GGP Financial Modelling Spreadsheet

[lebugue-addick]

https://www.mediafire.com/file/mqul32x8 ... .xlsx/file

I mentioned on the Telegram group chat that I have prepared a GGP financial modelling spreadsheet and some said they would be interested to see it.

Spreadsheets 1 and 2 (2Mtpa)

The starting point was that I was curious to find out why the GGP and Newcrest NPV calculations at PFS stage (RNS 12 October) differed so greatly. You will recall that the Newcrest valuation was $228m (payback in 4 years) and Greatland's $508m (payback in 3 years). It is clear that most of the parameters used were the same but differences in the price of gold, copper and the exchange rate give material differing NPVs. Not a surprise that Newcrest use very cautious prices though the pullback in the price of copper somewhat justifies their selection. Gold prices on the other hand have been relatively stable - currently around $1,737/oz - and both companies have used less than the current rate. This is prudent given this was modelling a 9 year mine life with a 2Mtpa ore processing.

Spreadsheets 3 and 4 (3Mtpa)

I then went on to see what a 9 year mine life would like at 3 Mtpa which is what the 2 companies are discussing. Again the results are favourable with a 3 and a bit year payback for Newcrest and 3 years for GGP, again using the 12 October RNS data.

Spreadsheets 5 and 6 (3 March RNS)

Shaun's bombshell RNS of 3 March as we all know increased the MRE to 6.5m oz equivalent which included 2.9m oz of Probable reserve. The updated ore reserve covers a 3 Mtpa underground SLOS operation with an expected mine life of 10 years. Using the production profile in Table 3 of the 3 March RNS and the gold and copper grades supplied I wanted to establish the extent of the NPV for this bigger operation as GGP didn't give an exact figure, only that it produced a positive NPV. Indeed it does - checkout the spreadsheet. It is not confirmed by GGP by the way as this was purely done for my own benefit.

It is also worth noting that the calculation only covers 2.9m oz which is recorded as the Probable reserve, and does not cover the remaining 3.6m oz though clearly, based on the quality of Havieron to date, the conversion factor from Inferred to Indicated and then to Probable is likely to be extremely high - possibly as high as the 86% to date.


You are welcome to play around with the spreadsheet using parameters of your choice. I would be intrigued to know whether Shaun could give us an updated NPV figure for the 6.5m oz even allowing for the fact that Inferred resources would carry a lower probability at this stage. Maybe I will send Greatland the spreadsheet after a period of reflection.

[Bancal]

League,
Excellent work on the spreadsheet and I've got a question. In the worksheet "6. MRE 3 March using updated GG" you have in row 63 the cumulative cash flow and it looks fine until 2032 and then it decreases but how can cumulative cash flow decrease? The Cumulative Pre-Tax Cash Flow
looks OK. Unfortunately I can't figure out how to insert a picture illustrating my question. Cell R63 should read $1271M and not $34M. The cumulative free cash flow has no dependents so the error doesn't affect the NP calcs.
Regards

[lebugue-addick]

Hi Bancal - yes I noticed this after posting the spreadsheet. I t was simply that the formula in the last 2 cells didn't read across correctly when I built in the extra 2 years for life of mine for the 3 March MRE and so I have now amended it. Thanks for noticing too. It has no effect on the overall NPV fortunately.

Did you look at the Sprott analysis by any chance - what did you make of the 5%, 7% and 9% discount factors applied and the effect on the SP? Surely 9% is way off beam over the whole life of mine.

I would interested to hear what you think of their modelling.

The gold price and copper price have gone against GGP in the last couple of months since the 3 March MRE update but consensus forecasts for gold are generally quite a way north of today's figures. Similarly for copper given the explosion in EV.

I found the Sprott figures quite conservative in many ways and will post further later.

Cheers l-a

[droverman]

Nice work LA, can be added to as the mine progresses. Much appreciated DM

[Bottle Rocket - Liam]

wonder what it looks like with an NPV of 1.2BN!