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10/2/18

The unbearable lightness of being a Novo Resources (NVO.v) skeptic

Here's the thing; I have this friend, he's in the mining scene and not only is he one of my better friends but he's also someone with an excellent take on the market and ample experience to back it up. He knows I'm a Novo Resources (NVO.v) skeptic without being outright negative about the company, he knows I'm strictly neutral on the stock price (NB: note that stock price and company are two separate matters), he himself is certainly interested without being convinced. He also knows all the main players personally. And I get a mail from him on Monday evening, a two line missive:
"I watched the Novo webcast.
I thought it worthwhile"
The link to that webcast is right here. At that point I hadn't seen the NVO presentation at the Denver Forum, neither on the live webcast when it happened nor on the replay, because I'd been busy watching the companies that interest me more (mostly those where I cover/own shares, some others too) and hadn't got around to seeing all the Denver gigs. Still, I replied that evening (with slight edit to protect both guilty and innocent):
"I watched a lot of others from Denver, didn't bother with the dog and pony shows ...(slight edit)... NVO has decayed into BS and will remain there until such time that it starts producing standardized assays of some shape or form. Now trading under $3. Good. So why should I bother watching it?"
Frankly, that was bad of me. Poor show, incorrect and Luddite, so I'm always glad when a friend throws my BS back in my face. Here's his reply:
"All that opinion on NVO  without bothering to see what they are doing or attempting to do?
That would be like me calling GGI BS without going thru the available info."
Absolutely. I was in the wrong, period. Chastened, I went and watched the NVO presentation featuring Quinton Hennigh. In fact, before opening my fat mouth again I watched it twice. Credit where due, it includes an excellent, well thought-out and visually pleasing video overview of "The Pilbara" which does a fine job of putting it all into scale. Then after the cool video comes frank and straight talk from Quinton Hennigh (QH) too, he's not trying to market to the Nth degree here, he gives it straight and perhaps to the point where the message is detrimental to the company. I replied to my friend:
Okay, so I watched it. Slick video. Yes, it does do a great job in conveying the scale of the project(s). And yes, it is interesting. When QH talks about delivering assays and resource numbers soon, it's credible and I'm looking forward to those. The segment close to the end is the most important, when he explains that the work now is required to get a mine licence in order to start the essential bulk mining trials. In other words, I don't need to own this until they start bulk mining. And that's why it's gone under $3.00. It's not only the time factor, it's now clear that $62m or not they're going to have to raise again before we get a definitive handle on the company.

Bottom line: Yes I'm more interesting in NVO now, but no need to own yet and there's not going to be any Kirkland takeover until the large scale bulk sampling gives up results. I think I can come back here in two years' time and buy it for $3.


And on that, my friend replied to say he agreed. Moral of the story; don't be an ass with the market, with your preconceptions, with prejudices or with your friends. Thankfully, good friends will tell you you're being an ass and you get the lesson cheaply, but the lessons doled out by Mr Market tend to be far more expensive. I remain neutral NVO. As does my friend (to my knowledge), but the days of dismissing this company out of hand are gone. True that I see no reason to be long today. Also true that I'll be watching its 2019 very closely.