Notes from GGPHelp Interview with Liam - Part 1 - 25 May 2022

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Notes from GGPHelp Interview with Liam - Part 1 - 25 May 2022

Interview: https://www.youtube.com/watch?v=Ja7ERAlsxQg

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* GGPHelp TV has a guest, and it's a guest that we've wanted to talk too for a very, very long time. I'm pleased to say that we have been joined today by Shaun Day, Managing Director of Greatland, Shaun - it's an amazing opportunity to have you here and I can't thank you enough for this, welcome to the show.
- Hi, Liam, firstly, thanks for having me. Been looking forward to the discussion.

* Your entire career has been related to mining. Is that something that happened or did you leave school knowing it was something you wanted to do.
- In terms of my career, growing up and being educated here in Perth, Western Australia is a huge mining sector. So, although I started off in consulting and banking, really a lot of the work that you did was related to mining clients and my first move across to resources was joining the team at Straits Resources and I got to know them through that work.
- They had a fantastic reputation as a team and that really was my entry into mining and I enjoyed it so much that at one stage I think I probably didn't necessarily know I'd be in mining for the rest of my career, but I think it's such a wonderful set up in terms of you're doing something very tangible, it's a lovely collegial atmosphere and it's been an exciting opportunity for me. So, it's something I kind of went in because the opportunity arose with a client, but that really started just because of the enjoyment and the fulfilment I've had individually or as a person through the sector.

* I've been involved with Greatland now for probably the last 18 months, two years, and over that time I've really become a massive geek on geology but do you find yourself looking at rocks and getting attracted to the geological side of it at all?
- Yeah, I look at it particularly here at Havieron, it's a really interesting ore body, it continues to grow rapidly. Look at our last ten months of drilling has delivered a 50% increase in resource, 50% increase in reserves, that whole Eastern Breccia is potentially really significant. You then got the high-grade bits down on that southern extension. You've got the gap zone sitting in between there which we're going to start drilling now that the geologists are all up and about.
- We see some other kind of base metals in that area as we get as we get towards it, into that massive sulphide zone that' sits in and around that Eastern Breccia, it's a beautiful ore body.
- So yeah, look, you can't help but get pulled into it and it's six and a half million ounces already. It's only been discovered for about three years. The growth rate on this ore body will continue to be very significant.
- So, it's a world class ore body. And its fun working on world class ore bodies and the calibre of people we've been able to attract to GGP because of the geology and setting up something new and exciting, I think reflects that in what is a difficult market to get good people we've found tremendous people wanting to come and join us.

*Which was going to lead into my next question, what attracted you to this particular ore body and company? But I think you've just answered that right there, would you agree?
- Definitely. Look, you don't get to work on these kind of multi-decade Tier one assets for all of your career so when you spot one, you do want to get involved. And I must say, my first week at Greatland, I spent most of that with the resource geology and just going through that and I did a lot of due diligence before joining but it was actually better than I expected.
- So that certainly coming in here I knew it was good, but it's been eye opening actually being behind the scenes and seeing the full extent of the opportunities.

 
* Am I right in saying that when you look at the magnetic anomalies and or the Geo stuff, that some of this ore body, you didn't even know it was there until you got down to it with the drills?
- Well, exactly right. A great example of that is this Eastern Breccia that's sitting right up next to the ore body.
- That was discovered and I don’t want to underplay the story but the geologist went down to turn off the drill and saw that they were still going through breccia, breccia that had material, interesting breccia, which is what we look for. And he said, well, keep that rig spinning. I think some 200 meters later, we discovered the Eastern Breccia. So that's extraordinary.
- And you know, you're seeing what is a very sizable system - the size of it, the depth of it means there can still be really significant discoveries.
- And also on that mining lease, or our extension up into Scallywag, we're really excited. It's rare you find an ore body of this size without, you know, peripheral bodies to augment it. So, whether that's another Havieron or half Havieron, there's no better place to look for copper and gold than where it's already been.

* Absolutely. And that's just what is so exciting when you follow that thrust and it goes right up, goes north and then comes back down through Scallywag, the Geo’s in your Geo department must be just crunching at the bit to get the drills into that on each side of that to find out what's really down there?
- Yeah, very much so. And we're a little bit spoiled bt the targets. It's very rewarding drilling Havieron itself and then understanding this Eastern Breccia, that high grade component in the Eastern Breccia, that gap zone continuing to punch into the southeast gradient. All of that is really rewarding. It's always nice when you when you pull out these big intercepts but along the structure, we really want to understand what's on the mining lease and we're starting to turn to that now with Newcrest and we've got some really exciting targets
- Now, time will tell but certainly the size of the prize is significant. And then as we go up into our 100% owned Scallywag, we've got dozens of mag and gravity anomalies there that we want to drill.
- I always say we do try to sequence them but it's very hard really to be able to sequence them in exactly the right order otherwise geology would be easy.
- We have some that look on a map better than Havieron, others with a lower signature. But I think it's very hard to know whether that high signature or the low signature one will be the one that ultimately delivers ore because there's so many variables that can go into how that signature is reflected in the….

* Especially when you've got something like the Eastern Breccia that's just producing so many good results, so many good results with no signature in the first place. It just doesn't help at all, does it? So, when you visited us over here in London, one of the phrases that you mentioned a lot through that trip was the compound average growth rate (CAGR). Could you elaborate what you mean on this, please, in relation to Greatland?
- Well, it's the growth per annum of, and I'm really talking about the fundamental value of the ore body. So, as you continue to add ounces, as you continue to incorporate those into the life of mine plan (LOM), you're then able to get these valuations and you can augment that valuation with material, with valuation on unclassified material that doesn't yet sit in the ore body.
- But fundamentally you slowly work up this understanding of fundamental value. And when you have an ore body that's growing at 50% per annum.
- That's even just the Reserve case, which is all new material coming into the ore body and that's all leveraging the same upfront CAPEX. So, there's still only one haul road, still only one decline, one camp so the capital efficiency as you bring in additional ounces just gets better and better.
- We've got these cash costs sitting around $645 an ounce USD against a price circa $1850. You're making well in excess of $1,000 an ounce. So, you bring these ounces in, no additional CAPEX, it just falls to the bottom line, it just falls to cash generation and that drives up this Net Present Value (NPV) very quickly.
- So, what I'm kind of trying to explain there with this CAGR, if you look at where we started with this ore body and you look at the various price discovery points, you just see this phenomenal growth rate and that's exactly what you would expect with a world class ore body.
- And I think you’re seeing that, you're going to continue to see it and based on the continued exploration success and the targets that we have, I think you don't need a lot of imagination to see that continuing for years to come and that's when you start getting these extraordinary values which reflect the potential to have a top five Australian gold mine for decades, this is a rare opportunity.

* Absolutely. Now, with that comes the potential opportunity for some of the larger miners that have got some massive skyscrapers there in Perth, might want a piece of this pie. With our share price dwindling over the recent times do you think that a takeover is something that we should look at, something that could happen to us and us not get to that that size and scale that we want to?
- Well, let me answer that in a couple of ways. Look, firstly, it's incredibly frustrating from my perspective to see the share price not continue to move up, se continue to deliver outstanding results, the asset is clearly growing in size
- Now markets ebb and flow, and we appreciate that. But what really concerns me and I think you hit the nail on the head, is there comes a point in time where your value doesn't represent the size of the prize and you become more susceptible to bids
- Now, we don't have any insights on what the future might bring in that regard, but it's certainly gone to something that I spend a lot of our time thinking about and making sure we're prepared because, look, potentially there's nothing wrong with being taken over at some point in the cycle. But really, I think we'd all be incredibly forlorn if we sold this at a fraction of its full value.
- And that, I think, is what I see the job of management and ultimately the BOD isn’t to determine that whether we're taken over or not, but ultimately is to make sure that if an event, if a change of control event occurs, it’s centred around getting full value for our asset. And clearly right now, given the growth rate and the relative decline in our share price, that does concern.
- And I think there's asymmetrical risk in our share price right now. On one hand, you buy the stock, you might get a takeover premium and well, that's nice. The alternative is you deliver the full value of Havieron and I think that has a much higher uncapped potential value. So, I think when I talk to some of the more sophisticated shareholders now, that asymmetrical risk in the share price is attractive.
- But to be open with you Liam I don’t want to keep that in our share price, I want to kind of pull out of this current kind of performance and it is to some extent a function, I think, of this uncertainty around the 5%.
- I think that is a process that we need to resolve at some point and would like to resolve. And I think once we have that, we can start moving through the gears and get through this transition period. And it has been and I’ve said in quite a few interviews, it's always been this kind of ballpark 18 months transition period. We're getting to the close of that. But at the end of this transition period, I want to remove these uncertainty events and I want to be fully funded.
- And I think that gives us a platform really then where people just can concentrate on this short pathway to free cash flow (FCF) and continued growth in the asset and remember, when we talk about this asset, we're still not even really talking up that Bulk Mine, which is huge as you know, it's doubling the asset
- Now, it's one thing to think about the value of that SE Crescent, which is formidable, but when you start talking about adding a bulk mine on top of that, you know, the size of this prize is substantial.

* Which is just amazing. I mean there's been talk about this kind of thing on the boards and there's a compelling argument given the quality of the team that you've built around you that there's so much more to give and some obviously may have walked away from a safe job, I guess, to be part of the Greatland story. Obviously hypothetical, but would Greatland take the risk to allow Havieron to be sold to release the funds to make you a major explorer across the Australian desert with the fact that there's 20 different tenements out there all with Greatland’s name on, is that a possibility at all?
- Well look I think this really comes back to the takeover question. I think you've always got to be pragmatic, if a strong value offer was made, we would consider it seriously
- I think let me emphasize two points here. I think I'd like to see significant additional value in the asset to where it's currently priced
- I think I'd also like to unlock the continued potential of this asset, when you're still growing at 50% every ten months, it's hard to put that line in the sand and then the third part is we don't necessarily yeah, my preference is we don't do us a swap. This is an amazing asset, I think I've already spoken to its growth
- What an amazing platform to grow Greatland into a multi asset, multi-billion dollar entity
- So that's what I'd like to do. But I'm sure my shareholders are not allergic to making money at some point and you have to say OK, well that's compelling but I think how do we get a compelling bid for it? - We don't think about short term, we think about medium to long term. We grow the asset; we demonstrate its value to where it's absolutely clear for everyone to understand the potential that we see in Havieron.
- So that's our plan, to give ourselves the funding and the time to deliver at full value for our shareholders. Because I think what I want to avoid is us looking back and going, gosh, we held that globally significant asset. Gosh, I wish we had taken that to its conclusion.

* Yeah, that's my thoughts as well as a shareholder personally, I'm happy to be here for the long haul and retire off of Havieron’s and Ernest Giles and all the other tenements that we've got as well.
- And, and sorry, I probably didn't fully answer your question. If we were to sell, I don't think we would keep all the money and become the world's biggest explorer. I think we would want to return a lot of that to shareholders.
- Now, there'd be a balance. I think we have a fantastic exploration portfolio; we continue to look at sensible ways to expand that and we're not afraid to let go some of the assets we think have less scale and opportunity in our portfolio,
- So, we’re actively looking at some of these opportunities, which I think add a huge amount of option value to our portfolio. But if we were to sell Havieron, I think either that would be the sale of shares or the return of capital to shareholders would be a significant part of it.

* Well that makes sense. Thank you very much for taking the time to answer that one and when you're not thinking about Greatland, well what do you do to switch off and wind down?
- Oh look, I've got a wife and three kids so that certainly keeps me busy in the time when I'm not here in the office. But look, I'm everything from a junior rugby coach to chauffeur in chief and I really enjoy those elements. But yeah, we've got great kids and enjoy that tremendously.
- But, you know, look, I enjoy sports. I enjoy running. There's a number of things I like to do but I think work and family and friends as well , certainly not as time rich as you are pre kids!

* Looking at the office now, how many people have you got in the Greatland office?
- So, we've got about 15 in the office and then site crews as well. So, it's look, it's a relatively small team but I think what we now have in place is an understanding of geology, resource geology, engineering, processing, legal and financing
- I think we now have the full suite of skill sets that we need to be a good owner and to be able to understand and articulate the value of Havieron and that's made us much more capable of going through this 5% process or going through our funding process because we now have those full suite of teams
- I think that the legacy we inherited, which was I an absolute top-drawer group of geologists, we've augmented that with additional skills to give us that more holistic understanding. It was great to understand the geology of Havieron previously, but it is a heck of a lot better when you can also understand the mind planning and the processing and the whole pathway to free cash flow generation
- And that means we can deliver value for our shareholders because we understand the full value suite.

* It is much easier when you understand something isn't it, to be able to then talk about it and make a plan and do things, that totally makes sense.
- And this is all that transition, part of the transition is getting that the full team in place to understand the asset comprehensively and that builds the trust and the respect with Newcrest as well. So, I think you've seen a sea change in that relationship as well.
- We really value the relationship. Yeah, we now have five technical meetings a month where previously that didn't happen. It's all about the engagement, you know we had a couple of Newcrest guys in yesterday, some more today where there is this respect, camaraderie and working together
- Newcrest is a formidable group, we're lucky to have them as joint venture partners, but it's lovely for us to be able to augment their capacity as well. So yeah, I think there's so many positives and that was really the first thing I tried to do when I came here was to build the team, invest in the people.

* Which leads me nicely to my next question. We understand that there's a monthly cookout at Greatland HQ. Who do you look forward to cooking the most? And the follow up there is what is their specialty?!
- Look, there's a little bit of a rivalry about which we’ll go into to be able to impart that. I think one of the geologists Roger, might have us all covered so far in the cooking stakes. But look, it's good and we enjoy it. And I think you know; I think it's everything from steak to sausages and lamb and anything else someone can put on a barbecue
- But yeah, it's a nice social element to it. And, and it's also a bit of investment in getting staff communicating. And I think we do that well in a relatively small team
- But it's, it's actually nice to spend that time together. And the chats you have in the cross specialization you have across the teams when you are just talking over a……...

* So, the most controversial question anybody is ever going to ask now is …… gas or coal?!
- Sorry, I know we're going into power generation or carbon or something, but I think you’ll find in Australia that pretty much all the barbecues are gas now, so that's a lot easier to have in your office if its gas powered.

*Absolutely. So, talking about the energies and renewables, what's being proposed regarding the projects to achieve the 35% renewable energy at Havieron? Will it be local renewables and battery storage renewables itself are connected to Havieron or a power purchase agreement or what sort of ideas have you had in relation to that 35%?
- Yeah. Look I think again one of the great pieces of alignment that we have with Newcrest is, is really well what are we trying to do? We're trying to get Havieron established quickly and efficiently
- Yeah, we're driving down to the SE Crescent, pulling out the high-grade ore, putting that through the mill and then we can reinvest the cash flows
- And one of the areas both companies really want to do with that free cash flow generation is reinvest in Havieron, both in terms of understanding it’s size and doing the bulk mine and other elements to make it bigger and more valuable, but also in the sustainability of it. And you saw us come out with our inaugural sustainability report
- That's again part of the transition to becoming a more mature company, giving us a broader appeal both to debt and equity capital providers. But as part of doing that, we say we're connected well, we will be connected to Havieron by power cable, that will allow you to place, say, a solar generation plant potentially probably close to the Telfer and then bring it in by wire into Havieron or perhaps you split it and get your local power generation closer to Havieron and then have a separate facility up at Telfer
- But I think that's certainly something both companies are committed to and we're really moving forward on that and there's a lot of work and studies being done. And then you start opening it up as to how you how you power your fleet and things like that as well
- So I think there's a lot to be done and even moving to an overland conveyor, which again is a CAPEX investment but reduces your OPEX and increases your annual profit and ultimately moves us to kind of a zero, not just a 35% reduction but a zero-carbon footprint
- So, we think it's achievable. And again, where are these things best achieved, where we've got a long mine life which means these CAPEX investments can be justified because whether they pay themselves back over three years or 23 years, if you've got a long enough mine life – they work.

* Because at the moment the mine life is only 9 to 11 years on paper, isn't it? But in reality, it's much, much, much longer.
- Well, we’ve already increased that with the updated reserve on the 1st of March
- We've already kind of increased that by 50% but again, once you start dialling in the bulk mine, once you start pursuing that SE Crescent at depth and laterally you just keep adding mine life
- It reminds me a little bit of an infrastructure asset in that once you build that infrastructure every incremental dollar, customer or ounce that you add to it, a lot of that falls to the bottom line.

* Which is just fantastic. Do you think once these things once Havieron is up and running that will shareholder be able to visit and be able to physically see what they're invested in?
- OK, it's always a little bit tough around your health and safety type issues, but what you see in a lot of sites is that they'll have a viewing platform. So, it might not necessarily be coming underground or something, but certainly a lot of sites you can go to in Australia will have a viewing platform and the opportunity to see some element
- So that's, that's something we might do. I'm also, I know it's something that's appeared on social media a few people have mentioned and I think a group called Callidus in Australia has just done it, that's from that first gold pour doing some commemorative kind of gold coins. I think they're pretty special and I’ll certainly be lining up for one
- So, I think there are things we can do to engage with shareholders and potentially that one of them but everything is seen through a prism of health and safety, which is our number one priority to get everyone home safely.

* And I suppose in some regards a lot of Western Australians would be sort of thinking why would these people want to visit 50 degrees worth a desert? Like it's not very nice out there, it's inhospitable, at the best of times.
- Yeah, if anyone wants to follow the temperatures in Marble Bar, which is kind of the closest town that is, that is regularly on the nightly weather report as the hottest place in Australia. So it is, it's a warm part and dry part. Well look, it has its own beauty, but it's certainly yeah, it's certainly not without its challenges as well. But yeah, that's part of the charm of opportunity.

* Just a random question has popped into my head and something we talk a lot about on our chat group but hasn't really come up. Have you got any concerns over this Night Parrot and the signs that have been had between Havieron and Telfer, it’s come up in a report and it's obviously a protected species, but from your point of view, is it anything we should be concerned about?
- We're an underground mine, so we have a very small kind of footprint, all of which has already been established
- I think one of the great benefits you've got of Newcrest is that their best in class and I like to think Greatland is as well but around these Environmental protection and community and social engagement. So, look I think you also find what we like to think, we actually improve the environment where we operate.
- You know that feral cats are a huge concern up there, upgrading the environment around those things. You always want more bilbies more of those things and creating offsets where we create habitat for them to actually create positive outcomes for that
- And I don't think that's unique to Havieron. I think you've seen that across the sector over 10, 20 years but building really for 40 years. And I think in the same way safety is just an unrelenting issue for a mining company, so is the environment and so are community issues
- I think one of the joys of working in the sector is just that relentless pursuit of best practice, we really understand our social license to operate is important and you see the amount of resources that go into it just increases every year
- I think again I referenced our sustainability report as well, it's something that we actually value as one of our core values. So, I think you should see that as a positive and certainly that the approvals we already have in place reflect that you're not seeing a lot of that kind of activity in that area
- It's an incredibly dry part of the world. My understanding is unless there's a rain event, you don't even see camels up there, so that just tells you how dry this is. Again, it's a beautiful part of the world, but it's not abundant with wildlife.
 
* That makes sense. And the indigenous people to the lands up there, I just wondered, will Greatland be investing in the communities up there as Newcrest do. Is that something that as we grow that would become part of Greatland's outlook and spending of that's the right word for it?
- Yes, very much so. All the activity that Newcrest does up there is part of the JV. So, we are effectively doing 30% of that expenditure. It's approved through the management committee.
- So, we already do. We do have our own separate engagement with the Martu people which we value
- One of the questions we're talking about is, is Havieron the right name for the asset, you know, is there a more local name that might be more respectful?
- So, we constantly try to engage and revaluate and work with the traditional owners of the land. Again, a shout out to Newcrest, I think they do that really well, they do a cracking job at that. I think we've learned from Newcrest as part of doing that
- And I think part of the reason we have such a good relationship with the Martu is it's built on such a good foundation given the time, energy and effort that Newcrest do it. So, it's certainly something we continue to do, it's going to be something we continue to do into the future as well.

* Wonderful. That's superb. This morning as she was leaving for school, I asked my 13-year-old daughter that I'm speaking to Shaun Day, Managing Director of Greenland. What question should I ask him? And as she left, she said, what's his favourite flavour of ice cream? So, Shaun what's your favourite flavour of Ice cream?!
- Well, I'm pleased she knew who I was to start with!
- But I think the chocolate chip cookie dough may be my long-term favourite. It's rare I have it, but I think it's a Ben and Jerry's flavour, but dare I say should I see some…..I'd be very pleased to pick some up.

* OK, and my final question before I move to part 2 of our interview, which is probably the most contentious - there's been a lot of talk lately over the share price and it's being so low and a lot of people have been calling for you to effectively buy more shares and it's not something you've done. I mean, would you buy more shares if you could?
- Yeah Liam, I think it's yeah, I bought some at a higher price. I'd probably rather buy some more at this price, but I think people should appreciate that under current governance, we only have very limited windows around where we are able to deal in the stock
- You should take it as read that until these 5% issue is dealt with that that basically we've been under restrictions in terms of buying stock for all that time. So, although I think that's where we talk about it and that might be resolved in a relatively short period of time
- Sometimes I see compelling value, but I'm not at liberty to transact and we really value governance. It's again, the sustainability is all about environmental, social and governance. It's, a really important element of how we operate as an increasingly sophisticated and mature company
- But I kind of share the frustration but people should understand I only have quite limited windows where I or any of our team can buy the stock and yeah, sod's law, we'll probably have a window again where the stock price is up. But that, you know, we, are measured in when we do that, but it’s a good question as I have seen people ask me before on social media, so it's good to address the point. So, I'm glad you raised it.

* Thank you. Which could be frustrating because obviously if the share price does go up and in a nice positive manner, you've done your job, which is fantastic. But then you've almost shot yourself in the foot because you're no longer able to buy at those prices that really do make it a compelling purchase.
- And that's why we have equity share plan
- So, I'm really incentivized, well it's multifactorial the incentive but certainly getting the share price up is the number one way to do that and is the number one way to grow the size of my financial incentive
- So, I think that's addressed through that and will be an ongoing feature of how we retain good people but certainly we want to see that share price go up
- It's good for me it's good for our shareholders and it's good for the company but we’re focused on medium to long term value, I'm not going to be sitting there on Twitter every day the share price is volatile
- I think people should have confidence we are building medium to long term value through a very deliberate and sophisticated approach
- And I think that's what will create the best outcome for our shareholders in the long run.

* That's a superb answer. Thank you. So that's going to conclude part one of our conversation today. So, thank you very much for that. And that was Shaun Day, Managing Director of Greatland Gold. Join Shaun and myself next time for a discussion around the 5% purchase option from Newcrest Mining.