Canada’s Novo sets its sights on Pioneer as Pilbara gold story resumes
Last year’s Pilbara gold story appears to be again gaining traction, with Pioneer Resources striking a deal with one of the original players, Canada’s Novo Resources, over its “Kangan” project in the Western Australia region.
Investors liked the news, pushing Pioneer shares (ASX:PIO) up 11 per cent to an intra-day high of 2c on Tuesday morning.
Novo can earn a 70 per cent stake in the Kangan project by sole funding $500,000 worth of exploration within two years – a move that Pioneer says will fast track exploration.
The pair can then form a joint venture and Novo will continue to sole fund activities through to a decision to mine being made.
The deal also gives Pioneer an initial $200,000 in cash and 100,000 Novo shares worth around $380,000.
And Novo has agreed to stump up $1 million for Pioneer shares at 2c apiece for a 3.3 per cent stake.
The Pilbara gold story took off mid-last year after Novo and its Aussie partner Artemis Resources (ASX:ARV) uncovered what was described as “watermelon seed nuggets” south of Karratha at their Purdy’s Reward project in July last year.
The nuggets were later determined to be conglomerate-hosted.
Conglomerate gold refers to nuggets hosted in rock containing rounded grey quartz pebbles and other minerals.
The world’s most productive gold region, South Africa’s Witwatersrand Basin, is famous for its similar geological formation.
Novo has been one of the most active in the Pilbara conglomerate gold story.
The company’s major backers include Canadian billionaire investor Eric Sprott and well known Western Australian prospector Mark Creasy.
“Novo has been active in the Pilbara region of WA since 2011 when it invested in the Beatons Creek gold project as well as tenements held by well-known mining explorationist, Mark Creasy,” Pioneer managing director David Crook said.
“Novo has steadily increased its position within the Pilbara as the conglomerate gold genesis model gained veracity and, most recently, has entered into this specific agreement with Pioneer targeting the Kangan project as a good fit with the prevailing exploration model.”
At last month’s Diggers & Dealers conference Novo chairman Quinton Hennigh said the company might have uncovered the source of the region’s nuggetty gold and would have “very, very interesting things” to say in coming months.
Pilbara explorers have been trying to reignite the conglomerate-gold story after it fizzled out.
This type of gold has proven difficult to drill in the Pilbara and has created concern in the market that it may not be economic to mine.
But activity is again hotting up, with Kairos announcing last week it had found 256 gold nuggets during metal detecting of a small area at its Croydon project.
Artemis followed that up by showing off the 7kg collection of nuggets it has unearthed so far from its 47K Patch and Purdy’s Reward projects just south of Karratha.
Pioneer, meanwhile, had several offers for its Kangan project but was holding out for Novo, Mr Crook told Stockhead.
“We received a number of offers for this ground, but we thought that Novo was the natural partner up here,” he said.
“They are the ones that are going to put the time and the expertise into the ground and we’ve got the optionality of participating at 30 per cent following some success.”
While Pioneer has itself not found gold nuggets at the Kangan project, Mr Crook said there have been nuggets found in an area called “Womerina”.
“There are reports in the Mines Department of people finding large quantities of nuggets at Womerina,” he said.
“Certainly they are the same as any other watermelon seed nugget.”