Determination of the 5% of Havieron

[lebugue-addick]

Dip/Strudel

Taking some of the parameters in turn from the best assumptions we had in 12 October's RNS:

Gold price: Newcrest were very cautious at $1,500/oz while GGP went for $1,750. Current POG is $1,818. Why would an Independent Valuer choose Newcrest's? I can see why he might be prudent and go for an 8-10% variation from current POG ie say $1,630-1,670 which I would not have difficulty with given it's down from a high of $2,022 in July 2020.

Copper: This concerns me a bit I must say. Newcrest went for $3.30/lb and Greatland $4.08. After hitting a high of $4.92 in February it has now dropped back to $3.78 today. Given a prudence factor of 8-10% it would not surprise me if the IV opted for Newcrest's figure.

Exchange rates: The rates used back in October were - Newcrest AUD:USD 0.75; Greatland 0.72. Today's value is 0.688. This is in Greatland's favour as costs are worked out in Australian $ first and then converted to US$. I would be astonished if the IV did not go with GGP's given the recent trend.

Gold ounces - a real range here starting from Newcrest's 1.432m ounces to GGP's 3 March updated MRE of 6.5m ounces. And all numbers in between depending on the variables of Probable, Inferred, Indicated etc that the Independent Valuer goes for. Hopefully he will choose the 2.9m ounces of Probable from GGP's 3 March update plus a slice of the remaining numbers. As to what price per ounce the IV goes for - well I offer no comment.

Reputation - this is a big factor for me. I know the IV judgement should be based on merit according to the detailed JV agreement which we haven't seen. But hanging in the air is the question for me: "Will the IV tend to have an unconscious inbuilt bias towards a big company like Newcrest rather than one of the new kids on the block?". Others may not have a problem with this issue and that the IV will play fair but......................

I am optimistic that a middle ground compromise on the 5% will be reached but there are just too many parameters to even taken an educated guess what that figure will be. It could be anywhere between $75m - $150m I suspect.

[GregY]

NCM do take the biscuit really as they know even at GGP value they are getting an absolute bargain as this is and will be an absolute monster of an ore body so they win either way. Be under no illusions they are a BIG corporation and dont give a monkeys who they stamp on to get their way and this is proving just that. Lets hope they dont try to swing it straight for a buy out once we have been low balled as we are being low balled with the two figures being considered now as it simply doesnt reflect the WHOLE body just a fraction.

[Bottle Rocket - Liam]

Lets hope they dont try to swing it straight for a buy out once we have been low balled as we are being low balled with the two figures being considered now as it simply doesnt reflect the WHOLE body just a fraction.

Is there any way you can suggest what figures are being considered? I have not seen any numbers apart from people taking fingers in air guesses.

[GregY]

Im just going on the MRE figures adopted by NCM (somewhat out of date) and those of GGP latest MRE2(superceeded already with excellent drill results) . BOTH are not a true reflection of Fair Market value and both would be an absolute steal for NCM's 5% raid on our shareholding of Havieron. I know its as agreed by previous Directors but come on play the game NCM you cant have everything for nothing and 70% of what you have so far is an absolute Bargain lets not be greedy now

[DipSard]

GGP agreed or indeed perhaps even proposed this option exercise, we'll be able to judge how wise that was after the conclusion. Regardless, our team signed on the dotted line to this Option Exercise and NCM will do what is best for their shareholders as they should do, why would they do us any favours? There is a cut off date for the valuation of 15/12/21 but valuations can also have forward assumptions built in from what I could see studying the Valmin Code and an example valuation, up to our team to build the best outcome for us now.

Thx to Bamp who piqued my interest into reading up on Kriging and unfolding and then looking again at the GGP MRE with a much better understanding of how GGP's MRE was constructed as I can see now how the methodology to come to our numbers seems very sound but also that the MRE has a lot of comparative focus vs the NCM PFS that should serve well for this matter.

Also excerpt from the 21/12/21 RNS doesn't mention arbitration in the sense we might think as it also mentions an independent expert determination. Also, doesn't mention that matters could go towards arbitration, so hopefully I get a reply to help clarify.

The confusion may arise from that fact that Shaun/GGP have allowed the term arbitration/arbitrator to be used such as in the Sunday Roast Podcast from 2nd Feb and Proactive Interview from 31 Jan both by interviewers and Shaun himself. Very much seems IMO that it is an independent jointly appointed valuer.

The question in my mind is if price determination is definitely about Valuation A (NCM) or B (GGP) becoming the price tag? Or if their input will be used to help guide further negotiations and whether arbitration in the proper sense can be entered if the valuer for instance picks Valuation B from GGP as the price, will NCM then be able to commence arbitration or must they abide by the decision?

Under the joint venture agreement, if the option exercise price cannot be agreed by this date, each party is thereafter required to notify the other of its assessment of fair market value. If both parties' assessments are within 10% of each other, the option exercise price will be the average of those assessments. If both parties' assessments are not within 10% of each other, the parties will proceed to independent expert determination, with the expert being required to determine which of the values nominated by the parties is to be the fair market value.

Following agreement or determination of the fair market value option exercise price, Newcrest has 30 business days to exercise its option to acquire the additional 5% interest. Proceeds from the exercise will first be used to repay the outstanding balance under the existing Newcrest loan facility.

[zoros]

Greg - I am sure you meant that tongue in cheek.
We all know that SB is a bully, we also know that NCM shareholders currently are not a happy bunch and are feeling the crunch! SB will do whatever it takes to sweep GGP to one side if needs be to obtain the prize that is Hav.
He will take no prisoners.
We're @ 10p now (give or take), how many PI's would sell up if NCM offered 20p to each of us?

Tomorrow, the last 6 months worth of driling completes (40km).
July to Dec 2022 inc : a load of results and reports will be pouring in, culminating in the DFS.[See my RoadMap in 'sticky' section]. viewtopic.php?t=139

What I am saying is that somewhere in amongst all of this torrent of news - SB has to declare his motives, vis a vie: the 5%.
OR DOES HE?
Why not drag it out until year end (possibly a little earlier) and bid for GGP@Hav?
After all - he has to tell his shareholders in December that he will be going underground mining which requires mega bucks. Does he REALLY want GGP along for the ride?

Conversely, there is a little voice in his head telling him: bid 20p now Sandeep, or else bid 50p by DFS time???

Fun and Games?

Z

[paddygall]

I can't speak for anybody else zoros but 20p ain't gonna cut it when it comes to my votes - not even in the ballpark.

Best - Paddy

[zoros]

Afternoon Paddy,
That's a taken! But with so much going on in the world and worse still - in this country, come autumn when the savings (post covid) run dry and energy prices go exponential, fuel prices, food prices blah blah.......
20p for some - might just be the relief valve they need.

I am sure - everyone (yeah right) has their exit strategy fine tuned!

Stay sharp.
Z

[Bottle Rocket - Liam]

- Before this descends into an "I won't sell for" thread because I am sure you all want to chip in to Paddy's comment.

- I will remind everyone to read the Subject before posting. - I am being proactive on "Hi-Jacked Threads". (being the meanie that I am)

[DipSard]

- Before this descends into an "I won't sell for" thread because I am sure you all want to chip in to Paddy's comment.

- I will remind everyone to read the Subject before posting. - I am being proactive on "Hi-Jacked Threads". (being the meanie that I am)

Absolutely - we're dissecting the process, potential scenario's once concluded and gaining clarification from GGP of the Option Exercise in this thread - not potential takeovers or bids

[Rotherby]

The question in my mind is if price determination is definitely about Valuation A (NCM) or B (GGP) becoming the price tag? Or if their input will be used to help guide further negotiations and whether arbitration in the proper sense can be entered if the valuer for instance picks Valuation B from GGP as the price, will NCM then be able to commence arbitration or must they abide by the decision?

The valuers task as far as we know is find a FMV for the 5% and then compare to the two values A or B. All agreements can be changed if the parties to the agreement want that, reading the post I do think the remit to the independent valuer may not be a simple as pick A or B, it may be that as part of the task of evaluating the options the valuer can advise both sides and help bring a quicker resolution.

Lets hope so.

[Goldhunter]

When do you think this will be resolved, we're 4 months overdue already. I know its important to the company but its really being dragged out!

[JerryS]

My guess is by mid July

[Habari65]

Zoros, I’m sure no anyone is aware what figures…if any…are going around in Sandeeps head..except SD himself…but as we’re pretending to be in Sandeeps head and assuming he doesn’t lie to himself and knowing the value of Hav I like to believe he’s more likely thinking 50p now or 80p after DFS..I mean if we’re being realistic that would be the thought going through his mind knowing what he knows about Hav. All conjecture of course.

[Bottle Rocket - Liam]

When do you think this will be resolved, we're 4 months overdue already. I know its important to the company but its really being dragged out!

Originally were they thinking it was going to be a quick process? I wonder if when they started looking at it properly, and they broke it down, There was much more to it than first realised. (No one has ever really done it before have they?) Start to throw new MRE's into it, and many other (multifaceted) things, we do not know about happening behind the scenes, it's easy to understand why it has taken so long.

I am confident Shaun and the team are doing things diligently, and without dragging their hills.

Liam

[Academy]

Seems quite simple and clear to me. The independent valuer will review both sides submissions and then determine which to choose.

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What is somewhat confusing and why I sent an email for clarification to GGP IR is that we understand the valuations are being reviewed - "..... before making any price determination.  No arbitrator is involved in this process."

So why I sent an email is to hopefully understand:

1/ Is the Valuer making the price determination themselves or just reviewing submissions prior to going into arbitration?
2/ If it is the Valuer who determines which valuation is closer to FMV, can the 'loser' appeal and we enter arbitration?
3/ Or is this more informal as Strudel's suggestion in prior post and both party's could then use the valuers recommendations (perhaps a benchmark range) to try and come to a negotiated agreement not requiring arbitration?

This was the email that was shared on Telegram:

The process around the 5% is ongoing with a price determination outcome as the next milestone.
 
An independent valuer has been jointly appointed to review each parties submissions before making any price determination.  No arbitrator is involved in this process.
 
We will announce the outcome of the price determination milestone when that is known.
 

[Rotherby]

I am confident Shaun and the team are doing things diligently, and without dragging their hills.

Liam

I think that is for sure, a lot of getting at SD, but cannot see he has done any thing to deserve it.

What I do see is a company going forward, while all around share prices do not reflect the work on-going in this sector.

I for one do not look for quick profit my plans are for 2025 and later.

Keep the faith. GLA

[jecsggp]

This is really just to get things sorted in my head....Can someone explain what the 'value' of Havieron is when we don't yet know the 'extent'.

When they made the original contract did they think they would know the size/extent by now? Is that caveated anwhere in the original agreement?

What is the 5% supposed to be of? Gold in the ground (a 'real' MRE); estimated value of processed gold on the market (and all points between)?

I'm not surprised it is taking so long. Newcrest seem to think it relates to the value of their 'starter mine'. I guess Greatland (rightly) don't agree.

Dragging the heels about the 5% helps no-one really. Just make the decision

[DipSard]

This is really just to get things sorted in my head....Can someone explain what the 'value' of Havieron is when we don't yet know the 'extent'.

When they made the original contract did they think they would know the size/extent by now? Is that caveated anwhere in the original agreement?

What is the 5% supposed to be of? Gold in the ground (a 'real' MRE); estimated value of processed gold on the market (and all points between)?

I'm not surprised it is taking so long. Newcrest seem to think it relates to the value of their 'starter mine'. I guess Greatland (rightly) don't agree.

Dragging the heels about the 5% helps no-one really. Just make the decision

The Option Exercise is being conducted on the value of 5% of the entire Havieron mining lease area as of 15/12/21 so drill data etc. can be used up to this cut-off point for calculations and the independent GGP MRE was using data within period, Valmin code allows for forward assumptions too though.

You can read up on the code and and get familiar with how a valuation is structured using links below:

Below are links to assist those wishing to learn more about the Valmin Code which is more a guiding set of principles akin to the JORC Code rather than a strict format for valuations.

https://www.youtube.com/watch?v=Odc0Y0ppI1E
- A YouTube presentation with great information on both the Code and application of it, worth watching the full hour.

https://www.csaglobal.com/wp-content/up ... r_2016.pdf
- Link to download some presentation slides that are a good reference to get an overview of the Valmin Code and a bit on the 'Reasonable Test' towards the end, those particular slides are weighted towards one, not all three of the valuation approaches contained within the Valmin Code.

https://www.mediafire.com/folder/uv8jau ... +Valuation
- Here are some files I have collated, you can download the Valmin Code and related docs referred to in the guidance material plus a Valuation example conducted by SRK. The Kharmagtai valuation was commissioned and completed within two months.
- The folder also contains both a summary and a synopsis I have pulled together from the SRK document to understand how the code was applied in this instance by SRK.
- The overall valuation is near 100 pages long, so quite a lengthy read and the Summary and Synopsis can be used to understand the key information and methodology used as oppose to reading the entire valuation.

[Rotherby]

Dragging the heels about the 5% helps no-one really. Just make the decision

Not sure I can agree with that statement!!

We all know that easy things can happen quickly, but I think the questions asked in the post are such that we do not know the answers.

What we do know in reality due to the size of the discovery and the agreement, it looks like the point of time set for the 5% is sooner than we would have liked, in HINDSIGHT.

It is not easy and we have to have trust in out Board of Directors, to achieve the best they can, they do seem to have a hard task, due to the agreement with Newcrest.

I do not expect Newcrest to do anything other than to get the best deal overall for their shareholders, they have to assess the value of Greatland Gold to them, so I do not post things about them.

Given this I see that we have a lot to offer over and above the 5%, in the longer term, and as part of the negotiation's as with the deal that set up the loan and the Juri JV, deals can change, it could be that this is what is going on in the background.

I would like to see less short termism, you should not be investing in companies like Greatland Gold if you want instant profit.

If Newcrest had not put a silly date on their announcement we would all expect a decision within the year from December 2021, nearer to December 2022 than spring of 2022.

Sit back 'enjoy' the roller coaster and if you do not need to sell you like me have lost no money, and maybe topped up a little/lot on the way.

GLA