Novo Resources – Standing on Golden Nuggets

Dr. Quiton Hennigh the President and Director of the most highly sought company in the Natural Resource Space, Novo Resources, sits down with Maurice Jackson of Proven and Probable to discuss the unlimited value proposition for current and prospective shareholders about the Karratha Gold Project located in North Western Australia in the Pilbara Region. Dr. Hennigh will address twin drilling, diamond core drilling, large diameter drilling, continuity, high purity, and coarse gold. Also, we will uncover what keeps Dr. Hennigh up at night that we don’t know about regarding Novo Resources!

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Maurice J:

Welcome to Proven and Probable where we focus on metals, mining and more. I’m your host Maurice Jackson. Today, we will discuss a company that is a new paradigm in gold exploration and investing.

I’m speaking of NOVO Resources trading on the TSX-V symbol in NVO, and on the OTCQX symbol NSRPF. Joining us today is the chairman and president of NOVO Resources Dr. Quinton Hennigh.

Before we begin, allow me to convey to our listeners that NOVO Resources is a sponsor of Proven and Probable, and that we are proud shareholders of NOVO resources for the virtues we will convey in today’s message. Dr. Hennigh, welcome to the show.

Dr. Quinton H:

Thank you Maurice.

Maurice J:

Ladies and gentlemen, we are delighted to have NOVO Resources the most celebrated junior mining company in the natural resource space on our show today. In less than six months, NOVO Resources was trading as low as $0.67, and recently reached a high of $8.55. Dr. Hennigh, what an accomplishment for NOVO Resources, and most important the shareholders.

Dr. Quinton H:

Thank you very much Maurice. We are truly excited about everything we’ve done over the past six months. We’ve basically made a new discovery. Looks like a very significant new gold discovery in Australia, and we’re delighted to share that with people.

Maurice J:

Sir, for first time listeners please share who is NOVO Resources.

Dr. Quinton H:

Yes Maurice. NOVO is a Canadian listed junior exploration company. We’re focused on exploring for an unusual style of gold deposit in Northwest Australia. We’re looking for conglomerate hosted gold systems. These are not your everyday gold deposit. There’s a system in South Africa called The Witswatersrand Basin that’s similar in age and geology, and that deposit has produced somewhere around 1.6 billion ounces. It’s a big stretch to say we have something that large, but that’s the kind of system we’re looking for. Geologically conglomerate hosted gold, and we’re looking for it in this particular region in Northwest Australia called the Pilbara. It’s a perspective terrain that’s similar in age and geology to the region in South Africa that host those deposits.

Maurice J:

You and I were discussing prior to this interview the latest press release issued this week entitled “Core drilling supports strong continuity of conglomerates at Purdy’s reward.” I could hear your excitement in your voice on the value proposition that you see for current and perspective shareholders. Can you provide us a brief narrative on the geology that we have there?

Dr. Quinton H:

Sure. What this is, is a bedded deposit. The host rock, like I said, is a conglomerate. These are basically fossil gravel deposits. Think of them that way. These were laid down in probably what was an ancient bay or shoreline years and years ago. Many years ago. 2.79 billion years ago. These gravels were laid down, and they were laid down with a significant component of gold. Exactly how the gold got there, my idea is that there was a precipitation event sometime in early Earth history that formed the gold, and it was subsequently incorporated into these conglomerates. All right so we’re looking at the edge of this basin. We’re basically looking at where this conglomerate sequence comes to surface in daylight. It was found about a year ago through metal detectors in the local area. They started metal detecting and finding large numbers of gold nuggets that were actually weathering out, and eroding from these conglomerate horizons.

 

When I got word of it, we assembled a land package. It took us a few months, but we put together a commanding land position over this area, and we’re now exploring it. What we’re doing is we’re trying to explore this thing through both drilling and trenching. Think of it like a jelly sandwich where a little bit of the jelly is squirting out around the edge of the sandwich. We’re able to see that little bit of the edge, and now we’re starting to take the leap and started to drill holes on these beds as they dip downwards into the basin. What’s exciting about the most recent news this week had is that we’ve demonstrated continuity of these conglomerate horizons over a fairly broad area, about 200 meters by 400 meters. It’s our first drill attempt on this system. All right. To see this continuity develop in an early stage is quite encouraging. We do not have assays yet from these. We are going to come in with a large diameter drill, and take large bulk samples out of this. It’s a very nuggety gold system.

 

But once we have those assays, I think we can demonstrate to the market that we’re on the edge of something very, very large, and potentially very, very exciting.

Maurice J:

It sounds like you’re having a two-pronged approach here to drilling. Is that correct?

Dr. Quinton H:

Yes, correct. That’s precisely right. I want to emphasize that to people. Like I said, it’s now your every gold deposit. Many deposits, you can go up and drill with a reverse circulation drill, or a core drill, and you can take samples of modest size, say a few kilograms, crush that down, analyze it, and the number that you get, the value of gold that you get in that rock can be applied as a meaningful number to assign to the grade of the rock. In this case, we have a very nuggetty gold system, which means that gold occurs as large particles that are erratically distributed through these conglomerates. Therefore, we have to take large samples. The large samples are needed so that we get close to the representative amount of material that gives us a meaningful number.

 

To do that, we have to do large diameter drilling. Basically, we’re drilling a 17.5” holes here very shortly. That should generate enough kilograms, or enough mass of material. Now we can … Through both processing, we can actually start to get a sense of the grade. Now, the first step we’ve taken is to drill diamond core holes, which are basically a stick or rock that comes out of the ground and we can observe the geology. We can look at this rock, and we can make a … We can collect data from it. Very important data. That information we’re gathering is necessary so that we can define the top and the bottom of the layer, and we can tell when we get going with the large diameter drill, exactly where we need to start sampling, and what intervals we need to start sampling through, so we can assess beforehand before the large diameter drill shows up, we can assess exactly what we need to recover out of the ground for assay.

Maurice J:

Speaking of drilling, NOVO Resources, will they be adding another diamond core drill today? Is that correct?

Dr. Quinton H:

Yes. We’ve got one rig on site at the moment, we’ve drilled 12 holes. Actually, we’re up to 14 now since the last news release, and we’ve decided to bring a second core rig on site. We anticipate rig drilling on 50 meters center, so we need to kind of accelerate that rate of core drilling so we can stay ahead of the large diameter drill, which is going to start shortly.

Maurice J:

With the new drill, will it be twinned?

Dr. Quinton H:

Yes, more or less. Basically every pad that we drilled a core hole from, we will drill a large diameter hole from. Okay, so we’ll have both the core to look at, as well as the large diameter samples to analyze.

Maurice J:

Part of this drilling process, does NOVO have a joint venture partner here?

Dr. Quinton H:

Correct. The project is actually quite vast. It’s called the Karratha Gold Project. It covers around 10,000 square kilometers in the Karratha region. But part of that project is made up of a joint venture, which is with Artemis Resources. Artemis is an Australian listed mining company, and we have a joint venture where we are spending money to earn in, and then advance through a joint venture partnership, this particular area called Purdy’s Reward. Purdy’s is a tenement that sits astride this day lighting conglomerate. There’s roughly a kilometer of what we’ll say is demonstrably gold bearing conglomerate on this tenement, and we’re currently drilling in this area because the tenement is granted fully permitted, and we can work there first. As time goes on, we’re going to as we get more tenements granted in that region, we’ll be able to step over to the adjacent property, which is called Comet Well, and also down onto our 100% own ground, which is immediately south of Purdy’s.

Maurice J:

Why is continuity critical for shareholders?

Dr. Quinton H:

Yeah, look, a lot of people look at deposit like this, and they think, “Hmm, plaster.” They think riverbeds, channels, erratic things like this, this is not a conventional plaster in the sense that it’s not a river deposit plaster. What this is, is a marine deposited plaster, and marine systems tend to form sheetlike deposits that can continue over a large area. We’re quite hopeful that this initial look at continuity, this sheetlike deposit that we’ve latched on to will continue over a much broader area. We’re starting to get the sense that we are in that right environment, and that this thing should hold together, and potentially be quite large over a significant portion of this basin.

Maurice J:

Talk to us about gold nuggets.

Dr. Quinton H:

Sure. Look, like I said, this is a very nuggetty gold system. A lot of people ask me “How did the gold get there? Where did it come from?” Those are very important questions. In short, we don’t know exactly yet, okay? My idea … I would say my idea because it’s really a working hypothesis that needs to be proven, but I believe there as a precipitation event in this very narrow window of time, and in what’s called the Archean Period here on Earth, and it was during that time that gold actually precipitated through some chemical means out of sea water. Basically, there was an event that was very important in Earth’s history that produce these things, all right? That’s why I think that the Witwatersand Basin, for example is so large. I came to Australia to look for another setting where this process might have occurred.

 

But that said, these nuggets, do we really know that they precipitated? No, we have to gather that evidence. My hunch is that the evidence might be further out into the basin because what we see right now is we’re basically at the shoreline. We’re in an environment where there was a lot of energy. Wave energy, things were tumbling around. The gold that we see, it resembles in many ways the kind of gold that we find in the Witswatersrand. It’s high purity. It’s got some similar chemistry, has the bits of gold dust, but we haven’t seen it situ in the sense of a precipitated version of that. It’s always been tumbled around a bit, and mixed in with these conglomerates. Now, what does that mean? Well, it means we have to be very careful how we sample this. Like I said earlier, we have to take very large samples. We have nuggetty gold, you must collect a large sample to get representation.

 

Imagine you had a sand box in front of you, and that sandbox has one ton of sand in it. You have in your hand, let’s say you have five little gold nuggets, and you throw it in that sand, and you mix it around. You just stir it around. Now, in your other hand you have a pail, and that pail can scoop out one kilogram at a time. Well, it would take you 1000 scoops to empty that sandbox. What’s your odds of getting a gold nugget in that pail? It’s pretty slim. It’s about 1 in 200, right? Or exactly 1 in 200. Basically, you would have to scoop, scoop, scoop, and approximately 1 time out of 200, you would get a nugget. One of those nuggets would pop up. All right? Is that an efficient way to analyze? No. Your first 199 pails had no gold. Voila, the 200th has a gold nugget. How do you sample that?

 

Well, you have to take the whole sandbox, okay? That’s the way people should think of this. We have to be clever, and we have to basically a large enough sample that we collect those gold nuggets, and they are included into the grade calculation for that sample.

Maurice J:

Now speaking of bulk sample, what was the weight average grade so far?

Dr. Quinton H:

Well look, the only sample that we have a grade for was done back in July and August. The results were published I believe in mid August, and that was for a bulk sample. It was a 500 … I think 570 kilo sample that was collected at Purdy’s Reward. We put the sample into two different drums, and we analyzed each respective drum. We had two splits basically. The grade of that sample, the weighted average grade of that sample was around 2.16 ounce per ton. Now, people get excited about that. Can we conjecture that the entire conglomerate system is that great? Not even close. We don’t know yet, okay? We have to do a lot of work before we can start talking about the grade for the greater property.

Maurice J:

Now, what percentage was coarse? Do we know that?

Dr. Quinton H:

Yes. Most of the gold we found was coarse in that sample. They actually process the sample through an ore sorting machine, which identifies metallic gold particles inside a rock. Okay, so the machine has the rock passes along a conveyor. There’s a detector that x-rays a rock, and it can see the gold particle, and there’s an induction core, which is like a metal detector that confirms that it’s a piece of gold, and then there’s a device at the end of the conveyor that actually flicks the rock off it. It pushes the rock off with a jet of air into a concentrated bucket. When we put our sample through, the ore sorting machine took 98% of the material and said, “Nope, there’s no gold … Or at least no visible gold in this. We’ll put it in this bucket, and then it took 2% of that material, and it put it into the concentrated bucket.”

 

It turns out the concentrated bucket had roughly 82% of the gold. In other words, that is the core fraction that the machine identified. That’s remarkable! That means there’s even potential commercial application to this machine! It’s conceivable that at some point processing this material you could crush it down, put it through an ore sorting machine, you can concentrate perhaps over 80% of the gold just through a mechanical device, which is astounding!

Maurice J:

It truly is. What can you share with us about the purity?

Dr. Quinton H:

Yeah, the gold itself, either the nuggets themselves are mostly fairly high purity. There is a 95%+ gold content or higher. That sets them apart from the purity of a lot of the load, or potential source rock gold that’s in the region. Now look, there’s not very many veins in this region, so the notion that the gold was washed in from some magical source around this area, it’s a stretch. There’s not much out there to generate this gold. In fact, there’s very, very little. But the gold that is found in some of these small veins in the basement rocks has purities often say 90% or 92% or less in gold, and then the rest is silver, and copper, and other metals. The gold that we’re seeing in the nuggets at Purdy’s is definitely distinct from that we find in the load gold sources in this region.

Maurice J:

Dr. Hennigh, we’ve covered the good. What keeps you up at night that we don’t know about?

Dr. Quinton H:

Yeah Maurice, it’s a very good question. This is an unusual deposit, it’s got this very nuggetty characteristic like I’ve just described in detail, and that really is probably number one what keeps me up. We’re currently ticking the boxes for investors. I’m trying to demonstrate, or we’re trying to demonstrate as Novo to the market. The aspects of this deposit if you will, that will define its potential economics. We’ve demonstrated now that the bed is continuous, it’s sheetlike, and we hope to continue to do that with further drilling. But now what we have to do, and what’s probably the bigger challenge is assessing the grade, and this nuggetty gold issue is a challenge. I’m not going to pretend. A lot of people wonder if we can even determine a grade through the sampling that we’re doing. I will assure people that we will do our darnedest, but it is not without challenge.

We have to take very large samples out of trenches, we have to use heavy equipment to extricate those samples, we have to collect in a meaningful way, we have hard scrutineers to make sure that they basically keep an eye on every step of the process. They’re independent from the company, so we can hold our hand to our heart and say, “Yeah, everything we’ve done is truly in line with protocol.” But at the end of the day, the bulk samples that we collect from trenches and drill holes still need to go through this process of determining grade, and we’re hopeful that these samples that we collect are large enough that they prove to be representative and can be used as such.

Maurice J:

Finally, what did I forget to ask?

Dr. Quinton H:

I think the things that people should understand, and on the big level is that systems like this, they tend to be quite large, okay. We’re not looking for a small pup of a deposit like a million ouncer. We’re looking for something big. Now, with that challenge comes risk, okay? Like I just said, the grade is a challenge to assess. I want to make it clear to any investor that puts money into NOVO. But with that is potential reward. I do think that this could be a very large gold system, we’re started to see certain aspects like the continuity that tell us that this thing is holding together, and that we’re starting to tick those boxes. We’re starting to see the aspects that we like. Now, the other thing that people should keep in mind is Western Australia is an absolutely delightful place for mining. It’s a very pro-mining culture. We found operating there, or I found operating there as an extremely positive experience. Most discoveries, most deposits that had been found whether it’s gold, or iron, or whatever are advanced to a mining stage.

 

I feel very comfortable working in this environment, absolutely delighted to work there, find that people in the workforce, especially around Karratha there an absolutely delight to work with.

Maurice J:

In closing ladies and gentlemen, and this is a forward looking statement, but we want to convey that we have confidence that NOVO Resources may very likely be the largest gold deposit in the world. I will restate this. The largest gold deposit in the world. We are not selling our shares, we have not sold our shares. In fact, I’ve spoken with some of the most respected names in the natural resource spase. They too are not selling their shares even after this exponential growth that we’ve had in the share price, and also I want to share this with you. My sons yesterday became shareholders. Dr. Hennigh, for someone listening that wants to get more information, please share the website.

Dr. Quinton H:

Yes. We’re www.NOVOresources.com. They can also find the contact information for IR. Leo Karabelas will answer questions, or else point them my way and I can help.

Maurice J:

And for direct inquiries, please contact Leo Karabelas. His phone number is 416.543.3120. Again, the contact number is 416.543.3120, and the email is [email protected].

Last, but not least, please visit our website www.provenandprobable.com where we interview the most respected names in the natural resource spase. You may reach us at [email protected] Dr. Quinton Hennigh of NOVO Resources, thank you for joining us today on Proven and Probable.

Dr. Quinton H:

Thank you Maurice.

Maurice J:

All the best sir.

Speaker 3:

Thank you for joining us today on Proven and Probable. Remember to like and subscribe for more conversations with the most respected names in the natural resource space. Check out our website at www.provenandprobable.com. The information presented on Proven and Probable is provided for educational and informational purposes only. Without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The information is not intended to be, and does not constitute financial, investment, or trading advice, or any other advice. You should not make any financial investment, or trading decision based on any of the information presented without first undertaking independent due diligence and consultation with the professional broker, or competent financial advisor.

Proven & Probable

Maurice Jackson

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