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HEDGELESS HOURSEMAN | Novo (Pilbara): More Than Meets the Eye

The Pilbara story has changed quite a bit in 2018 and I thought it might be good to recap some of the biggest changes (so far) and cover my personal view in terms of value proposition and Risk/Reward (mostly from the stand point of Novo Resources).

On the corporate/insider action side we have seen quite a bit of action, including the following for the Pilbara juniors:

 

On the geological/exploration front there has been quite a few developments as well:

 

1 – The Karratha Gold Project (West Pilbara – Mount Roe Conglomerates)

We have learned that the upper Comet Well/Purdy’s Reward gold bearing conglomerate horizon is much more nuggety than the lower (well organized and thicker) Comet Well horizon(s), and that even tens of 5 tonne bulk samples is probably not enough to give us an accurate number in terms of average grade. An approximate “true grade” number will probably have to wait until we are trial mining this horizon.
It seems Novo has been successful in their previously stated goal in terms of try to locate/track the conglomerate through drilling:

“Hennigh said core-scanning to prove the continuity of the conglomerates was proving “very effective” and the company was encouraged by ore-sorting technology.”
Source

In light of the previous success with the first “ore sorting” machine that SGS used for the upper CW/Purdy’s material, Novo has already contracted ore sorters from Tomra, and Quinton Hennigh made the following remarks recently:

“Hennigh said core-scanning to prove the continuity of the conglomerates was proving “very effective” and the company was encouraged by ore-sorting technology.
“We see ore-sorting as a very, very important means to treat this ore when the time comes,” he said.”
Source

2- Beaton’s Creek (East Pilbara – Hardey Formation Conglomerates)

As some may know, Novo signed an MOU (Momerandum Of Understanding) with japanese mining giant Sumitomo to “further develop the Beaton’s Creek project” in July of last year.
This tidbit was included in the News Release:

“Sumitomo will provide certain of its personnel to assist the Company with the preparation of its internal study, including basic engineering design work and other studies, and permitting (the “Study”).  The Study is being targeted for completion in late 2017. Once the Company and Sumitomo have completed the Study to both parties’ satisfaction, Sumitomo will have the right to elect to participate directly in the Beatons Creek project and/or make an equity investment in the Company (the “Option”).”
Source

Since then, a lot has happened. Late last year, Novo went back to Beaton’s Creek (late 2017) on the back of their new realization in terms of adequate sampling size after talking to a coarse gold expert, and this time they had the funds. This was a few months after Kirkland cashed up the company big time with $56 M. Keep in mind that the 5 tonne bulk samples they are doing over at Karratha are very very expensive ($40,000 per sample!) and at least similar bulk sampling was probably not economically feasible for Novo before this, given the many years of abysmal market conditions and thus sparse funding options for pretty much all juniors.
Their coarse gold expert suggested that Novo should take at least 2 tonne bulk samples from Beaton’s Creek, which is still much less nuggety than Karratha, and might be a tell that 5 tonne samples for upper CW/Purdy’s might have indeed been a bit “greedy”. Remember, 5 tonnes was the absolute minimum sample size that the expert suggested for Karratha.
Anyway, what Novo seems to have discovered is that the grade estimation based on drilling for Beaton’s Creek might have been severely understated due to the nugget effect. In fact, according to Novo’s preliminary findings, Beaton’s Creek Hardey Formation conglomerates might be up to twice as rich compared to the original resource estimate.
As anyone will know, IF that kind of bump in grade turns out to be close to being true, that completely changes the project and economics big time. 
During Novo’s latest presentation from the Denver Gold Forum, the presentation started out with Quinton showing drone footage from Beaton’s Creek and a new cross section with the gold bearing reefs. Quinton also mentioned that the company has an office and currently 12 people stationed in the town of Nullagine (The Beaton’s Creek project is located right next to the town).
Sumitomo MOU —> Kirkland cashes Novo up —> Goes back to Beaton’s Creek late last year with a full treasury and takes large bulk samples —> Discovers that due to the nugget effect, the grade might be up to twice as high —> The Sumitomo/Novo study scheduled to be released around the same time got pushed back… For perhaps obvious reasons? —> Novo continues bulk sampling activities through out the year —> Now we have 12 people stationed at Nullagine —> New Beaton’s Creek resource expected in the coming weeks (HH: We got it but only for the 2017 work!) —> Quinton starts off the Denver presentation with Beaton’s Creek.
… Can anyone see an interesting pattern emerging as to how good, and by some people conveniently “forgotten”, the Beaton’s Creek project might be? And barely anyone even acknowledges its existence judging by the discussion, or rather lack of discussion, in the forums. This inability by the market do focus (and thus put value) on more than one thing is the whole reason why spin offs usually work out so well. Depending on how good the new Beaton’s Creek resource will look, one can then play with the thought in terms of what a Spin Co with the Nullagine assets would be worth, and then subtract that from Novo’s enterprise value of about US$260 M. If the market is pretty much oblivious to the potential value from Beaton’s Creek alone (again, judging by the almost non existent discussions regarding the project), then what part of it is actually reflected in the Enterprise Value of Novo, if at all? Seriously, stop, think and try to recall when the focus wasn’t only on one thing and one thing only (Karratha) by most longs and ESPECIALLY the bears/bashers. Also, do you remember any positive market reaction after Quinton stated that Beaton’s Creek might be twice as rich? I don’t. Did you see any particular reaction when the big land package in Egina was announced and explained? I remember some big bulk buying but no real change to the SP… Food for thought. I rest my case. 
In the Novo News Release that was out just two weeks ago (Oct 10), we got an update to the Beaton’s Creek (BC) resource that ONLY included work from 2017. The larger BC bulk samples that might reveal that BC’s real grade is up to 100% higher than has been reported via drilling are still in que. Think about this for a minute. The SGS debacle did NOTHING for the long term value proposition. The gold is still there, and it looks to be twice as rich (4-5 g/t perhaps). We all know that the market (especially when it’s depressed) is extremely impatient, and will often over-discount a short term hurdle, for the benefit of patient investors seeking outsized returns. There is no way that targets of this scale lose lets say 50% of their long term NPV just because a couple of first ever bulk samples got delayed for multiple months.
Furthermore, the News Release included indicative  production costs numbers for Beaton’s Creek and they were superb:

 
… Thus, the preliminary or “indicative” production costs totals around US$20.4 per tonne, and recoveries are simply outstanding!
So lets see what the gold value per tonne might be and what indicative operating margins BC might have:
Well, lets start conservatively and use a grade of 2.3 g/t and 90% recoveries (2.3*0.9=2.1). That comes out to US$81.9 (worth of gold) per tonne based on the current gold price of US$1,231/Oz, and would thus result in an operating margin of  75.1%(!). In other words it would (preliminary) cost 306 USD to produce an ounce of gold worth US$1,231 today (20.4*31.1/(2.3*0.9)). Such an operation would have a lot of room for unexpected costs, and would put BC down as one of the lowest cost operations in the world.
Now, lets imagine the real grade is closer to 4.5 g/t, and remember, the production costs in terms of US$/tonne should be roughly the same:
4.5 g/t and 90% recoveries = 4.1 recovered grams of gold per tonne of rock, which is worth $162.3 USD. In this scenario, the operating margin would be 87.4%(!). In other words in would (preliminary) cost 154.7 USD to produce an ounce of gold (20.4*31.1/(4.5*0.9))… Yes, that’s US$154.7 per ounce, and would possibly be one of the lowest cost operation in the world from an operating costs stand point!

  • Lets imagine that the original plan of having a relatively modest 2,000 tpd operation going at BC for a minute. In that case we could be looking at something like this:


 
Even if we take the low ball estimate of 2.1 g/t of recoverable gold and almost doubled the operating costs to US$600/Oz, then a 2,000 tpd operation could theoretically spit out US$27.7 M in annual free cash flow. Now consider the fact that ALL of Novo’s projects are TOGETHER valued at US$226 M based on Friday’s close.
If we instead look at the 4.1 g/t of recoverable gold scenario and roound UP the costs to US$200/Oz, then a modest 2,000 tpd operation could theoretically spit out a whooping US$88.3 M in annual cash flow from BC alone! That would put our current EV/Future FCF (excluding dilution) at 2.55 (226/88.3).
Are we really paying anything for the potential ultra district scale upside in all our different other targets if those estimates are even close? What if Novo would put up a 4,000 tpd operation instead? Food for thought.

  • below is a crude NPV table that assumes
    • a whooping US$100,000,000 in CAPEX for a pretty modest 2,000 tpd operation:
    • Uptime of 325 days/year
    • Discount rate of 5%
    • Mine life of 15 years
    • AISC = Operating costs in this case.

 

Beaton’s Creek NPV scenarios. Source: The Hedgeless Horseman.

In the table above you can see the that all scenarios highlighted in GREEN would mean that Novo’s current Enterprise Value (Market Cap – Cash) is more than covered by the theoretical NPV of Beaton’s Creek alone. The scenarios highlighted in RED represents the production profiles for Beaton’s Creek that would partly cover Novo’s Enterprise Value. As you can see, you can downgrade the theoretical scenarios a lot before we would start to actually pay for any of the blue sky upside, for any of our targets outside of BC. Personally I am comfortable with using a conservative scenario of 4.1 g/t and operating costs at US$500, which would still leave a lot of room for downside before I take on ANY exploration risk. In fact, even if you average the 2.1 g/t and 4.1 g/t scenario with the parameters described above, the average still comes out north of our current EV… And few even knows BC exists it seems like(!).
Let me show one more slide just to prove my point. Below are different scenarios but this time using a discount rate of 7% and Uptime at 250 days/year:

Beaton’s Creek NPV scenarios. Source: The Hedgeless Horseman.

In the low balling scenario for BC, and even upping the operating costs to US$500/Oz, the operation would still pretty much make up 50% of our current Enterprise Value. THEN we can start talking about what fraction of potential is priced in from the rest of the basin. In the preliminary “true grade” scenario for BC (which in turn might be low balling it), the costs would have to be over 4.5 times higher than Novo believes in order for BC not to theoretically cover our current Enterprise Value.
This is why I don’t get the sentiment. Some people seem to think that there is some large percentage of blue sky potential already priced in, and specifically the MYTH that is ALL about the Comet Well “patch”. What is priced in outside of the low ball BC scenario is my question? The way I look at it is that when I topped off my holdings last week, I was getting 13,000 km2 of prospective ground with MULTIPLE district scale target potential for FREE(!).  Basically, in my view I wasn’t taking much risk (if at all) in terms of how CW, rest of the Mt Roe, rest of the Hardey Formation, Egina and/or the potential source would pan out… This kind of R/R is why I simply love Novo. Market seems to have no clue, and that is what I have been taking advantage of. The hefty decline doesn’t scare me, it just makes it even more obvious that the market, your average retail investor and/or pundit REALLY has no clue. Novo used to be cheap, now I feel like I am literally stealing an entire basin.
How many “bashers” or “pundits” even mentions Beaton’s Creek? And if they do they pull out some ridiculous numbers out of their ass with nothing to back it up (I am looking at you Topend). The results (intentional or not) is that they make retail investors actually believe that Novo is MUCH riskier than it is at face value. They make people believe that a dozen bulk samples out of one potentially basin wide Mt Roe prospect (CW) will dictate Novo’s future, when in reality, nothing could be further from the truth. This is probably why the bashers/bears constantly scratch their heads as to why Kirkland Lake doubled down at $5/share not long ago. No wonder, since most seem to have no concept of Risk/Reward or what Novo’s total value proposition is. I know one entity that does know it very well though… Kirkland Lake.
Most “bashers” for lack of a better word always seem to focus on one thing at a time, and they keep harping on it… Find an obstacle and then press on it and keep pressing on it in order to keep all forum discussion on that subject (hurdle/problem). They always stick to what might go wrong, but never in their life are willing to talk about what it would mean for Novo and the Pilbarians if the insiders are actually correct in being this bullish, and not to mention what amount of “risk” is already priced in (…and then some). Now who has got a better grasp on the prospects and value proposition? And yes, they got serious skin in the game and thus are risking millions to go with their investment thesis…
I include both the risk and REWARD side of the equation. If you include only the risks, then you are either a basher or ignorant and have no business handling your own money. IMHO.
If Novo and the Pilbarians unlock this 600×300 km gold field(s), then the sky incalculable, and if by some chance, every project, every area and every geological target turns out to be completely and utterly worthless by the time they have burned through all their cash and BC is set on fire, then yes, the downside is theoretically 100% as with any investment. Odds of all that happening? Slim to none in my book.

3. Egina

(This section that will cover the district scale “Egina” typ targets is still in the works)
 

RISK VERSUS REWARD

Lastly, keep in mind that the Pilbarians are INTERNALLY DIVERSIFIED in terms of both different types of targets AND areas.

  1. (Sub) Mt Roe conglomerates as evidenced by numerous Pilbarians and historical reports
  2. Hardey Formation conglomerates as evidenced by Beaton’s Creek, other Pilbarians and historical reports
  3. Modern gold bearing gravels derived from all of the above and possibly more as evidenced by Egina, Friendly Creek and countless historical reports
  4. Structural gold as evidenced by numerous Pilbarians
  5. Other metals as evidenced by Artemis most recently

Burn through all cash and every current project and all other prospects must turn to crap, and yes, then you might theoretically have your 100% loss. Not only that, but given the fact that multiple juniors are basically working on different parts of different macro prospects, they must all come up empty for there to be no implied value on any Pilbarian in terms of Mt Roe, Hardey and gold bearing gravels.
Odds of that happening? Food for thought.
And by the way, don’t buy into anyone telling you that they know what lies beneath the surface in Pilbara. I have heard from many different people from down under just how UNDER explored the whole craton is. It is huge, rather remote and often a very hot place. There were not even any conglomerates mapped in Karratha for example, and now with Novo’s lead, the Pilbarians are turning up new conglomerates and finding gold all the time.
So to repeat, just based on what has been announced so far, Novo’s current projects consist of:

  • 1. The Beaton’s Creek Project – Hardey Formation Conglomerates
    • Which got Sumitomo involved and is getting a new resource any day/week now.
    • With excellent recoveries and is free digging that can be mined via a bull dozer.
    • Wide open system that is drillable (although grades might still be understated through drilling)
  • 2. Karratha Gold Project – Sub Mt Roe (hard rock) conglomerates
    • Including the thinner and very nuggety Upper Comet Well sequence that is proximal to a tuff marker horizon.
    • Including the thicker and lower less nuggety (well organized) bottom Comet Well (Cannonball) sequence.
    • Can possibly be miner at very low costs with the help of ore sorting machines (Machines already contracted).
    • Wide open system which is not drillable (at least at CW/Purdy’s).
  • 3. Egina Gold Project – Near surface gold sourced from eroded conglomerates etc
    • Modern near surface gravels that contain both nuggety and fine gold.
    • Can possibly be mined at very low costs (bull dozer and gravity separation).
    • Wide open system with over 100 years of reported mining activity and over 100 known sites of mining activity known today.
    • Possibly drillable due to the fine gold, but perhaps overkill.

… Out of the three projects above, Beaton’s Creek could be considered well advanced since it has an existing resource and will be getting a new one with the help of bulk sampling instead of only drilling. The Karratha Gold Project will (in my opinion) most likely see trial mining 2019 on the back of a mineralization report. Egina already has some existing mining leases and I think it will be in trial mining/production phase in H1 2019.
One ought to remember that these projects are tiny fractions of the overall 10,000 km2+ land package that has been staked by Novo and the other Pilbarians.
The big picture unknowns for the 600×300 km basin are:

  1. How big is the Sub Mt Roe mineralized gold system?
  2. How big is the Hardey Formation system?
    • Is it similar to Beaton’s Creek in the West and Central Pilbara as well?
  3. Are there more systems?
    • (The West Mt Roe conglomerates are believed to have been sourced from older conglomerates.)
  4. What, where and of what quality is the source(s) that created this seemingly 600×300 km basin wide gold anomaly?
    • Carbon leader type gold?
    • Basin wide hard rock sources?
    • A combination of the two above?
      • Most of the Pilbara craton has experienced metamorphism.
      • It is believed that there has been subduction zones active during the Archean.
      • Plenty of shears and faults.
      • Some believe that Pilbara experienced at least two major meteor impact events.

Novo is thankfully not alone in terms of proving up the very UNDER EXPLORED Pilbara Craton. We get news almost every week from Pilbara juniors that includes nugget finds, gold confirmed in stream sampling and/or
If things turn out well in the short to mid term, then Novo might see cash flow from two projects sooner rather than later, and hopefully begin to scale up from that point forward. If both these targets are anywhere near as high margin as some have theorized, then we can potentially be seeing some material free cash flow and thus be self funded starting next year already. It is also worth noting that given the sheer potential scale of both systems, if proof of concept is achieved, such operations might be workable for many many years to come. That is why I think that as soon as/if trial mining shows that one or both tiny slices of these “gold fields” are indeed economic, and preferably very high margin, then one can start theorizing at least a range of potential NPV scenarios for [X] km2 of similar strata.
In short, I see Novo and some select Pilbara juniors as (in my opinion) cheap options on one or more gold systems proving to be economic and if one or more prove to be, the potential scale is off the chart. With the Pilbara juniors trading for peanuts and Novo trading at an EV of about US$226, one has to wonder what part of success is priced in for one, two, three or more of the gold systems on top of yet undiscovered systems such as the source(s)? In my personal view, these are crazy cheap valuations given what it would mean if the insiders and their bullishness proves to be correct. With Kirkland buying more Novo at $5 just a couple of months ago, I would assume they are either stupid or the market has no clue how to put value on such a vast and complex case as Pilbara. My view is that the market is suffering from tunnel vision and depressed overall sector sentiment. I really get the sense that many view Novo for example as some kind of super risky “one trick pony”, when in fact it has loads of cash, multiple projects (one advanced), near term cash flow potential, bigger blue sky scenarios than any known gold junior in the world and top quality management/backers with skin in the game.
 

“Price is what you pay. Value is what you get” – Buffet

 
Current Pilbara junior favorites are:

  • Novo Resources
  • Pacton Gold
  • De Grey Mining
  • Kairos Minerals.

There are more Pilbara juniors with prospective ground, but when taking into account the blue sky potential, management and backers, I would say those four comes out on top in my opinion.
When I take into account the multiple project diversification aspect and consider the potential blue sky scenarios I can’t help to feel that the valuations of most of the juniors already have discounted an obscene amount of risk. Are you paying for any “unconventional” upside in De Grey for example? Food for thought.
When you divide Novo’s current EV by three (number of current projects) you get US$75. Then lets play with the thought that the US$75 number represents the current price for 1) The Mt Roe gold system, 2) The Hardey Formation gold system and 3) The Egina gold system…
Is the CW/Purdy’s and the tens of kilometers of nearby strike potential as “confirmed” by Brent Cook and Kirkland Lake only worth US$75 M?
I mean even Cook stated that there are “tens of millions of ounces” in that area alone, and IF Moriarty and Barron are even close to being right, then that figure wouldn’t even reflect 500 Toz of high margin gold.
Is the potential for Egina and all similar “terraces” that covers a huge area (where there used to be conglomerates etc) only worth US$75 M?
I mean this is perhaps the cheapest form of mining that exists. Will all these flats host gold in economic quantities? No, but you only need a fraction of the area to be economic in order to rack up US$88 M in discounted free cash flow. Especially given the probably rock bottom CAPEX.
Is the potential for the Beaton’s Creek system and the already delineated Hardey Formation target to the north of it only worth $US75 M?
I mean Beaton’s Creek was apparently looking good enough for Sumitomo to get involved, and that was before Novo realized that the grade might be significantly higher, and it’s wide open. And as stated above, QH disclosed that they have already delineated considerable Hardey Formation strike in another area to the north of Beaton’s Creek. Also note that Beaton’s Creek ore is free digging, has excellent recoveries, is wide open and they seem to have found at least one additional Hardey Formation system already. How much of all that is priced in?
I would argue that any of these gold systems at least has the potential to overshadow US$265 on a stand alone basis, let alone US$88. The important thing to remember is that we are not talking about a few kilometers of strike potential here, we are talking about tens or hundreds of km squared. They are unconventional in every aspect of the word, and who know, it might end up being the production margins that is the real story and not even the sheer scale. What I mean by that is that lets assume that the average $AISC for gold production in all conventional forms is US1,000 and the average Free Cash Flow is US$200/Oz when gold is at US$1,200. Now lets play with the (very speculatile) thought that Beaton’s Creek can produce gold at US$500/Oz, CW at US$400/oz and Egina at US$300/oz. That in turn would mean that these ounces in the ground should be worth 4 times as much as conventional ounces on average. This is all very speculative, but if we get signs of this panning out in the trial mining, then the valuations above will look ridiculous in hind sight, in my humble opinion.
With all of the above said, this is mining and nothing is easy, but the point I am trying to make is that I consider much of the risk to already be priced in and thus you are not paying for much of the upside potential. For example, if De Grey Mining’s valuation does not reflect much more than their known hard rock gold, you get all conglomerate potential etc for free. If Novo’s Enterprise Value reflects 2-3Moz of AVERAGE margin gold in a tier 1 jurisdiction, then how much are you paying for thousands of km2 of land with potential for multiple (thus different/diversified) gold systems? Any stock can go to zero, but compare the valuation to what the upside potential is and you will be hard pressed to find something similar in my opinion. On the same note, I think it is a stretch to think that Kirkland invested an additional $20 M at $5/share with the expectations of Novo ending up with only 2-3 Moz based on what is known at this early stage even. I’d side with Kirkland Lake in terms of Novo being at LEAST worth $5/share given what I have discussed in this article over the market’s view that the R/R is worth $2.7/share, and that is AFTER the Egina announcement.
Any and every stock has a theoretical downside of 100%, but there are no gold juniors (that I know of) out there with the upside potential that matches some of the Pilbara juniors and their multiple (super) district scale targets. If they unlock 1% of Pilbara, that’s pretty much blue sky already. The unparalleled size potential is one thing, and the other is margin or free cash flow potential. We are already beyond spoiled when it comes to size potential, but if we get proof of concept of this to be as low cost operations as some speculate, then those two factors should be multiplied. For example, if the Pilbarians are able to delineate 10 Moz from a few km2 down the road (to start with), then that is obviously massive in its own right. BUT, if they show that the margins are say three times better than conventional ounces, then I would argue that their deposit(s) is equivalent to 30 Moz of conventional gold (10×3). Do you see the potential upside scenarios? The market is pricing in very little of anything, and we already know Cook and Kirkland have previously stated that there are tens of kilometers of strike from the Mt Roe conglomerates (Egina type included?) alone, and we know Moriarty and Barron believe this will be dirt cheap to process. Given that nothing close to even a few million ounces of high margin gold is priced in for the Pilbarians, you are not even paying for that upside.
And people claiming that “the consensus” is that there are tens of millions of economical ounces are out of their minds. The market IS the consensus and they are valuing for example Novo at $2.26 and not to mention the other juniors, while insider and main bull Kirkland Lake paid $5 just a couple of months ago per share of Novo. Since that purchase, Egina was announced, and the stock dropped 20% because; 1) Hot money didn’t get their assays and 2) QH said that the upper and most nuggety horizon would produce volatile assays with 5 tonne samples. Anyone thinks that this nuggety nature was a surprise for Kirkland when they bought at $5? Please.
As a matter of fact, the bears ARE the consensus, they just don’t realize it since they in my opinion 1) Only focus on ONE small patch from ONE of the gold systems, 2) Doesn’t seem to have run any numbers and what different success scenarios would mean for the Pilbarians, and 3) Doesn’t realize that the market has discounted the Pilbarians down to the bone already.
… Just go over the forums for the last couple of months and I think you will agree with me. 
When you hear people say that they don’t think any of the gold in Pilbara will be economical do extract, one might ask how anyone can possibly know that since we haven’t even gotten to trial mining and the huge Pilbara Craton is very under explored. And again (I keep harping on this), nothing close to blue sky for even one of the systems is priced in, so you are not paying much for the potential anyway, since the bears and their bearish views ARE the consensus at these valuation levels. 
While everyone and their mother is obsessing over the first tens of 5t bulk samples from one (in this context) small patch, Novo and Pacton are quietly buying up as much additional land as they can in the Egina area Central Pilbara. Remember, this area is about much more than the Mt Roe conglomerates, and this is what Brent Cook has said about specifically the Mt Roe conglomerates:

“It goes for tens of kilometers” – Brent Cook
“It’s big. It’s really big. We just don’t know if it is economic” – Brent Cook
“There’s no doubt there is gold there. There is tens of millions of gold in this conglomerate unit” – Brent Cook

 
… It’s up to one self to determine what kind of chance of success is priced in for that Karratha target alone, not to mention the other 99% of the land package and multiple other targets. Again, investing is not about absolutes (black and white). I want to buy companies where I can see a favorable Risk/Reward scenario which basically means, in the case of junior explorers, that the upside potential has been overly discounted due to perceived risks, bad sentiment and/or the market poorly understands the sum of its parts.
 

Check list:

[x] Market heavily discounting every project given what is already confirmed
(tens of km strike, BC wide open with better grades, Egina not valued at all since it didn’t really budge on the news).
[X] Bad market sentiment dragging pretty much everything down no matter the developments (with few exceptions) 
(Whole sector is off 50%-80% from its 2016 highs)
[X] Market having a hard time understanding/valuing what Pilbara is about.
(Tunnel vision on one project and most of the discussion is about the hurdles and not really discussing what it would mean if the hurdle is overcome)
(Case in point: Dropped over 20% due to assays not being reported in Denver and that the upper CW/Purdy grades would be volatile)
(Kirkland Lake doubling down at $5 with superior information while SP and thus consensus is doom and gloom)
… Food for thought. Make up your own mind.
 
Note!!! This is NOT investment advice. Junior mining stocks are risky and can be very volatile. Novo Resources has been my biggest position since 2016 and might buy and sell stock at any time. I can’t guarantee 100% accuracy in terms of what is contained in this post and thus would encourage everyone to do their own Due Diligence. This post is contains my personal view on Novo.
Best regards,
The Hedgeless Horseman
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