Will Novo’s chairman reignite the Pilbara gold nugget rush this week?
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Nugget-gold has slipped from the headlines, but it will be back in the news later this week after a keynote talk at a Canadian mining conference.
But before anyone gets too excited, it’s worth putting Australian nuggets into perspective, by looking back to a time when they fooled some of the world’s richest people.
The late Kerry Packer and the late Sir James Goldsmith dabbled in nugget gold near the Victorian city of Bendigo 25 years ago when they tipped some of their petty cash into Bendigo Mining, a company that hoped to redevelop the fabulous Bendigo goldfields.
It was a brave try, but it failed because while nugget gold can yield handsome rewards for lone prospectors with a shovel and wheelbarrow, it is devilishly tricky for a company which needs to invest in processing plant and equipment.
Planning ahead is hard to do because of the erratic nature of nuggets — rich in one spot and not in others.
Drilling the orebody to devise a mine plan can be all but impossible with a nugget-rich (or course) goldfield, either because the narrow drill-holes can miss nuggets at depth, or they can hit a few and encourage the miners to head into what turns out to be a barren patch of rock.
Today’s investors in nugget gold will be hoping for better luck than that which eluded Goldsmith and Packer.
The man who launched the nugget rush
Which is why they might like to follow what Quinton Hennigh, chairman of Novo Resources, has to say during the International Highlights section of the AME Roundup conference in Vancouver this week (Jan 22-25).
Novo is the Canadian company which launched a gold rush in the iron ore country of WA’s Pilbara region.
Hennigh, an economic geologist, made a star appearance at last year’s Diggers and Dealers conference in WA’s gold capital, Kalgoorlie. He famously showed anyone with the time a handful of small, water-melon seed shaped nuggets, recovered from the company’s Pilbara claims.
It is Hennigh’s theory that the flattened nuggets were formed a few billion years ago in conditions similar to those which created the world’s richest goldfield, South Africa’s Witwatersrand.
Airing the nuggets and taking about the Witwatersrand was a winner for Novo, and a number of Australian companies active in the region, including Artemis Resources (ASX:ARV), which has joint venture arrangements with the Canadians.
The Canadian company ran from less than $C1 last July to a peak of $C8.55 in October.
Artemis, on the ASX, rose from 5.8c in July to 59c in November. On a percentage basis the Aussie stock won, up 950 per cent v the Canadian 750 per cent.
Too far, too fast, is one way of describing the rocket-fuelled run of Novo, Artemis, and other players in the nugget race, including De Grey Mining (ASX:DEG), which rose from 6c to 36 (a modest 500 per cent gain), because as the nugget hunt has unfolded, and success proved elusive, prices have fallen back to earth.
The return of Novo, like all high-flying objects re-entering the atmosphere, has generated some heat with its price on Friday down to $C3.25 — a 62 per cent decline for anyone who bought at the top.
Artemis is back to 21c, down 64 per cent from its peak, while De Grey has fallen to 16c, off 55 per cent.
The problem for all the nugget hunters is identical to that confronted by Goldsmith and Packer.
Finding nuggets in outback Australia is relatively easy, turning a nugget field into a profitable mine is not.
Hennigh has acknowledged the challenge he faces in taking the nuggets found near the WA coastal town of Karratha to the next level of exploration, a process unsuited toNovo’s high-profile nugget-picking video which gained international attention last year.
Narrow-diameter drilling has proved unsatisfactory, as expected, in demonstrating that the near-surface nuggets are also found at depth – and depth (as well as breadth) is what a successful mine needs.
Broad diameter drilling, of the sort used by diamond explorers who face the same “small target” challenge as nugget hunters, has also been considered. As has building a small (pilot) processing plant to test rock samples in a range of five-to-10 tonnes of the conglomerate ore in which nuggets have been found.
As well as a possible pilot plant, Novo is also considering putting even bigger rock samples, possibly measuring in the thousands of tonnes, through a processing plant owned by Artemis at the mothballed Radio Hill nickel mine near Karratha.
The challenge for Novo is not a new one for a mining project trying to find a way to successfully (ie: profitably) mine what is technically described as a coarse goldfield.
To help plan the next step the company has engaged an independent coarse gold expert, Dr Simon Dominy, to work out the best sample size for testing and the best way of analysing the samples.
Hennigh should be able to say more in Vancouver on Wednesday morning Canadian time (Thursday morning Australian time), and might even be able to re-kindle interest in nugget gold.
But, lurking in the background is a long history of nugget gold being a challenge for companies which have tried to mine nuggets profitably because of the costs involved in sometimes extracting huge volumes of rock for small amounts of gold – while also trying to “drill ahead” to find rich patches of coarse gold.
What eluded Goldsmith and Packer in Bendigo could also elude today’s nugget hunters, but it is also possible that with original thinking a way might be found to overcome the nugget challenge.
On a positive note, Canadian explorers in Australia have been remarkably successful recently with Kirkland Lake Gold enjoying considerable success at Fosterville, about 20km from Bendigo, but with the gold believed to be the result of conventional processes and not like the Pilbara nuggets in conglomerate.
Novo’s hunt for nuggets, including their source, is far from over, in fact it might just be starting with the real challenges being the issue of who funds what is a world-class exploration puzzle, and can they solve it.