denver) conference coming up right?”

Hennigh said his brother suggested that Novo do a live stream from Purdy’s Reward. “You know, go detect some nuggets and chisel them up,” the brother suggested.

“Ahh…that’s brilliant,” Hennigh said.

‘’It was exciting. It was very exciting. But it got way ahead of itself,” Hennigh told a conference in New Jersey.

Hennigh continues on as a non-executive co-chairman of Novo, with the executive co-chairman and acting CEO role now filled by well-known Aussie mining man Mike Spreadborough.

Recasting Novo

Spreadborough has been busy in recent years recasting Novo as an Aussie focussed greenfields gold explorer. Part of the change included the ASX-listing last year.

Put the Pilbara conglomerate nuggets fiasco in the past, and Garimpeiro reckons the new-look Novo is well worth a look now on a value basis in a rising gold market.

The stock was trading at 8.9c mid-week for a market cap of $31.6 million. Cash at last report was $11.7 million and, get this, investments in marketable securities were valued at more than $46 million.

Spreadborough has made no secret of the fact that he is looking to sell the marketable securities by mid-2025 and use the cash to become a sustainably funded explorer of scale, as well as possibly adding some new projects in Australia and Canada to the portfolio.

The portfolio is pretty good as it is. The standout is a joint venture deal on Novo’s Egina project in the Pilbara with the $3.3 billion De Grey Mining (ASX:DEG) – the company that made the breakthrough Hemi gold discovery (10.4Moz) in 2019.

The Egina ground is nice and close to Hemi (intrusion-related) and even closer to De Grey’s Withnell (shear-hosted) gold deposit that could also be developed along with Hemi under current thinking by De Grey.

De Grey can earn a 50% interest in Egina by spending $25m over 4 years and it has two drill rigs punching in holes right now.

Novo has other less advanced Pilbara gold projects on its books, with its big ground position in the region a legacy of the ill-fated conglomerate nuggets push.

Over in Victoria it has just established an exploration target at its high-grade Belltopper project near Castlemaine of 320,000-570,000oz.

“We are a greenfield explorer. We don’t have a resource. But we are out there looking for the next big thing,” Spreadborough said recently in a bit of soft promotion.