The midnight unearthing of gold nuggets in WA’s outback by a Canadian miner, which beamed the footage live to a Denver conference, sent shares in nearby companies soaring. Kairos, which holds 100km of the rocks known to host the nuggets, now appears to be the cheaper entry to the play.
Only a sad old grump wouldn’t be getting a buzz from the modern-day gold rush taking shape in the Pilbara.
Quad bikes loaded with metal detectors and jack hammers are barrelling through the bush in pursuit of the melon seed-sized gold nuggets to be had from the region’s extensive Witwatersrand-type conglomerates. It’s a sight to behold.
More to the point though is that the crafty promotion by the lead player in the Pilbara gold nuggets rush, Canada’s Novo Resources, is fuelling massive share price increases for a bunch of ASX-listed juniors with tenements covering the prospective lower Fortescue Group rocks, including Novo partner, Artemis (ASX:ARV).
Novo’s value has trebled since July to close to $1 billion, with the latest leg-up triggered by its remarkable live stream cross on Monday from the Denver Gold Forum at the Broadmoor Hotel in Colorado Springs to its Purdy’s Reward prospect, part of its broader Karratha project area in the Pilbara.
It was well past midnight at Purdy’s Reward where a bunch of surprisingly sprightly geologists and field hands proceeded to pluck nuggets from a patch of conglomerate exposed in a 30m x 10m x 5m pit.
Time was against the midnight miners – one of which played up to the Colorado crowd by wearing a 10-gallon hat – so they had previously marked up the spots where the metal detectors had pinged alerts some 300 times for likely locations of nuggets. Sure enough, a bit of jack hammering liberated a couple before the link to Colorado was flicked off.
The seed was sown. The suggestion is that if that one little patch could be repeated across the region’s seriously extensive conglomerates (like in South Africa’s legendary Witwatersrand), or even just sections of it, well, wouldn’t that be something.
It does not matter to the punters enthralled by the Pilbara nugget hunt that no one knows at this stage if the conglomerate play will ever prove to be economic in a meaningful way. But immediate gratification is at play.
Unlike WA’s hard rock gold mines which take years of drilling to confirm as economic propositions, and where the gold is more often than not invisible to the naked eye, the recovery of the Pilbara nuggets are next to immediate, and highly visible. Does it mean a profitable mining operation is the next step? No.
Just as one decent gold hit in a diamond drill hole does not make for a mine, nor does a fistful of nuggets form a single pit make for a mine.
But it is going to be fun to watch whether Novo and others turn the WA gold scene on its head.
The mainstream gold sector looks down its nose at the Pilbara play. And it could well be right to do so. But there is no doubt that some real value is being created for shareholders in a bunch of companies that are following in Novo’s footsteps.
DGO Gold (ASX:DGO) was mentioned here as one of those at the start of the month when it was an 80c stock. It is now $1.29. De Grey Mining (ASX:DEG) is another. It flashed pictures of 98 nuggets on the ASX platform from its Loudens Patch earlier in the week. What was a 6c stock is now a 15c stock, with a market cap of $40m to boot.
There are plenty of others, all of which are saying their Pilbara tenements – many of which were originally picked up for iron ore, manganese, lithium or some other non-gold mineral - have the right sort of “Novo” rocks.
KAIROS MINERALS (ASX:KAI)
This space has written previously about Kairos Minerals (ASX:KAI) on the strength of its exploration work on its WA ground positions which neighbour one of the most exciting gold projects around (Breaker Resources’ Lake Roe) and one of the biggest lithium projects (Pilbara Minerals’ Pilgangoora).
All interesting stuff it was too, even if the share price was left to languish. But thanks to that lithium ground, Kairos is now very much part of the Pilbara nuggets story. So much so that it has received a share price speeding ticket from the ASX.
Its response noted the “significant recent investor interest in companies exploring for conglomerate-hosted gold mineralisation in the Pilbara region”.
Kairos was on to the Novo push early and it was able to say a while back that its 1200sqkm tenement position in the Pilbara contained an estimated 100km strike length of the prospective lower Fortescue Group rocks.
“This stratigraphic package is similar to that which hosts the discoveries reported by Novo and De Grey,” Kairos said.
The Pilbara nugget rush enabled Kairos to get away a $1.71m placement at 1.9c a share with an attached December 2019 option exercisable at 2.6c earlier this month. It now trades at 6.5c.
Given rocks required for the nugget story, its undiluted market cap of $37m looks to be on the light side of things compared with some of the other nugget players, the prime location of its ground and the confirmation of the extensive presence of the prospective rocks, remembering the company had pre-existing gold and lithium credentials.
Fair enough too, as Kairos is obviously not as advanced as Novo and Artemis, with its $118m market cap, in putting some meat on the bones of the Pilbara nuggets thematic.
But that is fast changing. With the extra dosh from the recent placement, watch out for Kairos to hit its ground hard in coming weeks. It is likely to be early stage stuff like comprehensive stream sediment sampling and the obligatory prospecting with metal detectors.
It’s new stuff for the Kairos ground, though history tells us gold nuggets have been plucked in the past in close proximity at places like Marble Bar and Croydon. The first phase of Kairos’ work shouldn’t take that long, say a month.
Assuming initial encouragement – including the obligatory fistful of nuggets - it would then be on to trenching and wide diameter drilling to pin down a “resource.” Lots of news flow in coming months can be expected.
That also goes for elsewhere in the Pilbara from work by Novo and others, all of it feeding in to the story, maybe with more live crosses to the action.
One of Australia’s leading business journalists, Barry FitzGerald, highlights the issues, opportunities and challenges for small and mid-cap resources stocks, and most recently penned his column for The Australian newspaper.