It has been an emotion filled few weeks on thesethreads and I...

It has been an emotion filled few weeks on thesethreads and I have held back from responding until I could summarise my ownfeelings in a non-emotional and rational way.

Understanding why the 9.9m oz announcement wentdown like a lead balloon is important and how this might have been avoided andmight be recovered is of key interest to investors. I have also taken this timeto re-question for myself why I should continue to believe in this company.

The upshot is, I continue to see the upside as faroutweighing the downside, but there remain some significant negative behavioursand factors that management and Board need to address in future communicationsand actions that would be very helpful to realise the value that they and I seesooner rather than later.

Below is what I consider the key reasons for Nova being significantly undervalued at the moment, in order of significance from most significant to least (although not insignificant):

1. Over promising and under delivering

• · Yeswe are unlocking a district, but that will take many years, investors want tosee certainty in the nearer term, especially around economics that willindicate level of dilution and therefore likely end share of the resource.
• · Letthe district message sit as a supporting message for long term value, not theupfront lead message. Until then it comes across as spruiking, immature andunprofessional. Give me boring approach with over delivery on promises anyday.

2. Lack of understanding/confidence in economics ofbulk IRGS resources

• · 2-3years ago the whole effort of these threads was to build understanding of why abulk IRGS resource could be economic.
• · Itstarted with building understanding of Australian investors of what Heap Leachis and why bulk low-grade resource of this type could absolutely be economicand therefore why bulk 0.3g/t was not necessarily a problem. A gold mine doesnot have to be >1.0g/t to be economic.
• · Nextcame managements investigation of Ore sorting and its promise. While I supportmanagement in this investigation, I do think this has had an unfortunate sideeffect of causing the doubters of Heap leach to interpret this as more evidencethat the economics don’t work for 0.3g/t resources rather than an effort inenhanced economics. Presenting the trade-off studies including Heap Leach as anoption to show the uplift rather than relying on trust us is going to beessential to understanding this.
• · Soit was already getting confusing when we then hit the Bonanza grades at RPM.Yes this was great, but my gut feel when this was first announced was&@$&#! This unwinds all of the above confidence building and shiftsfocus back to high grade resources and reinforces the message only High gradeis economic. RPM better be huge because so many investors will go back todiscounting Korbel completely.

The more the message is shiftedto RPM, the less value is seen in Korbel, with or without Cathedral. This inturn undermines management’s focus on the unlocking a district message, as mostinvestors see the 8m oz as smoke and mirrors and so read the headline as BSspriuking for what now looks like a 340,000 oz @2.3g/t opportunity in a remoteregion and is valued as such.

3. Avoiding reporting negative (notpositive) news

• · Explorationand resource development is not a one-way street. Pretending it is all upsideis unrealistic. In taking this approach rather than a matter of fact approach,management is no doubt scaring away investors and encouraging traders to takeshort term positions.
• · Honestyis always the best long term policy and in this business I would prefer to heara mix of good and bad communicated in a clear and rational (unemotional) way.If we learn something new, boundary of resource for instance, it helpsunderstand what we have. Especially important to get that information outquickly so the overexuberance does not assume only upside and then bedisappointed by reality. Reality is not an emotional state, it is what we areseeking.
• · Innot communicating the change in opinion/view/approach of the new Geologist early,the only expectation established for investors in anticipation of the news wasan increase in resource. At no time was less inferred considered (hence shockand lack of trust on last announcement). While a notice of reduction ininferred due to change in Geologist (or even understanding of thegeology) in say December would have hit the share price also, it wouldhave set the ground for building trust. The communication could have beenrationalised as a difference in professional opinion, and then on release ofthe 9.9moz could have actually been a good news story. Humans have atendency to remember the last news they read, and focus on the negatives,especially where the information is complex.

4. The fact we only hold 85% and are free carryingAvi Kimelman (22.5% interest at time of agreement in AKM)

• · Atthe risk of opening up another negative that has not really got much attention.I personally feel this is a red flag issue that ought get negotiated awaysooner rather than later. The agreement signed in November 2017 to pick up thedistrict provides a 2% net smelter royalty and minimum 15% share of the holdingCo with AKM.
• · Continuingto maintain this relationship with Avi K, having been convicted of insidertrading with Quantum (now Nova) and providing such generous terms means everydollar invested in developing this great district, $0.15 is being given away.
• · Myrecommendation is leave the royalty, but stop the free carry and exchange someshares (merger) to eliminate this stain on our future.

So what does this mean for having a BUY, SELL orHOLD on NVA at the moment?

For me it comes down to do you believe bulk 0.3g/tIRGS resources can be economic?

If yes, this is a screaming BUY, despite themanagement comms missteps and AKM free carry issue as the amount of gold hereis exceptional and the value relative to the share price at $3oz is patentlyridiculous.

If in doubt, the upcoming Phase 2 Scoping Study andPFS are the critical proof points, HOLD is probably the only reasonable settingand management communication and dealing with red flag issues will be criticalto how quickly trust can be built around these studies.

If you don’t believe is economic, don’t trustthat management can extract the value or simply see the AKM free carry as aclear signal that this project can’t be trusted, then SELL is also veryreasonable.