Gold dream powers Novo Resources share surge [IMG] A pile of...

Gold dream powers Novo Resources share surge


A pile of gold nuggets found on the ground near Karratha is driving feverish trading in Canada and Australia.

• The Australian
• 12:00AM August 21, 2017
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• MATT CHAMBERS
  
  Resources reporter
  Melbourne
  @mattchambers1
  
  PAUL GARVEY
  
  Resources reporter
  Perth
  @PDGarvey
  

A pile of gold nuggets found on the ground near Karratha, a random half-tonne surface sample and a 1980s CRA drill hole are driving feverish trading in Canada and Australia on the hope a huge new gold region lies beneath the surface.
Explorer Novo Resources has had $C550 million ($542m) added to its market value (now $C656m) since the start of July on excitement over the Purdy’s Well prospect, 35km southeast of Karratha. The trading has spilt over to Novo’s Purdy’s Reward partner, Artemis Resources. Its shares are up 240 per cent since the start of July, giving it a market value of $100m.

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The prospect has not even been drilled, sparking warnings of a bubble from analysts. But Canadian punters are piling in on the slim chance that Novo’s theory the Pilbara hosts a gold region similar to South Africa’s prolific Witwatersrand will come good.
For 13 years, Novo executive chairman Quinton Hannigh has been chasing a theory that the three-billion-year-old Pilbara Craton could host similar deposits to the Witwatersrand Basin, which has supplied one-third of the world’s gold to date.
At Purdy’s Reward, which Novo entered in May after striking a deal with Artemis, he says he has found the strongest signs yet to back the theory.
The way Hannigh and Artemis executive director Ed Mead tell it, prospectors with metal detectors swarmed all over the region at the end of last year, uncovering thousands of nuggets and leaving the landscape pockmarked with small holes.
“It blazes a trail for us ... from what I can see people are digging up nuggets the whole way across the section,” Hannigh said in a podcast interview with US independent gold analyst Jay Taylor.
There is little downplaying by the Canadian geologist of what he is chasing. “It shares similarities to the Witwatersrand in some respects,” he says.
Along with the buoyant statements and gold nugget finds, an apparently random trench sample taken just to establish sampling and assay protocols has been jumped on by speculators.
The sample had an average head grade of 67 grams of gold per tonne, Novo said on August 8, driving a $C320m jump in Novo’s market value. “This is a very speculative story,” Hannigh admitted in the podcast. “It has big potential and the market is clued into that — it’s had a pretty good run given we haven’t drilled a hole.”
One analyst, who did not want to be named, says Novo and Artemis has proven “very, very polarising” in the eyes of investors.
The analyst notes that despite its reputation as a hub for iron ore, the Pilbara has a long history of delivering gold nuggets and that the Witwatersrand comparison trotted out by Novo has been floated many times in the past.
“It’s a theory that comes up every 10 years or so, people have spoken about it for decades,” he says. “Investors should play softly-softly and be a bit more cautious because the share prices have run up extremely highly on the prospectivity of something that still isn’t proven yet.”
Artemis’s Mead says the early stage of the project means he has been reserved about talking up the potential of the find, even at the annual Diggers and Dealers gold conference in Kalgoorlie earlier this month, where spruiking prospects is the name of the game.
“I took a pocketful of nuggets and showed them to geologists who were across the story, but once we start getting drill results we’ll start to tweak the interest of mining engineers and other people,” he says.
The theory that something bigger lies under the surface is also being informed by a drill hole dug 60km to the southwest in 1983 by Rio Tinto forebear CRA.
That drill hole, the pair say, encountered grades of 11.7 grams per tonne from 1753m deep.
Hannigh says core photographs show a conglomerate similar to what they are seeing at Purdy’s Reward (although without visible gold) and that CRA’s sampling, which was not chasing gold, was not consistent across the core. “It’s intriguing. We see at least enough to be dangerous.”

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