Good news for Pilbara gold stocks after sharp gain for bellwether Novo Resources
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New life appears to have been breathed into the Australian gold-nugget exploration game after what looks to have been a well-received presentation at a Canadian mining conference by Novo Resources — followed by a 25 per cent bounce on the Toronto Stock Exchange.
Despite its Canadian roots, Novo is the leader of the hunt to unravel the secrets of gold nuggets found in a previously overlooked layer of rock classed as a conglomerate in the Pilbara region of WA.
A runaway success in the middle of last year Novo and other companies engaged in the Pilbara nugget hunt have faltered recently as the complexity of the search became clearer, especially the challenge of proving commercial viability.
Investors who attended the AME Roundup at the Vancouver conference centre over the past three days seem to have shaken off some doubts about Novo and the Pilbara nuggets with a rush to buy Novo shares after a scheduled talk by its chairman, Quinton Hennigh.
Mr Hennigh was due to discuss Novo’s exploration strategy for its Comet Well site south of the Pilbara town of Karratha – and how it ties to the nearby Purdy’s Reward site it owns with ASX-listed Artemis Resources (ASX:ARV).
Earlier in the week, Novo announced West Australian authorities had approved its submission for exploration at its Comet Well site, south of of the Pilbara town of Karratha. Trenching and drilling is set to start this month.
The subsequent share price move was so sharp, and followed Dr Hennigh’s speaking slot, that it is likely buying orders followed the talk.
A strong rise in the gold price earlier in the week will have helped Novo, as it did other gold stocks, but Novo’s price rise on Friday Australian time was exceptional.
It continued even as the gold price peaked at $US1364 an ounce before retreating to $US1348/oz after a speech by the US President Donald Trump, in the Swiss city of Davos in which he backed a strong US dollar – which is bad for gold.
Novo shares reached a low of $C2.45 around 11.10am on Wednesday (Canadian time) just as Dr Hennigh was due to speak, rallied slightly to close at $C2.61.
At the start of trading on Thursday Canadian time (Friday night Australian time) the stock slipped again to at $C2.54 – when a lightbulb flicked on.
Despite light trading volume the stock started to march higher, reaching $C2.80 by 10.40am local time, then up to $C3.21 by 1.20pm (the peak for the day), before closing at $C3.18 (up 25% from the low, or 21.8% from the previous day’s closing price).
The shares closed the week at $C3.04.
The price rally after the Vancouver conference was encouraging for investors with an interest in the nugget hunt, but still left Novo well short of its peak price of $C8.55 in October.
Australian investors exposed to locally-listed nugget stocks, such as Artemis and De Grey Exploration (ASX:DEG) will have to wait for Monday to take advantage of the Novo bounce.
At the close on Thursday Artemis was up marginally at 20c after dipping to a low of 18c, well-down on its November high of 55c.
De Grey ended steady at 14c on Thursday, also well down its high of 36.5c reach in mid-November.