from part of today's $tockhead! The right decision? Resouro will...

from part of today's $tockhead!

The right decision?

Resouro will be hoping to follow in the footsteps of Novo Resources (ASX:NVO), the Pilbara gold explorer which made the leap from the TSX to the ASX last week in a $7.5 million IPO.
Its CDIs rose 20% above the 20c offer price on its first day of Friday at 22c.
It would be welcome relief for long-time holders who had seen little interest in their TSX-listed stock for months.
Backed by De Grey Mining (ASXEG), the ASX 200 gold developer that found the 9.5Moz Hemi discovery near Port Hedland, Novo executive chairman Mike Spreadborough told a similar story to Eager about the liquidity challenges small cap mining investors currently face in Toronto.
“We made this decision 12 months ago because we just saw zero liquidity on the TSX and as I was talking with advisers and brokers through the latter part of last year, it really firmed up that the TSX was not responding to explorers and particularly gold explorers at all,” Spreadborough said.
“Our good supporters were saying they probably couldn’t provide equity funding going forward in the marketplace. So that really cemented the decision that we had made that we need to move to the ASX.”
No clearer was that lack of interest shown than when Novo secured the $10 million equity investment from De Grey and announced that the $2 billion owner of the Mallina gold project would take over exploration at its neighbouring Egina JV, home to the promising Becher discovery.
“We didn’t get a bid on the TSX and you know a 10 million ounce company takes over a project, $25 million over four years valuing your project at $50 million bucks and puts $10m into the corporate, that would normally trigger something and it didn’t trigger anything on the TSX,” Spreadborough said.
“So that really affirmed that we just don’t have traction on the TSX and our liquidity has been very, very poor. So coming across made sense — Australia’s our base, our assets are in Australia.
“We needed to bring some institutional people onto the register. Australian institutions weren’t going to come on board if we remained on the TSX for Novo — they would for maybe (lithium darling) Patriot or something, but not for us — it was quite laid out that we should move forwards with it, and I think it’s been a good decision.”

A new Novo

Novo is best known for its stunning surge in late 2017 on the back of the discovery of so-called “Watermelon Seed” shaped nuggets in the Pilbara and a theory that it hosted conglomerate gold in a system once linked geographically to the world’s richest gold basin, South Africa’s Witwatersrand.
That ran out of legs, and Spreadborough says Novo is a very different company today.
“We really cut that link June last year and I suppose me moving from a NED role to an executive role was the big symbolism of cutting that link,” he said.
“Quinton (Hennigh) stepped down as executive chairman, was also a big cut of that link.
“Clearly the conglomerate story, the theory is fantastic, the Pilbara is full of conglomerate gold, but is it economic? It’s not, and that’s the differential.
“Two years ago we started a journey of delinking the conglomerates. And through that, we shut down all of that work and we pivoted exploration as quickly as we could back to looking for traditional orogenic gold, lithium, copper, nickel across our tenements.”
The Nullagine gold project and mill, once owned by Millennium Minerals, is also on the market through Argonaut PCF after being mothballed last year. Rather than rush to become a small-scale producer, Spreadborough says Novo is pivoting back to an exploration focus looking for a big find at Becher, the broader Egina JV and the Belltopper project in Victoria, 50km from arguably Australia’s best gold operation, the Agnico-Eagle owned Fosterville mine.
It also has a lithium exploration JV with Bald Hill operator Liatam Mining in the Pilbara. While Agnico — formerly Kirkland Lake — has whittled down the stake it took in the Novo rush in 2017 to around 3%, legendary WA prospector Mark Creasy remains a believer, participating in the ASX IPO to bolster his stake to 4.5%.
Canadian billionaire Eric Sprott is also high up the register at 4.1% but didn’t subscribe for new shares in the float.
In particular Spreadborough is excited about Becher, where Novo completed 60,000m of aircore drilling to the end of June and where geochemistry was showing similarities to Hemi.
“That was enough work for the De Grey geologists to have a look in the dataroom and be really comfortable to do the deal. It’s a big patch of ground, Becher was 20km2 and very early on we saw it as a high potential analogy of Hemi,” Spreadborough said.
“It’s only 5km from Withnell and it’s 28km from Hemi. And if you look on the pictures, Becher has got some of the same shear structures from Hemi convoluting at Becher.
“I think De Grey will do a good job. We’re going to go drilling again in September, later part of this month. They obviously know that area even better than us — they’ve been there five years, we’ve been there six minutes.
“So they will accelerate that work very quickly and it’s a big chunk of money — $25 million within four years — I think they will spend that money much quicker.”
The tie-up with De Grey means even a resource that doesn’t justify a standalone plant could feed into its future production plans outside of Hemi, where a DFS is expected this quarter.
“De Grey don’t need to find 2 million ounces to make it economic,” Spreadborough said.
“If there’s a 500,000 ounce gold resource in a pit it’s very toll-treatable. And it’s a 50-50 joint venture. So we’ve got the potential to be really high on the upside.”