SINGAPORE – The nascent gold rush in Western Australia’s remote outback hit a speed bump after a key player reported disappointing drilling results.

Novo Resources, the Canadian explorer that kicked off the rush in July after finding nuggets in the northern Pilbara region, notched up its biggest drop in six years in Toronto on Thursday, while partner  Artemis Resources followed with a decline of as much as 20% in Sydney. Novo shares dropped another 13% as of 10 am on Friday in Toronto.

The market frenzy – that’s driven big stock gains for a pack of junior miners – first started to cool after Novo’s November update on its Purdy’s Reward joint venture. The frenzy has been driven by a theory propounded by Novo President  Quinton Todd Hennigh that the region was once conjoined to Witwatersrand in South Africa, the world’s biggest gold resource.

“Novo’s release just confirms what we already knew – which is that the discovery process will be a long and arduous one,” Gavin Wendt, founding director and senior resource analyst at MineLife, said in an email.

‘EARLY DAYS’
Larger samples may be required to accurately reflect the gold grade, Novo saidin the statement Thursday. Analysis of a three metric-ton sample is expected to be completed in January.

“It needs to be remembered that it is still very early days and to date we have only had access to a postage stamp sized area of the total tenement package,” Rob Humphryson, Novo chief executive officer, said by email. “Novo will factually report what we observe as we learn more about this unique deposit. Some of that will be positive and some will be disappointing.”

There’s still optimism among investors. Novo is up more than fourfold this year, while Artemis, De Grey Mining and Southern Hemisphere Mining also are holding onto gains. Investors “love a big-picture speculative story – and they don’t get much bigger, or more speculative” than Pilbara gold, according to Wendt.

“It’s early days, and statistically, nothing’s really been proven or disproven, but the indications are going the wrong way,” said Matthew Keane, director of metals and mining research at Argonaut Securities, who visited the Novo-Artemis project about a month ago.