I have for a while been amazed at how much of what Shaun tells us is the whole truth IN PLAIN SIGHT and that he does reveal a great deal more than we understand. What we lack is the time to consider what they mean, and because there are so many competing and contrary (and complex) wheels turning at the mo, this is really just a brain dump of what is in my head and needs to get out in to the world for others to comment on.
So be gentle, and all this comes with heavy CONJECTURE.
But I believe SD has been telling us much more than we realised
And the summary I have arrived at is that Wyloo are helping shape the future decisions of GGP towards an outcome that we can’t yet see.
“sell Hav 30%, buy Hav 70%, JV less likely”
- We have heard SD mention a ‘launch asset’ that brings significant (eye-watering) money in to the company
- Selling 30% would clear all debts and provide a well of money
- Buying 70% is possible because his ‘people’ have told him so
- The advantages/disadvantages are in the following section
- The JV is less likely but isn’t being dismissed altogether. It does feel like minds have been made up that it’s full buy or full sell
- Now a JV going might just mean another major could buy the JV off NEM, or a friendly strategic force in the region e.g. Wyloo
- A JV with Wyloo, Rio, and GGP could work on some levels but a JV with NEM appears not to be the way ahead
Havieron and Telfer as a single package
- The liability SD mentioned of -$500m approx. for Telfer alone means you save now by disposing of it now
- It could fit the NEM Operating Model to squeeze better efficiencies out of the mill, so it isn’t a foregone conclusion
- Though a strategic stake in the Paterson at this key time is positioning for copper and greater copper exposure is a NEM strategic priority
- (can’t remember the exact figure but SD mentioned it was in their massive takeover document and about $530m liability for Telfer)
- The 24 month model shows a $500m goal to squeeze benefits from all their assets. Getting $100m out of Telfer is easily achievable
- But SD mentioning a single package for Hav and Telfer suggests this either dumps too costly assets (yes, really) in one hit or makes Telfer look less rubbish than it is
- The jury is still out on this for me, and as he says can go one of two ways. But GGP could work with either outcome
“being a credible counterparty”
- With a Board this good we would be a credible group for any major to work with. Not just NEM. All options are open therefore
- As a well-funded and agile partner with great geos and inorganic growth being spoken of, the weighting of GGP will continue to increase
- He can say a credible counterparty as he knows there are long term plans being discussed and a long term vision that he wants to be part of
- Meeting banks and investment houses requires steely assuredness and this comes from knowing you have full backing from a visionary funder (Wyloo/Forrest)
- We can come up with more money when we need it
- Free cash flow makes us credible and profitable, and money is coming very soon from production
- We are likely to find riches at other sites which also makes us a credible counterparty (we must think beyond Hav alone)
“not my bag/not needing a full board if GGP became just an explorer after selling Hav”
- I’d speculate this conversation has taken place already between SD and the Chairman. Why else would he say it?
- In talking to SD about his options for the future (share and career) he will have expressed a desire to be the head of something even bigger than GGP
- Wyloo/Greatland/Paterson Province has the makings for a rival Aussie major to the one that just disappeared (NCM)
- Strategically what does SD see himself as becoming? Probably Luca Giovazzi’s successor, or the top man at an expanded Wyloo
- Just get me a job where I can shine, and make it more than an explorer please. Ideally a new midsize-major Aussie company
Wyloo strategic investment
- What has brought Wyloo to this decision to invest with GGP and Shaun?
- Paterson Province is full of elephants
- A US firm has just taken a big piece of the pie with the NCM takeover. Proud Aussies (Mr Forrest) won’t like that
- What gives Wyloo a competitive USP? Copper and other rare minerals at a key time, plus a green mining paragon which is what they want to become. Literally Aussie ‘green and gold’
- The old way of mining is gone. Watch the new mining concepts break out in Aus with GGP top hat co offering a fresh launch asset to build from
- Supercycle coming if others are to be believed and timing is very good
Not taking the bank money yet
- This is quite fascinating. The $200m + of funding appears to be for the costs of the mine, but what if this money was for something else?
- Is it GGP’s share of the Telfer and Havieron full buyout. Wouldn’t that be attractive for a bank to lend against…
- And when the ownership of Telfer/Hav is done then you go to your friendly Bank of Wyloo amongst others and get funding for the development costs in exchange for them owning a bigger stake
- Of course we don’t want to incur interest (SD’s words I believe) but what if the money was about to be exercised to buy Hav/Telfer and then NEM said they needed to wait til February?
- Draw it down when you need it, perhaps to buy out the JV and
MRE3 issuance ourselves
- Waiting to do this in the December quarter sounds like a way to get the major partner’s attention and tip their elbow to make an earlier decision that February
- In reality SD probably will wait til Feb for alignment reasons, but the second he knows NEM aren’t going to designate have as one of their Tier 1 projects he’ll issue it
- But first he would have agreed a purchase price
- He’s not daft and won’t raise the cost for ourselves, but having data that is over 2 years late to add in gives him a tough decision to make
- Go out and cost us money, wait til Feb and we are 3 years behind the curve
- Which makes me think it is a bargaining chip to push NEM to an earlier outcome than February
Holding back drill results/assay time delays/sending in batches
- Controversially, I am disputing the alleged time it is taking to get back assays
- For tactical reasons I believe some are being held on to
- It makes sense to lump all the samples together in a supposed ‘batch’ as it looks like the delay isn’t of our making
- But I suspect we are keeping our powder dry ready to explode when we choose
- I know this is not ‘proper’ but why else does the wording now exist about ‘sending batches’
- SD is an honourable chap but surely even he would be OK with getting as close to the ethical line as possible to gain a competitive advantage
ASX listing deferred
- The SP wasn’t at the right level
- Wyloo had money available to get us to next year and to solve liquidity/cash burn
- With NEM not yet decided on which Tier 1 to keep why would you go to ASX only to find within months that the game has been changed
- Top Hat Co will still get to ASX but what damage would it had done for us to diverge from the starting prospectus SO much
- Wait for six months post February then dust off the application, see the 11p achieved, move then with certainty
Top Hat Co
- Potentially a company into which a number of companies or assets can be transferred
- The clean new co can be a holding co in which lots gets housed and which becomes the main focus for Wyloo and institutions
- Havieron/Telfer is one asset (v important to us) but when you look at all of Aus and the Paterson there is so much more to include in a new co
- GGP as a company will then inevitably become the money-making bit and we as PIs will feel further away from where the profit is taken
- An unpopular view of course, but why else would Wyloo want to do business with us if there wasn’t a pathway to greater control
Share consolidation
- Makes sense / is a prerequisite to do this for good order (SD’s phrase I believe
- Tidies up and makes ASX happy
- Creates instant demand for a smaller quantity and allows for issuance of shares in future
- Also enables institutions and Wyloo to gradually take a bigger stake over the years ahead and letting PIs have a bit of the riches
- Bad consolidations are a result of bad management or a lack of discipline. Good consolidations need a good narrative around them
- A consolidation just to get to ASX would not be credible for the management so that isn’t why
New licence applications
- Someone has told SD to get out there and grow the company proactively
- Drop the Tazzie assets and find something bigger and better
- Don’t worry about the cost too much, build a land bank based on clear geo logic and we will back you
- We are beginning to understand the geology and can predict so much better where the metal is
February 2024
- Important that we are aligned with NEM and use this time to influence their thinking which SD has probably been doing for ages
- The sunset clause in April is a nice bargaining counter to use, a reason for NEM to move quicker in deciding
“an eye-watering amount”
- Very subjective turn of phrase. I’m not falling for this and it is clearly a defence mechanism to try and deter interest
- A lot of PIs imagining multiples of where we are now. Not so sure personally
“the hammer will fall” in the context of a low/falling SP
- We all took fright when it sounded like the risk existed for being bought out for too little
- Whilst GGP the company won’t be subject to a falling hammer now that Wyloo are on board, the sale of Hav or acquisition of Telfer make it highly unlikely
- JVs with Rio also suggest that any serious players can see GGP couldn’t be priced properly as its assets are too unspecified right now
- Upside exists but quantifiability is missing
) but synthesising many views and reading the corporate tea leaves do bring us to generate theories.
