"Telfer can process down to 0.3g/t" says Shaun

[Hydrogen]

Last week was an astonishing week for GGP on many levels...

GGP has, I estimate, some $30-40m cash in hand. They raised $16m in November. They had ~$8m cash. They just sold the 5% for $60m. Let's assume they spent $35-40m out of the $50m loan, so when they repay that, they've got $20-25m plus $24 minus their opex costs since. I'll put opex at $5m... so if i'm correct, that leaves roughly $40-45m cash we only need to borrow ~$35m to get into production.

The shorts are obviously now screwed... and have some 60-70m to buy back. They will be reducing, every session, whilst simultaneously fighting like bandits, to prevent an uncontrolled breakout...

BUT there was also another tiny, but very interesting fact, that made its way to me.

"Telfer can process down to 0.3g/t..." I wasn't aware of this but immediately caught my attention.

IN the world of gold mining, "marginal ounces" refers to gold ore that's sub economic at the prevailing gold price - $1500-$1800 gold ... but suddenly becomes highly economic at a higher gold price.

This is particularly important in very large deposits, like Havieron. Because the very large volumes of marginal grade around the principal ore body(s) as delineated - Eastern Breccia v Northern Breccia + NW Pod v High grade backbone - can leverage these marginal ounces in proximity to the existing infrastructure.

THE news is that Telfer - the existing infrastructure - can process down to 0.3g/t. The big pods of what be considered 'economic or'e would explode in size - maybe 20% or 30% more ... ?? I'm not certain but its significant.

And because havieron is so massive, but sit on a relatively compact footprint - it's spread out over 800m strike, not 5km - the effect of this leverage is hugely important.

Telfer is not limited by grade.

THe leverage to very large volumes of these 'marginal ounces' at Havieron, is massive IMO.

It could be argued that GGP's SP should get explosive if gold goes >$2100 due to this leverage.

But DYOR on marginal ounces.

[Bamps21]

Hi Hydro
I had in my mind that the gold price at the moment must be putting a strain on Telfer continuing.
The last report had the AISC falling but it had been nearly $1400.
The low copper price may be adding to the pressure
$350 an ounce will barely keep the lights on.
It may spur Newcrest to accelerate Havieron.

[Bamps21]

The AISC was falling to December but now rising $1429 that’s huge
NCM must be very nervous of mothballing Telfer

[Rotherby]

I think hindsight a wonderful thing.

I am relatively late to the party, 24months.

At the time of the start of the JV did the GGP board fully understood the position that Newcrest were in with Telfer and the costs involved should they not obtain new ore to process.

All on this does highlight the real bargain that they have got through the JV, 70/75% seemingly* for nothing if you take the decommissioning costs into account, although the site will have to be decommissioned at some point in time, but it will earn this from its extended life.

I do ask the question could at the time we have got a better deal especially with the 5%? I am sure other JV's in the industry will be very careful entering into this restrictive type of deal, with any partner not just NCM.

I think as others seem to that Shaun has given the rules he had to play by down a good job, lets hope he can change GGP into the company he things he can, then the 5% deal may be seen as good having put us on the right path to a substantial dividend paying company, not that I look for dividends capital growth is what I look for but here I may have both.

(*not sure of the exact amount but Havieron may be in profit for NCM before any ore is processed.)