Novo Escalates Hunt for Witwatersrand in Western Australia

Issue 76, March 2014

Novo Resources, which is backed by US gold major Newmont Mining, rocketed 23 per cent on Wednesday after striking a vast land deal in Western Australia with prospector Mark Creasy.

Novo is led by former Newmont geologist Quinton Hennigh, who believes a gold deposit equal to South Africa’s Witwatersrand sits in Australia’s Pilbara. Witwatersrand has produced over 1.5bn gold ounces since its discovery in 1886, half of all gold ever mined, fronting South Africa’s gold boom and naming its currency, the Rand.

The theory hinges on Hennigh’s belief that the Witwatersrand was formed during the 'Oxygen Catastrophe' 2.4bn years ago, when a proliferation of algae caused a global oxygen overload, lowering the acidity of water and the metal content it could carry, dumping metal reefs on the seafloor. If correct, Australia’s Pilbara, which has the same age of rock and was once connected to the African Continent, is a leading candidate for a similar deposit.

Novo has been in talks with Creasy, a radical English prospector with huge claims in Western Australia, since mid-2008. “Finding a gold deposit with a zillion ounce potential is probably a lot easier than doing a deal with Mark Creasy,” said gold commentator Bob Moriarty, a former US marine and a staunch Novo Resources shareholder. “The precipitation theory of gold deposits is going to be debated for years before the industry accepts what should be as obvious as a pimple on your nose.”

Novo agreed its first land deal with Creasy in 2011 and has since hit grades of 25 grams per tonne over 4m in shallow Wits-like reefs.

The company’s hunt for the new ‘Wits’ is an exemplar in junior mining stock promise, including a novel geological theory, the world’s largest undiscovered gold deposit and liberal equity issuance. Shares however are tightly held by Creasy and Newmont Mining, which bought 36 per cent of the stock in September last year.

Under its expanded land agreement Novo is acquiring 70 per cent of 103 separate tenements, lifting its footprint tenfold in exchange for shares and the reimbursement of Creasy’s prospecting costs. The deal echoes terms Creasy struck with Sirius Resources in 2009, leading to the Nova-Bollinger discovery, also in Western Australia.

Novo Resources last traded at $1.33, valuing the company at C$81m ($74m).

“As obvious as a pimple on your nose.”

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