Novo Resources Corp. ( “Novo” or the “Company” ) (TSX: NVO, NVO.WT & NVO.WT.A) (OTCQX: NSRPF) just announced quarterly updates for the first full quarter of their Nullagine Gold Project. In this post, I’ll expand a little bit on some of my thoughts and opinions on what is going on. Mind you, I am inexperienced and have only owned shares of the company for a few months so there will likely be many mistakes in this article. If you notice mistakes or something that is incomplete, please correct me. I am here to learn. This article contains my personal opinions and I’m not being paid to write this. I am a shareholder of Novo Resources Corp, and Novo also rents banner space (and nothing more) from my website. This makes me biased and gives you all the more reasons to do your own due diligence. Let’s have a look at the important points here: 1. No lost time injuries at Beatons Creek. This means that no major injuries were sustained by any of the employees working on that project, and there will be no loss of productive work time as a result to injuries. I see it as positive because it means that the company’s team will be able to continue working as planned, under normal conditions. This doesn’t surprise me, and I wouldn’t have it any other way.
2. An increase in gold production. Novo Resources booked a record gold production of 5,898 oz Au in June, a 16.5% increase over May. While this is by far not a lot of gold, the production is growing, and as you’ll see further on helping to increase the revenue when costs are dropping. As you can see below, the growth in production has been great so far, and I expect the production to keep growing throughout 2021, and beyond, but they might have to turn on additional processing power, to increase mill throughput.
It is also worth noting that the average grade in June was 1.45 g/t Au, an increase over Q2 2021 average grade of 1.30 g/t Au. Hitting 2g/t Au would be very good, placing them among the higher grade open-pit mines out there.
3. An increase in revenue. Novo booked C$11.9 million revenue, which represents an 11.4% increase over May, for a total of C$31.7 million in Q2 of 2021. Although this sounds positive, I always remind myself that this company is only getting started, so I will expect higher revenues through the next couple of quarters and year. I am not crazy about the fact that the revenue grew slower than the production. I will have to ask Dr. Quinton Hennigh why that is.
4. Positive operational cash flow in May & June.
The Nullagine Gold Project achieved a positive operational cash flow in the months of May & June. I’m sorry if this doesn’t make sense, but this looks like a big deal to me. Let’s remember that Novo is a junior with tremendous growth potential and even better exploration potential, that is already generating positive operating cash flow. I don’t think this is to be ignored. Now let’s see when the positive free cash flow comes along.
5. Higher production & processing rates.
We’re seeing another increase in mining & processing rates for Novo Resources.