Investors in GOR will know the reason why it is important to have other resources in the pipeline. There has been quite a bit of criticism by shareholders because they are slow to define resources for growth. They are hindered by the sand cover in parts of WA which can make the exploration more challenging.
NVA are blessed with visible geology at surface which helps in exploration - so why not take advantage of it?
Considering it takes 5-10 years to define resources to the reserve level, getting new deposits defined early allows for long term plans for growth. Their approach is do just enough to determine what is where based on drilling. As Korbel is moved into production they can progress plans in background to prove up other resources for future mining, JV or sale.
NVA will likely start out as a 100 koz to 200 koz pa producer but to move to the big leagues they would need a reserve base of 10 Moz + ( which would mean a resource base of say 20 Moz ). 10 Moz of reserves would give them perhaps 15 years of production at 500 koz pa allowing for recoveries. I see that as 10+ years away but to achieve long term growth they need to have irons in the fire with the early exploration (due to the time required to drill and undertake expansion feasibility studies). In the scheme of things I don't see the drilling they are doing at RPM ( a few thousand metres ) as significant cost in the context of the tens of thousands of metres of drilling at Korbel if it sets NVA for a long-term strategy of becoming a mid-tier to major.
Predictions of gold at USD $5,000+ by 2026. This chart is from NorthstarCharts on twitter (posted November last year).
Let's say gold runs to USD $5,000 and pulls back to USD $3,000 in a future bear market then allowing for increase of ASIC next decade (due to inflation), lets say the margin is USD $1,500 then a 500 koz pa producer in say 2035 would be producing a gross profit of USD $750M ( AUD $1B or AUD $850M at 85% ownership ).
NVA Price at posting:
11.0¢ Sentiment: Buy Disclosure: Held
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