Novo Resources – Follow up on the financing announced today
Quinton Hennigh, President and Chairman of Novo Resources (TSX:NVO – OTCQX:NSRPF) joins me to address some of the questions on the back of the financing announced today. This deals a lot with the need to continue drilling at Beatons Creek to upgrade the resource.
If you have any follow up questions for Quinton please email me at Fleck@kereport.com.
They f..k..d up. Look at Pure Gold’s production ramp up -pure screw up after lots of happy talk. It looks like their is either a gap in the mine plan in terms of ensuring continuity of grade. Continuity of grade is ISSUE 1 in a ramp up mining plan, and reconciling it to the PEA or PFS.
Most mines coming online have challenges, so what Pure Gold is seeing is nothing different than countless other mines as they ramp up into commercial production.
As for Novo, if one bothered to listen to the interview with Quinton, they aren’t having any major issues at the mill or at Beaton’s Creek, so stating they f..k..d up or have continuity of grade issues, is simply not true. Q.H. clearly outlined that they were recommended to start doing infill drilling at Beaton’s Creek to get in front of their mine plan for years 2, 3, 4 as they need to start making decisions about permitting and mine planning now, and he was following the advice of the board their Qualified Person recommendations coming out of the PEA.
I don’t feel this financing was needed. My intuition is that it was a way to get more shares to those who are financing it. Once again screwing the retail investors who were told “no more dilution” just a short time ago.
can you address:
-Today’s investor relations FAILURE.
-Dilution.
-The now obvious, but still unclear operational issues at Beaton’s Creek.
-Whether or not we have now reverted to being an exploration company, hence the need for much more cash to burn, at my expense.
-If BC is a bust.
Mining companies are ALWAYS exploration companies. That is the name of the game. Feed the monster.
There have not been any operational issues reported at Beaton’s Creek, but thanks for the fake news. Listen to the interview and Quinton outlines clearly what the capital raise was for. No need to spread false narratives when he came on and explained clearly what the capital raise was for.
WAF, PRU up 8%. EVN, SLR, RMS, DEG up 5%
today. And more.
✓ Novo, lots of hype I warned on this. Down significantly today. A rocket in reverse. Stuck in a trading range for years and usually when this happens any stock that can’t rally out of this range has no place to go but down. We’ll see what happens. My bid is 0.50. no problem with a market crash. Step right up folks, it’s coming up. ✔️⬇️⬇️⬇️⬇️🎯 High probability. We’re not there yet , getting closer everyday.
I’m sad to say Quentin’s answers were not very clear. I sent this email to Leo today:
“I’m sorry to say that this was not a well handled, or well thought out private placement.
The story that I and most Novo investors had bought into was that the cash flow from the BC mill would shortly be able to pay off debt, fund exploration expenses, and eventually support a dividend. And because of that outlook, stock dilution was no longer a risk [other than possibly for an attractive acquisition]. Further questions are being raised regarding why some of Novo’s stock portfolio could not have been sold in order to raise cash? By maintaining the stock portfolio, it implies mgmt. thinks those stock positions are more valuable than Novo. Relative to the stated reason that “infill drilling” is necessary in order to reduce the amount of inferred resources, Bob Moriarty and others have maintained that Novo should just mine the existing resources, as there is no reason [other than perhaps an unneeded financing] to prove up additional resources. Why also could not the loan from Sprott Inc. have been used instead of diluting the stock?
My thoughts as well. I emailed the company too, voicing my frustration, but in a little less polite for;mat.
Well said and I fully agree, as per part of a letter I wrote to the company below:
Novo shot itself in the foot:
• Novo broke its promise to shareholders after only 8 months, losing credibility with investors.
• Novo raised expensive equity capital, deciding to sell its own company shares over any other
investment or pursuing a flexible credit line or term loan.
o Novo must think it’s investment in New Found Gold, among others, are more valuable
than it’s own company shares.
• Novo choose to raise common equity at a significant discount to market prices, including
additional warrant overhang that hurts all existing shareholders.
• Novo did not make this offering equitable to all shareholders through a rights offering.
• Novo made this decision in haste.
Didn’t need to listen to this to know Quinton’s response to this dilution would be nothing more that “BLAH BLAH BLAH BLAH BLAH”…. and so on.
Just like so many of the PM pumpers and dreamers, the next bull market is always “just over the horizon… our day will be coming soon” and so on.
These people make $$ of subscribers and it wouldn’t surprise me if none of them even own a single share in any of these companies.
PMs had a good run last year, and if you didn’t sell it you’re going to be waiting a long, long, long time to get your money back.
People look at the premiums on PMs right now and say that’s bullish for the metals, but in fact it is very bearish. Many people think PM prices are being manipulated, and they are 100% correct. High premiums are just another way to keep the price suppressed because it destroys demand. Who wants to pay a 30%+ premium for gold and silver, especially when they have been going down in value.
Think about it.
👍👍Don’t have to Joe, it’s a known fact. People love chasing rainbows and lottery tickets that lead to nowhere except for the boulevard of broken dreams.
Indeed. Rainbow chasers can’t be reasoned with.
If people MUST own mining stocks, why don’t they just buy RIO, BHP, VALE? They mine important industrial metals, amongst other things, and pay excellent dividends. If people MUST own PM stocks, buy some NEM or AEM. They both pay good dividends.
Gambling on juniors can pay off, you just need to keep a steady head and SELL when they are way up. But no, most people can’t take a gift when they get it.
Joe, very good thoughts and very true. It’s called GREED. You have to know when to hold these very risky mining companies and you have to know when to get out and it might be a lot sooner, than later. Every dog has his day, if this nation doesn’t crash and burn there’s going to be a lot of money to be made however a lot of people are going to get whipsawed in and out and lose money in a big bull market. Gold can you go to $5,000 an ounce and most investors are going to lose money it’s guaranteed. Very low odds of anybody making any money probably less than 5%. In a big bull market. Otherwise, if its professional trading in these stocks and then investors just take their profits … that’s be fine. Only, most go back for more and end up losing the money they made anyway. Including their initial investment.
High premiums happen naturally and wouldn’t exist if people weren’t willing to bid the available products higher. For example, Sprott’s PSLV traded at a huge premium to NAV in 2011-2012 only because of market pressure, obviously. It is the same when it happens at your retail dealer. Allowing the market to function is the best way to ration any and all products and services.
Price fixing isn’t fair to anyone and only causes problems (e.g. gas shortages in a hurricane. If politicians would refrain from exploiting the stupidity of the average guy, gas prices would be allowed to rise to the point where fewer people would buy more than they need which would make more gas available to more people.)
We saw shortages of silver in the fall of 2008 as well, and it was clearly a bullish sign, not bearish at all, as you claim.
Keep stacking. It’s better than paper in this hell hole. May not be able to even sell it when it gets bad enough. At least you can barter. People are losing confidence in the system that’s why there are premiums and high demand. It’s not going to get any better.
I haven’t bought metals in many years. The miners are where the biggest gains will be so they remain my focus.
I completely agree however that’s why people buy physical because when the exchanges close and everything gets that bad you’ll have nothing. It’s not something positive either for physical because it’s going to be very difficult to sell anything however at least you have something to barter with. It’s better than zero. It’s whatever people prefer.
I’m worried – is this one deal too many? Also, why the fire sale – why do they have to raise the money today?
The market sure didn’t like it, but Quinton did a good job of unpacking why there was the urgency in raising the money today in the editorial, after Cory asked him that question.
I hope you are right –
When you trust Mgmt and stuff like this happens – it is kind of a shock. My problem is why did they cut the buyers such a deal? Was laying hands on 22 Million immediately that important? I sure hope so –
Quinton should put Hunter Biden on the board. Then whenever Novo needs money, Hunter can arrange a 99 year sweetheart loan from the government. Of course the Big Guy gets 10%
Good one bonzo. Ha!
Right wing echo chambers don’t serve you well. Dreamers with money and stupid ideas get hosed. Just rewards?
They are mining shareholders, not gold. With around 250,000,000 shares outstanding, they are looking at MUX with 500,000,000 and see an opportunity. Like McEwen, Quentin is a star and wants to get paid.
Wow! The knives are out for Quinton today. I don’t want OVO to dump NFG, perhaps the biggest gold discovery of the decade! My best profits are usually when I see people calling for .50 cents on a $2 stock after a decline, so I will hold. Sentiment on NOVO sucks bigly. A contrary indicator? Just sayin
As they should be! A stupid boneheaded decision that destoyed value for all existing shareholders. Expensive capital that was not needed. Stupid decision and bad advice. A big company with hundreds of millions of shares is not a valuable one. Focus on the mill, Beaton’s Creek, and producing gold bars. That literally should be the only focus right now. Stop moving rocks in other areas unti you have this expensive mill running at 100% capacity.
Edward I agree with you and to date Q has done me well and while I do not complete understand the why of this (lots of speculation) I continue to believe in Novo and Q. I just hope he is not over extended himself and the company.
DISAPPOINTING INTERVIEW RESPONSES FROM QH. Price of gold is immaterial to the communications issue that triggered the share implosion today. The concern is that operations are disappointing. ADDRESS THIS QH.
With a high probability of a market crash. My bid could be much lower. Depends on how fast this stock trades and the liquidity. It’s OTC so the market makers aren’t very good. Expect a lot of low bids and giveaways possibly could be down to less than 0.20. Depends on the turbulence. Market order might be better catching some low market order sells. There’s going to be a lot of sellers on OTC stocks in a market crash.
With all due respect, I think you are short. That’s fine. ut saying the stock goes to 20 cents with all this company has going for it is ridiculous.
No, I’m not in a short position on this stock. Just being realistic and I’m referring to a market crash. It’s an OTC traded stock. You dealing with market makers that are not very reputable. In a market crash OTC stocks get dumped because they’re very speculative. Big money knows this and they’re going to just dump them almost at any price sometimes. If it’s bad enough these stocks will go to zero and never return.
It is first and foremost a TSE traded stock, unlike U.S. – based OTC listings which do not trade on any exchange at all.
OTC is on a dealer Network and someone is still making a market in the shares of the company. The liquidity is not there with significant investments. All depends on the current condition of the market and how much the individual stock is trading. OTC stocks are all high speculative equities.
Not quite. The OTC shares that are tied to those listed on an exchange like the Toronto Stock Exchange don’t diverge much, or for long, from the price action on the exchange, net of currency differences.
Not quite ? As far as liquidity concerns you’re not going to be able to sell significant amount of shares if the stocks not trading actively or very little activity. NYSE it’s much better and like I said depends on the stock. It wouldn’t want to have a large portion of my capital tied up in OTC. There are liquidity concerns. During the market crash OTC stocks are going to get dumped much more than anything else because they’re highly speculative that’s my point. Regardless of a market crash, I’m not going to tie up a large portion of my capital in a OTC stock.
I feel completely betrayed. QH is not the saint so many believe in. This corporate maneuver is antithesis of what he always preaches. He repeatedly has said would finance expansion from profits from mill, and essentially said dilution was over. This move screws retail stockholders in favor of warrants, forcing stock sales. And this is yet another time novo has changed its story. From Egina as the savior, to the missing sorters. And why no news about mill, even if preliminary? News blackout is crap, especially as in past lots of news. This move has also crushed a friend, hurt his retirement. QH should stop being a shill for Crescat, where he is close to SEC violations, and talk about novo TRUTHFULly instead of ambush
Thank you
Quinton owns 3,160,000 shares of Novo, so he lost over a million bucks on paper today.
I doubt if he is worried, and he will do what he can to get the stock higher. I hope Doc was buying today.
Bonzo, I nibbled today and plan on nibbling some more when the stock settles out over the next 2 weeks. Please keep me from buying too much.
I have a feeling that Doc expected this kind of drop based on his excellent chart work…
Jay, it was like a deer in the headlights—–just a thought; I would think someone as astute as Quinton is with as many shares as he has would not support something like this money raising effort unless there was a positive long term effect from it.
Agreed Doc. People have doubted Novo and Quinton the whole way along so far, and over and over again, Novo has surprised doubting investors and the typical bashers to the upside. If Quinton felt it was the right thing to do, to raise the funds to get the infill drilling needed for the mining plan then I’m sure he made the decision for the best possible outcome for the company and shareholders.
Now that everyone has become very bearish and people are throwing in the towel, it has me interested in possibly adding to my Novo position over the next few days. I love a good overly emotional fishing-line sell-off in stocks I like for the longer term.
Doc – Honestly I was kind’a shocked when I saw the news – not that they may need to raise money but the price they sold the stock for and by the speed it happened. Time will tell but hopefully somebody got a really great deal. I’ve been sitting on a full position for a while now so having “bought right” I’m content to “sit tight” as they say.
When I worked in a photo lab years ago they used to say – “Price, Quality and Speed – choose 2 of the 3”. Quinton choose quality and speed so price had to take a hit. We will see.
Doc: I slept on it overnight and realized that they while those buying in did get a good deal it wasn’t a fire sale. They paid $2.00 US a share so they got a discount but not an extreme one. So, while I have a full position I bought a bit more this AM at $1.90 so I got it cheaper than they did. Now my average cost is about $1,70 US a share so time to hang tight and have a hope that this decision is as good as all their other ones over the years.
My sentiments exactly. There are many things in this world I do not complete understand and this was one of them but as you say Q has done us well in the past and I believe has a plan in place for this as well.
Bonzo: Thanks, in comparison my day in Novo land look trivial.
Mike, thanks for the above thought.
NSRPF traded about $3.5 million U.S. today which is not bad at all for such a company. Still, you miss my point. Novo is listed on Canada’s premier exchange so it is not an OTC stock like Mexus Gold, for example, which, btw, traded one-one thousandth the U.S. dollar volume of Novo today.
The above was for Holy Grail.
Thanks Matthew and of course that’s fine. However, most of your OTC stocks are very highly speculative and liquidity is very questionable at best with significant amounts of money.
I don’t own Novo so that’s good for future reference in case I decide to buy it at the fire sale price. Anyway, you have to investigate before you invest. That’s what I do and when I see OTC I get nervous right away and then I have to limit funds. I don’t want to keep track of a small position so it’s always been something I never do. That’s my perspective and don’t want to get stuck in a stock I can’t get out of with a significant investment. Already been there and done that. It’s like an all-day job. No thanks.
It’s a big job in a good market never mind a bad market you’ll never get out. If liquidity dries up for a long time you’re out, you’re done, it’s over, good night
I don’t own Novo either but I am fine with the much less liquid companies that I do own. A lot of people buy the junior miners/explorers despite having the wrong personality for such plays in addition to their lack of understanding. That will never change since people will never change.
What ever happened to Mexus Gold?
They are blasting soon.
Mike
Yes, Mexus Gold is blasting ore to put on their leach pads, and they are doing small scale gold production, but still have incredibly low costs, they just don’t produce much gold yet.
I believe they are looking for JV partners to assist with development and mining of their other projects, or there has been some chatter from investors that they may be thinking of selling out to a larger producer in a takeover. It will be interesting to see which direction they end up going – partners, or a buyout.
___________________________________________
(MXSG) Mexus Prepares To Blast At Its Santa Elena Mine; Continues To Speak To Potential Partners
April 5th, 2021
A stop loss can be determined before buying.
If too low, probably better to look elsewhere.
Matthew, certainly that’s very true however everyone has different risk tolerances and it really depends on how much capital you’re using there again. For someone else, that risk tolerance could vary and there’s some very good opportunities in the areas that you’re discussing. No problem with it because some of these newer companies that’s how they start out and you want to get in before the crowd. That’s where you get all the multiples and that’s where all the fortunes are made. On the other side of the coin, that’s how a lot of money is lost too. You’re well diverse in those specialized areas so that risk tolerance doesn’t bother you because you know what you’re doing. Very few have those capabilities and of course the risk tolerance that you’re describing. Still, you don’t pour millions into a small company unless you really know precisely all the parameters and without a shadow of a doubt you know the future of this company. OTC is never on my radar screen unless something really comes up and it’s a big opportunity. I don’t have a problem it. Must be really analyzed with a forensic white glove many times over. Regardless, in my particular case OTC doesn’t get my interest unless like Nova looks like a great opportunity but I don’t think at these prices. I’m looking at a market crash so I don’t know we’ll see what happens. Everyone’s different and I just don’t buy anything. Especially out of greed. I analyze my odds around the 95% percentile and that’s never compromised all due to a significant chunk of capital being employed. I can handle some red ink however the trade must complete in his entirety with a huge profit.
It’s dangerous to decide that you know the future of any company beyond a shadow of a doubt. I place my bets with the awareness that a positive outcome is never guaranteed.
“Greed” is a word best left to demagogues. It has no utility to me since those who accuse people of it are usually the ones who misdiagnose it. Furthermore, banishing it from your motives does nothing to protect you from failure and might even add to your risks.
👎👎Matthew, then that’s fine, I’m just telling you how I prefer to invest my money and quite frankly that’s my own personal business. If you don’t like it, should have no concern of yours. What you do is your business. By the way, when do I take orders from you ? I’m not going to base my investing strategies off your philosophies. Everyone has their personal preferences and you want me to base mine off of your strategies and philosophies. That’s very nice and arrogant of you Matthew and thank you anyway.
Arrogant? My assessment differs from yours but wasn’t meant to offend you OR to convince you of anything. I do not want you to base your investing on my comments or beliefs. That goes for everyone. We all share what we feel like sharing.
Matthew. if you read your message you mentioned “”accuse””. The tone sounded very forceful it’s very trivial at this point. It’s not a serious issue. Not like other things I’m dealing with right now. This is miniscule petty trivial. Thanks for your message and chiming in at least I know. Just an innocent misunderstanding and I think you can kind of see what I’m talking about but if not, it’s not a big deal nothing to worry about here.
I see your point and can see why you thought I meant “you” when I said “those who accuse…” But you didn’t accuse anyone when giving your opinion about greed so my reply was not intended to single you out.
Yep, the message got a little crazy but extremely minor issue anyway. Really, I was just giving you back a sincere response. It’s too bad everything isn’t this easy. Thanks for you’re kind further explanation.
It is nice to have Quinton answer some tough questions. Yeah, it was a bad day for Novo stock investors. But this is a 5-year story, not 1 week, not 1 month, or even 1 year story. Novo is a big vision attempt and it is going to take years for this to work out.
Novo made me hesitate in buying Eloro. I heard the Eloro interview first and wanted to start a position. Then I heard the Novo interview following the Novo price drop. I ended up adding Eloro and holding on Novo.
Eloro was in 4 buys over the day trying to sort all this out. Gold hit shortly after open and capped all day making things uncertain if things were going to break down again.
Quinton’s points about the value of finding the Tin in the recent long and well-endowed Eloro channel sample finally got me off the sidelines with it and I was a buyer of ELO today.
Despite on the emotional tirades from retail investors regarding Quinton and Novo today, most are angry at the dilution, but didn’t spend 15 minutes listening to the interview with Quinton where he clearly lays out why they raised, what it is for, and it has nothing to do with mining problems at Beaton’s Creek.
Most retail investors get it wrong with companies, buying into hype at the highs, and selling into FUD at the lows, and get is a$$ backwards the majority of the time.
With Novo, while everyone is having a tantrum and there is a fishing line sell off, I’ll be looking to start adding to my position, which is still in the money despite todays sell down, at lower levels. I actually hope the fickle retail lemmings run the share price off a cliff again tomorrow, and will consider adding if they do, as I still really like the longer term plan with Beaton’s Creek, Comet Well/Purdy’s reward using the ore sorting, and developing Egina. Also their shares in New Found Gold have been a stellar investment, and while they could have sold them instead of doing the capital raise for the infill drilling/mine plan sequencing, they obviously saw more value in hanging onto them.
As for Eloro, they just put out stellar news on that channel sample, and if anyone listened to Quinton’s ELO interview here on the KER that posted today, I’ve not heard him that animated about exploration results in a long time, and he is right, Eloro may really be onto a massive Silver/Tin/Base Metals deposit in Bolivia, so I picked up my starter position today, as retail sold the good news the last 2 days.
On another note, Leo says the Q1 2021 financials were posted on the website on March 31 2021 but aren’t there. Another dodge! I would like to see the Q1 report to see what was actually produced in Q1.
Doc, glad you bought some Novo today. I decided to buy more ESKYF and DOLLF instead as I have so much NOVO already. But I may buy more NOVO if it falls more. Same goes for Eloro and NFGFF and IRVRF. NULGF got up to 12 cents today.
Big candle down at 8:30 PM when everyone trades gold.
I got out of Novo two months ago but I am now invested in much riskier stocks. There are always a lot of problems facing companies when they first become producers, but I have noticed of late that the volume has dried up somewhat in my juniors. People these days are conditioned to sell when any news release comes out good or bad. A lot of other investors are waking up to the fact that the system has a lot of faults that could crack everything wide open and this leads to uncertainty and nothing is worse than the fear of the unknown. If anyone knows what is happening it is Bob M and I expect he will be penning an article tonight for his website tomorrow. That is his job at Novo he tells the story and it should be interesting to read in the morning. Bob has also said we are in for a major market correction and some of the smart money could be exiting it’s not just the conventional markets that will be in trouble. Now is the time to consider the what if scenario. DT
Good point DT on the trend of investors selling off all news lately (good or bad). Great Bear put out great drill results and people sold. Vizsla has put out stellar results a few times that got sold, (but at least people are waking up and it bounced 8% today). There are plenty of companies that put out record quarterly operational results, and the stocks hardly budged or liquidated. We just discussed up above that Eloro resources put out an amazing channel sample yesterday and sold off yesterday on the news, and continued to be under pressure earlier today.
It is an odd market lately where no matter how good the news, most companies are getting sold as investors use the news to liquidate positions. Personally, I love it, as it allows me the opportunity to accumulate quality companies doing great work, putting out great results, when the market doesn’t care.
As for Bob M. , someone already posted his thoughts over at ceo.ca today:
___________________________________
@WisGuy1 For all those looking for BM:
“People are pissed because the shares went down. I wish he hadn’t diluted the shares but frankly it was some dilution or selling $22 million of NFG and if he had done that I would have been leading the pack to the hardware store to buy a nice hemp rope.”
“Shit happens and if you don’t make mistakes now and again, you aren’t making enough decisions.”
— Bob
Thanks for the update, Excelsior. DT
I didn’t buy Novo to buy NGF. Novo is supposed to be a production company, not an investment company in other mines. They have a big enough land package to focus on one thing – mining the Pilbarra region. If NFG is more valuable than Novo’s mill and land package combined then I should just sell my Novo and buy NFG instead. Stupid decision to raise capital on the backs of Novo shareholders, especialy after 8 months of saying they didn’t need outside capital.
I agree with you Tyler. We got sucker punched. This capital raise came out of nowhere. From the NOVO information given to date, we had every reason to believe they would be self financing from their mine production. I was stunned by some of Quinton’s comments. His telling us they got recommendations from some very smart people left me agog. I thought NOVO was already run by really smart people. I read “What Became Of The Crow” and it sure portrayed them a really really smart people. And the comment on the price of gold! WTF?
J Taylor’s monthly newsletter came out this morning with the following comment on Novo:
“Novo Resources saw its shares get hit hard in April when the company announced a C$22 million financing. I firmly believe the market is overreacting but as Quinton Hennigh explained to me once the company received the PEA, it concluded that it will need to drill on 20×20 spacings before it begins to mine and mill in order to have better grade control. The PEA which was reported on April 2, calculated a NPV5 of $250 million. I view this as a buying opportunity and believe the company’s future is as bright as ever.”
The Hidden Secrets of Gold & Silver Juniors by Dr. Quinton Hennigh
Baby Investments – Apr 15, 2021
“In this video, Dr. Quinton Hennigh is talking about the hidden secrets of gold & silver juniors.”
“However, Dr. Quinton Hennigh doesn’t think that gold & silver juniors have to make it from exploration to production in order for a stock market investor to make money off of them. Gold & silver juniors are often times taken over by larger gold & silver companies.”
“Dr. Quinton Hennigh says that there is no perfect definition for what a junior gold & silver company is. ”
Thank you – terrific interview. I am surprised at the number of total ignoramuses that are clueless about mining. A bunch of back seat drivers still living in mommy ‘s house that have zero understanding how mining works. Again thank you Quinton for a terrific interview. I used this millennial temper tantrum as an opportunity to buy more. I’m very PLESAED with your progress. Keep up the fantastic job Quinton!
Then why reduce the loan from Sprott, -why not use those funds instead of diluting the stock? Also, if Novo has 1-2 years of oxide drilling already mapped, why then is more necessary? Why was not this better telegraphed ahead of time?