Bob Moriarty: Price Is Always Right And Opinions Are Often Wrong

CLICK HERE to read the full interview with Bob Moriarty done by Energyandgold.com.

Snippet about Novo:

here was some controversy about Novo Resources (TSX-V:NVO) last week, in the mining financial media sphere. There was this particular interview with Quinton Hennigh where the guy (Matt Gordon “CRUX Investor”) who was interviewing said, they did the interview in February, he said, “$C600 million market cap, $C600 million market cap, how do you justify a $C600 million market cap when you’re not mining anything?” And Quinton goes into the whole thing about three different projects, and how they could be very big, and the goal is to move them forward and get them permitted, and then it could justify a C$600 million market cap (or potentially much more). And then, I saw an interview yesterday, where Mr. Hennigh said, “Our goal is to have concentrate coming from three different projects, from the three different primary projects (Beaton’s Creek, Egina, and Karatha) that Novo’s focused on in Australia.” And then if you think about that, and weigh that against record gold prices in Australian dollars, it could be extremely attractive.

But the problem is, and this is something you’ve written about, since 2017, is you have the nuggety gold effect. So for example at Karatha the problem is you can’t get a 43-101. And so how do you finance it? How do you move it forward when you have this problem, everybody wants to see a resource estimate? You know, all the analysts, all the bankers, want to see a 43-101. So how does Novo get from here to there?

Bob Moriarty: Well, the guy that did the interview had an extreme bias. You can tell from the nature of the questions, and I did listen to it. Let me ask this a different way: Is the price correct?

Goldfinger: Yeah, the market price is always the right price at that moment.

Bob Moriarty: Thank you. Price is always right. Opinions are often wrong. Now, unfortunately, because of the Internet, in the last 20 years, everybody has gotten used to having all kinds of data that they never had access to before. And with something like CEO.ca, you can look and see what we’re talking about. People want to analyze every little thing and justify every single price movement…. that didn’t exist 20 years ago. 20 years ago, you were lucky if you knew what the name of the company was, okay? Now, people believe, because they got all this information now, that you could somehow rationalize everything that’s happening: “Well, interest rates went down, so gold should go up. The S&P’s up, so gold should go down.” It’s all bullshit, okay?

Prices go up and prices go down, and the really funny thing about Novo is that it’s actually been a lot more stable in price than anybody actually wants to admit. There are junior stocks that pay 10 times as much as Novo has (to management). Novo has two or three things in the works; things could change in a week, and basically, I’ll say what I said eight years ago: Novo is a 10-bagger, at the very least, and we know that’s true. It’s already been a 20-bagger, and it has the potential to be a 100-bagger. I’m not sure it has potential to be a 100-bagger from where it is right now, but it certainly does have the potential to be a 10-bagger from where it is right now. I state categorically, unequivocally, I don’t give a shit whether it’s Eric Sprott, whether it’s Mark Creasy, whether it’s anybody else, Novo is sitting on more gold than any company in history has ever had to sit on.

And that doesn’t mean they’re going to be able to extract it, and you’ve raised some really good issues, and I was the guy pointing out how difficult nuggety gold is. Quentin has so many irons in the fire, something’s going to happen. And it could happen quickly.

Goldfinger: I think that getting a mill would be a big deal for Novo, is that right?

Bob Moriarty: Well, it will be, but you will never have a situation where you have gold come from three different places. Beatons Creek would have had a mill built by Novo five years ago, except for the fact there was already a mill there. And I’ve said this many times, it would be total insanity to spend a hundred million dollars on a mill when there’s a hundred million dollar mill sitting there in a company run by idiots. And I said that three years ago, I called it an employment service, and nobody’s ever given me credit for it, because, damn, I was right. Okay, so they went into bankruptcy, the mill was still sitting there, Novo’s still got a million ounces of gold they could put through the mill, but that would be a big deal. They don’t need a mill at Egina to process the gold there, it’s all in gravel. They’ve got mineral-sorting machines that are quite capable of sorting it out, everybody’s ignoring the numbers, okay? Everything’s in numbers.

Now, I’ve had half a dozen alluvial projects myself. How much does it cost you to process a cubic meter of material?

Goldfinger: It’s very cheap, I don’t know what it is exactly, probably around US$1?

Bob Moriarty: It costs you a dollar every time you move it. If you scoop it up, it costs you a dollar. If you put it through a mill, it costs you a dollar. If you haul it and put it on a waste pile, it costs you a dollar. So the reality, and the only other guy in the industry actually knows the numbers is Keith Barron. Keith and I totally agree on that. If you’re talking about six or eight bucks a yard, 10 bucks a yard, for processing a yard of gravel, that’s reasonable. If it costs you $15 a meter, you’d have to be run by a bunch of idiots. If it costs $6 a meter, you’re doing damn good.

Did you happen to know this? The last press release, they mentioned a grade in the new area they just discovered?

Goldfinger: I did not.

Bob Moriarty: It’s a gram to a gram and a half per cubic meter.

Goldfinger: Oh, that’s very profitable, to my math.

Bob Moriarty: No shit.

Goldfinger: So the bears say, well, you don’t know how much area actually grades a gram to a gram and a half, right? It could be a gram to a gram and a half for 50 meters, and then it could be a tenth of a gram for another 500 meters, right?

Bob Moriarty: The only thing that would ever scare me about investing in any market is when everybody agrees you should invest in it. They don’t care how many times they get proven wrong, they still want to come up and pee on the parade. My god! Okay, let’s work out the numbers. Can you do it in your head? What’s one gram material worth per cubic meter?

Goldfinger: US$50, or something like that?

Bob Moriarty: How much is a gram and a half material worth per cubic meter?

Goldfinger: US$75

Bob Moriarty: Okay, if you’ve got US$75 material and it costs you US$10 a cubic meter, what do you have?

Goldfinger: US$65 profit per cubic meter.

Bob Moriarty: No, you have a fucking gold mine.

Goldfinger: Fair enough.

Bob Moriarty: The crazy thing is, Novo keeps coming out with these numbers, everybody ignores the numbers, they don’t understand the significance of it, and I’ll tell you flat-out right now, Quinton Hennigh is lying about the extent of the gravel. Were you aware of that?

Goldfinger: No.

Bob Moriarty: It goes all the way to the damn Indian Ocean. Of course it won’t all be that sort of grade. But a lot of it will be.