by Stockwatch Business Reporter
New York spot gold slid $22.80 Friday, ending the day at $1,787.20. The TSX-V rose 3.03 points to 749.20 while the TSX gold index dropped 1.15 points to 308.12. Barrick Gold Corp. (ABX) helped lead today's retreat. It fell 80 cents to $29.45 on 8.22 million shares.
Dr. Quinton Hennigh's Novo Resources Corp. (NVO) lost another 14 cents to $2.24 on 2.02 million shares. Novo slid 39 cents Thursday, closing at $2.38 on 2.22 million shares, on word that Anthony Makuch's Kirkland Lake Gold Ltd. (KL) is selling 18.5 million shares at $2.45 per share -- and perhaps half that number again at $2.80 should Novo's stock bounce back from the blow. Kirkland Lake added 72 cents Thursday on the news, but today it lost 18 of those cents to $52.02 on 1.1 million shares.
Kirkland Lake is selling the 18.5 million Novo shares as units, with each share accompanied by one-half of a warrant. A full warrant will allow the holder to acquire another Novo share at $2.80 over the following 12 months. Kirkland Lake currently holds 27.89 million Novo shares, so if the sale proceeds as planned, the company will be left with just 135,000 Novo shares.
Kirkland Lake's interest in Novo began three years ago, when the company bought a block of 11.8 million Novo shares at $1.60 from Newmont Corp. (NGT: $75.70) and then purchased another 14 million at $4 through a private placement. Early in 2018, the company added another four million shares to its portfolio, this time at $5, giving it nearly 30 million shares at a cost of about $95-million.
Since, June, Kirkland Lake has been on the sell side, selling 1.8 million shares at an average of $3.45, recouping $6.26-million of its investment. The current sale will rake in another $45.3-million and possibly an additional $25.9-million, which would leave Kirkland Lake about $17.5-million in the red after closing the books on its Novo adventure.
At the time of Kirkland Lake's big buys, Mr. Makuch, president and chief executive officer, cheered the investment as "an important part of our strategy to grow and enhance the value of our Australian franchise," which included large land positions and the producing high-grade Fosterville gold mine. The cash injection into Novo, he concluded, would support an acceleration of exploration at that company's Karratha project.
Three years later, Mr. Makuch's only comment about the change of plan and desire to sell the Novo shares came in August, just after Kirkland Lake began its series of market sales. Those sales, he said, would "further enhance" the company's financial strength and allow it to "pursue our key strategic priorities," which by then had largely shifted to Macassa and Detour Lake in Northern Ontario.
Michael Collins's Exploits Discovery Corp. (NFLD) lost five cents to 65 cents on 661,000 shares on word that it has staked the Katie gold project, southwest of Gander in Newfoundland. The 2,600-hectare block lies within the northwestern portion of the company's Great Bend project, and Mr. Collins, president and CEO, was pleased to have been able to secure the property "in a competitive staking environment." Katie hosts some great gold targets, he cheered, adding that it is also a critical piece in understanding mineralizing systems in the Great Bend project.
In other words, those gold targets may not be all that great. Previous explorers did tout some worthy grades, but over tiny intervals. Grab sampling yielded up to 16.7 grams of gold per tonne, although subsequent drilling managed just 2.52 grams per tonne over 0.5 metre. Mr. Collins also points to a volcanogenic massive sulphide target at Black Bart, where drilling produced 10 per cent zinc amid modest amounts of copper, gold and silver -- but over just 0.05 metre.
Despite the lack of assay encouragement, Mr. Collins and his crew have "a new structural thesis" -- a geological hope -- that centres on the southern Dog Bay Line, Appleton and Joe Batt's Pond fault zones as being associated with deposition zones for gold in the area.
(Yes, this is the same Joe Batt who lent his "arm" to the far more famous locale on Fogo Island, northeast of Gander. Joe Batt, as the story goes, was a sailor with Captain James Cook on a charting voyage around Newfoundland in the mid-1700s. He somehow parted ways with the ship -- some say he was tossed while others say he jumped -- but either way, unlike his time aboard ship, he was particularly popular with the locals. The reasons why are lost in the mists of time but recall that Joe Batt's Arm is so named because it is shaped like an arm holding a pint of ale.)
In any case, Exploits intends to use its existing understanding, as well as whatever new comprehension can be derived from a variety of geophysical and geochemical methods, to explore Katie and the surrounding parts of Big Bend.