Novo (NVO.TO): Exploration Driving Growth Webinar (November 29, 2022)
Novo Resources’ Executive Co-Chairman & Acting CEO, Mike Spreadborough, GM of Exploration, Kas De Luca, and Non-Executive Co-Chairman, Dr. Quinton Hennigh discuss exploration throughout the Pilbara with a highlight on the Egina district.
Learn More: https://novoresources.com/
There’s something seriously wrong with this company…..roughly $60 million in cash on hand and a market cap. of around$50 million????
Sure, some silly tax loss selling is occurring, but there’s more to it than that….
Their burn rate means they are out of money in about 1.5 years.
$65 million cash on balance sheet as of 09/30/2022
$11.5 million in SG&A + Exploration expenses per quarter.
Gold sales = Gold Mining Costs
So the company is out of money in 6 quarters at this rate. The only thing they can do to conserve cash is to stop all exploration.
Indeed. At the rate they are going they will blow through their proceeds from the sale of New Found Gold in another year or so, will not be able to obtain debt at that point, and will have to resort to extremely dilutive equity raises. This is all slowing being priced in as the market underwrites the increasing financial risk profile with Novo. They had a huge opportunity with Beaton’s Creek and the mill they acquired to sustain exploration and ongoing operations without needing more capital, but that got shut down just recently and will cost $25M+ just to restart.
The only way out for Novo will be to get approvals for the fresh rock at Beaton’s ASAP, hope the grades are way better, and ramp up profitable production ASAP. In the meantime, they should literally stop all exploration, cut all costs to near zero, and simply wait for the approvals for the fresh rock. Then, use the cash to re-start the mill, and make a last attempt to get into profitable production with the fresh rock.
Continuing to spend millions in exploration and operational costs is incredibly stupid at this point and a waste of shareholder money.
Disclosure – I am not a shareholder.