I’m going to submit this for the fun of writing something as I love writing but bowing out of the competition as I am in a support position in the telegram groups, would be great to see some quieter members of the community post a submission and have some fun with this too
Greatland dares to be great…
Where other explorers favour divestment, Greatland has chosen to retain 30% (perhaps 25% soon) in their W.Australian based Gold Copper discovery Havieron, scheduled for production in early 2024.
Various broker estimates (Hannam, Sprott, Berenberg, Canaccord) pitch Havieron’s potential resource at >10Moz currently, indicating decades of production with an initial SLOS starter mine focused on the high-grade SE Crescent commencing with >3mtpa output expected in a FS due by year-end and outlined in Greatland’s MRE being augmented in the years ahead by estimates varying from 6-9mtpa bulk mining rates from other zones of this compact but increasingly high-grade ore body.
Interestingly there has been confirmation of nickel being present in the ore body by Greatland’s MD Shaun Day although whether of academic interest due to its head scratching presence in a Gold Copper ore body or in commercial quantities is to be determined. Whether the hesitation is through JV confidentially or lack of understanding and further drilling required from underground is unclear, but nonetheless adds a fascinating twist to an already unique discovery.
Exploration and infill drilling continue to deliver with CAGR since the maiden resource in Dec 2020 of 43%, Shaun describes it as a high-quality ore body that continues to expand. Conversion of the resource into reserves currently stands at 86% and ounces per vertical metres are also exceptional at over 8000m in the top half of the ore body in such a compact footprint and Shaun recently described a clear correlation between ounces discovered and delineated and meters drilled as exploration continues.
He also stated that as they drill the northwest pod, it appears to be linking up with the northern breccia to create a good grade corridor coming in and touching right up to the SE Crescent and drilling in the south of the eastern breccia has had some of the highest hits in the ore body with grades more reminiscent of the SE Crescent with the team excited to have another area that appears to be very high grade.
Shaun also recently speculated on a potential 20Moz resource according to ‘relatively basic volumetric calculations’ and Greatland’s recent JORC MRE with a cut off from 5th December 2021 outlined 6.5Moz Gold Equivalent, including over 218,000 tons of copper and reserves of 3Moz @ 3.7 grams.
Amazingly, production is scheduled barely 4 years after the astounding HAD005 discovery hole and being jointly developed with Newcrest under a JV, with the benefit of utilising the infrastructure and replacing the rapidly diminishing ore from their Telfer mine just 45km away, thereby retaining 1200 staff and avoiding mothballing this grand old dame of Australian mining.
Such synergy, a conflux of perfect alignment offered by the death of one mine and the birth of another akin to a reincarnation, you would think both Greatland and Newcrest have been in the throes of true love?
Especially with potential for a ‘family’ of assets through a further JURI JV and potential partnership with Greatland’s 100% owned Scallywag tenement, all in the Paterson and following the NW strike from Havieron with compelling geological interpretation opening up possibilities for other mineralised breccia pipes both inside and outside the mining lease.
But alas… there have been tensions and high drama through a perhaps ill-judged option exercise in the JVA that allows Newcrest an additional 5% of the mining lease at FMV. Perhaps Intentions were that it could assist Greatland in paying off the existing $50m loan held through Newcrest to cover costs to FS.
Shaun Day has been at pains to explain that achieving FMV seemed improbable given the prescriptive measures basing valuations off the conservative Newcrest PFS modelled on a fraction of the SE Crescent, itself a fraction of the ore body - along with conservative price decks. And his message has been adamant, the exercise set an option price not FMV for 5% of the mining lease.
Yet despite this and a binary process whereby an independent valuer selected one valuation over another due to inability to negotiate valuations 20% within each other, Greatland were able to utilise their own MRE with the data cut-off within the period utilised in the exercise to update resources by 53%, reserves by 50%, include an updated mine plan which helped increase value over five-fold by adding >$1bn USD just 64 days after the PFS from $228m to $1.2bn and helped achieve a price determination of $60m.
If Newcrest bite, the existing loan is covered and funding development to production eased without a preferential lender in place, although Shaun Day has stated terms sheets to hand with Tier 1 banks utilising just the PFS.
If not? Then you could argue the 5% retained by Havieron could provide returns well above $60m in the years ahead.
Nonetheless Diggers and Dealers saw both companies professing mutual respect and commitment to the project, perhaps Cupid’s arrow has again found its mark?
The company also has compelling opportunities outside the Paterson such as Ernest Giles covering a sequence of greenstone rocks typical of large W.Australian gold camps such as Kalgoorlie and Gold, Cobalt and Nickel opportunities at Bromus and Panorama.
A Tier 1 mine in a Tier 1 Jurisdiction with a Tier 1 partner, existing infrastructure, JV alignment returning, other compelling tenements within the portfolio, Havieron production looming in potentially the second lowest cost and geopolitically most investable gold company globally, macro outlooks promising… recommendation is a BUY.
Disclaimer: This article does not contain financial advice; the author holds shares in GGP.
