...From developer to producer - Free Cash Flow by Jan 25...
Greatland announced on 10 September that it had reached an agreement with Newmont Corporation (NEM-NYSE: US$54.14 | BUY, TP US$59, Carey MacRury, Canaccord Genuity Corp, Canada) to acquire the remaining 70% of Havieron it does not already own, in addition to the Telfer mine, associated plant and infrastructure. Apart from increasing GGP's interest in Havieron, the transaction means that it will operate the assets as a single hub, rather than toll treat the Havieron ore (for a fee). Greatland will pay Newmont ~US$208m in cash (upfront), and issue ~US$168m in shares, with US $100m in potential contingent payments (to be paid out of Havieron cash flow). The deal has been funded by a US$325m institutional placing (in early September), with a letter of support for A$775m in debt facilities to provide a buffer for the funding of Havieron's remaining capex.
We now expect the combined operation to produce ~375 koz Aug from Telfer's initial 15-month mine plan (conservative v 426 koz Aug in the technical report) at ~US $1,500/oz AISC, with >250 koz p.a. AuEq from Havieron from late CY27 at ~US$900/ oz AISC (vs US$818/oz in the technical report). We assume ~US$516m in Havieron pre-production cape to complete the necessary plant modifications.
The deal transforms Greatland from a developer to a producer overnight, with immediate cash flow from Telfer to derisk the overall story. We note that the share price is +42% since the capital raise, and we feel that there is significantly more upside for investors seeking exposure to a precious metals growth story with an attractive asset in a tier 1 jurisdiction. We maintain our SPEC BUY rating.
enjoy
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Just look at the comps!!
IMO This is hugely undervalued now at 0.42x NAV which has to unwind soon ... Been hearing that privately Cannacord think Greatland is worth at least some 35 - 45p based on a 5Mt DFS .... IMO thats fairly conservative. But this is just stage 1... ( to which they attach 15p to in the first instance)
The key is a low debt to equity ratios will make us extremely attractive once the market sees clarity over the opportunity better - rather than speculating and trusting Shaun Day as it were - (since most don't truly understand the scale of Havieron yet and they think Telfer is more or less finished - which Shaun says is ALSO highly unlikely) Plus we get significant free cash flows in Q1. Catalyst will no doubt be Telfer mine life extensions, Q1 ASX cross listing and Index ETF buying and DFS moving the 2.8mt to 3mt - expect that shortly after or even with ASX listing.
Albeit 'off the record' they apparently say to expect a 5-6Mt DFS.
Looking forward to first Greatland gold ... Hmmm..? in just a few weeks.
