Why did NCM Extend the Feasibility Study?

[RationalAssessor]

The NCM RNS on 27 Oct 22 advised the market that NCM has "extended" the production of the FS. Why would they do this?

FWIW, my view is as follows:

The Feasibility Study would normally sit between the PFS (based upon an MRE) and the DTM. It's function is to gather all the relevant facts for the management to determine whether the project is economically feasible and to inform the Decision to Mine.

In most cases, there would be a clear link between the MRE (defining the size and shape of the orebody), the PFS and the Feasibility Study.

In the case of Havieron, what we have seen is that the more recent assay results have a potential of significantly changing the MRE. We have also seen that some of the plans defined in the PFS have changed with the decline design. The link between MRE, PFS and a FS (issued now) would, IMO, be pretty tenuous. Add to that the plan to extract 2-3MtPA, ore volume transportation and the production levels at Telfer and it makes sense to me for NCM to go back to the foundations and rework the MRE and then base the FS on the revised MRE - it's also possible that they could do this without impacting date of first ore.

What else could they address from a revised MRE/extending FS?

Do they need a second decline?
Do they install a conveyor from Hav to Telfer?
Do they slow production at Telfer to wait for Hav to be done right?
Do they pre-process at Hav in order to reduce transportation demands?
How best to extract the ever-changing shape of the ore-body?
How do they keep their plans flexible enough to accommodate further changes?
Do the JV Partners have adequate backing if costs rise? Would suggest that the answer to this may have been holding back plans previously - not any more.

They need to look at the big picture - Paterson-wide, Telfer operations, Havieron Mining plan.

I'm over the moon at this news as it indicates to me that NCM/GGP are looking to do this right first time and will be trying to remove the risk of rework or unnecessary expense.

Yes, potentially it is a further delay to news which we hoped would allow further institutional investors thus assiting in the SP. However, by taking this decision to extend the PFS, we will hopefully avoid RNSs in the future which could have more damaging impacts.
Let's make sure we do it right rather than falling for pressonitis.

ATB RA

[zoros]

It's the mark of good practice.
3Mt/annum is now out of date.
A modified extraction plan is needed.
Production costs will go up together with inflation - time to trim the edges.

Responsible management in action.
Z

[jecsggp]

There's a massive gold-rich block cave developing down there, so I'm not surprised NCM need time to reassess the situation. Excellent news indicating more available ounces to add to the resource estimate.

[DipSard]

Absolutely agree that although no on foresaw a delay or rather an extension actually being positive, the focus areas as we understand them are all positive and a reflection on the increasing size and quality of the resource:

Key Objectives:
- Optimise costs to combat inflation
- Optimise / increase production profile
- Increase resource & life of mine projections

GGP has established funding with a PFS so effectively we don't need the DFS to obtain funding and with twice the assumed costs in our coffers and an increased capability for access to funds with our new strategic partnerships with banks, funds and directors linked to the company, we are now a different proposition as a JV partner.

No longer a ball and chain as we can now run with NCM instead of slowing them down and perhaps for example if they plan to incorporate a 2nd decline/conveyor type option into the mining plan they know we can carry our share of the costs. It appears that NCM had planned a FS release for Cadia yesterday from an email someone had from their investor relations prior to last night that seems to have been delayed.

Perhaps the new plan is for NCM to incorporate their usual resource updates in February into optimised and 'bigger' Feasibility Studies for both projects early next year and also hopefully take advantage of better asset prices, lower inflation and releasing good news into a better market.

The 'con' against all the 'pro's is that we now have a delayed SP catalyst from having the DFS/DTM being delayed but of course a bigger and better DFS could serve as a bigger and better SP catalyst, so the wait might be worth the while.

Perplexing, exciting and frustrating... but never boring in the GGP Universe

[Maximus10]

I’d love to know what was said between Shaun and Sandeep over dinner. I think we may only be seeing a portion of the manoeuvring in the background.

I am usually a glass half full kind of person, so it was no surprise to me that I immediately felt positive about this move. Absolutely no need to hurry, the more drill-metres that can be included in the FS the better imho.

If Sandeep is playing some sort of game ( which I personally doubt) I have full confidence in Shaun to deal with him.

[poniexpress]

The reasons for extending the feasibility study could be numerous-some posted but many other possibilities, some good for GGP and others not quite so good. SD, I think, intimated that the outcome of the results, decline progress etc this week would be very good or better. Perhaps the developing links being highlighted between various areas within Haverion has exemplified the enormous potential growth of the project to potential suitors. The fact that SD has been quiet so far since the results indicates the possibility that he cannot speak about developing matters at this stage. Alternatively, the possibility of further work for his team reassessing their strategy temporarily prevents him from engaging with shareholders in an immediate interview. Patience as always is the key and heres hoping it's good news.

[Bamps21]

Well it was quite obvious to me that the mining plan had to change to accommodate more ore in the mining plan.
Sprott picked this up in their first note saying 9m ton per annum but they never mentioned how to get it out.
I pressed Shaun twice now in London, the first time he didn’t get what I was on about but the second time when I mentioned a hoist system he said he preferred a hoist.
A hoist could achieve far more than 3mt pa, the Decline will not achieve with transport.
I put these slides together and discussed at my presentations in Stroud and Stirling .

At the moment the 3mtpa operation is getting all of this from the high grade SE crescent going deep.
What I’ve shown here especially the middle slide is each level of stoping can be extended into the Northern corridor and maybe the pod.
The 3mt plan can be obtained from nearer the surface enabling a hoist such as this vertical conveyor by Robins to be installed.
The Decline will continue downwards and maybe collect another 6mt from the lower reaches of the MRE zone and the Northern corridor.
To get this ore out by transport would be very time consuming it needs a conveyor Decline to be installed together with an underground crusher
From this lower level a bulk cave infrastructure could be started in the Eastern breccia at about 1300m depth of ore, recognising the height limits on a bulk cave operation of 750-800m which would be just about right.
The extraction process would then already be in place.
You can see an underground crusher on the Havieron thread in Mining plan

[Bamps21]

This is just at the point where the EB starts bulging out to the N and E.
What this shows is new high grade pods in the centre and north.
That blob at the bottom is just below the 3mt plan.
The old plan would only go for that bottom blob
Getting all this out by conveyor makes much more sense.

Comparing this plan to the sections is confusing as the yellow 0.5 shell is coloured blue on the sections.
You can follow the increase in this zone right from day one.
That is the crackle zone reducing as the cemented breccia zone information becomes available ie the averages are getting higher

[_J_C_]

Fantastic posts, great reading.

Thank you!