Notes from Proactive Interview regarding Institutional Placing and funding Havieron - 25 Aug 2022
Posted: Thu Aug 25, 2022 1:29 pm
Notes from Proactive Interview regarding Institutional Placing and funding Havieron - 25 Aug 2022
Interview: https://youtu.be/kGw3FSdtis4
Placing RNS: https://polaris.brighterir.com/public/g ... ry/w08ypnr
Post Placing RNS: https://polaris.brighterir.com/public/g ... ry/xo146mr
* A significant update this morning, news of a capital raise of at least £25m, you saw a good response.
- A really good response, really important for us, been heavily oversubscribed
- And in what is a relatively choppy market it is testament to the quality of Havieron and Greatland as a whole in terms of the team we have assembled that we’ve been able to access equity markets at this point in time
- Think those choppy markets have kind of manifested in a depressed share price across a number of companies right now
- But I think what people should know, look we’re about.. to drive medium to long term value and that should drive our short-term value as well
- But look we’re really comfortable in terms of how we’re moving forward and how that creates value in that medium to long term view.
* Well, I suppose you mention the choppy markets, the uncertain backdrop this was done against, so considering this was done against a 15% discount, you can live with that?
- Yeah look, I think of course, I’m a shareholder as well and bought some more stock as part of this but it’s…. you know, more is more but we would like it to be higher
- But at the end of the day, to have the certainty of this being done, to be able to bring in some high-quality institutions I think is really important and the success of this I think just continues to mature the platform.
* Well on that, tell me a bit more about the involvement of Tribeca Capital Partners as a cornerstone investor?
- Tribeca has come in as a cornerstone as you say, we’re wrapped to have them onboard as a very meaningful shareholder, they’re a very well-respected group
- You know particularly, they’ve got very specialist skills around resources, they’re very well known in Australian resources
- I think their involvement is a tremendous endorsement for the asset and again the team, but I think is also a great demonstration to other funds in the market and you’ve kind of seen this as we’ve built the equity raise book
- It gives others confidence to come in as well, so I think their involvement was really critical to the success we’ve had with this process, we’re really grateful for them, we’re looking forward to working with them
- I’ve known them previously you know from roles such as at Northern Star where I have a relationship with them, but I think they will be tremendous shareholders and the fact that I think they can see the value, that they can see the opportunity here should give everyone a lot of confidence.
* And you say in the announcement that they’ve agreed to work with you to provide an additional funding facility apparently?
- Yeah so look I should talk about why we’ve raised equity in terms of that, we are solving to be fully funded and I think of that in terms of debt
- You know, that’s what we fundamentally want to do, we want to bring in a substantial debt piece and that leverages the benefit to equity holders, you know… I understand the magic of leverage in these things
- Like if you’re buying your own home, you know the banks will never lend you 100% of the value, they want some equity to sit alongside them and I think people should view this as part of that step
- It gives a lot of confidence to the banks and with that now in place, I think we can now go to the banks and say look, we’re all ready to go with this
- We’ve needed two things to happen that we’ve needed to solve for the equity and we’ve also needed to know how much of the asset we own
- You know, we found that out on Friday and we found out in a really positive way that we own 30% of the asset, that was the best possible outcome for us, our fundamental value is increased by that
- But if we think about the debt piece, you know we have the equity in place, now we bring on the debt and this all helps us be fully funded
- And the fact that we had an opportunity to go to the market now, corner stoned by a really well respected fund in Tribeca… the opportunity was too good to pass up
* What about the opportunity Shaun for your considerable retail base, did you give that some consideration?
- Yeah absolutely, my preference was to extend this to retail shareholders as well, this is not about… I think I’ve been pretty open with people that I want to build the institutional base but we really want the best of both worlds
- We want to continue and engage our retail base and you know that’s one of the reasons we’re chatting this morning again Andrew but also bring in the stability that institutions give you, you know that buying on the dip and have the best of both worlds
- Unfortunately under UK prospectus legislation you can only offer up to 8m euros of equity in a 12 month cycle, we offered that equity in October last year so kind of 10 plus months ago
- You know that was really disappointing from my perspective, this 8m euro cap feels like a bit of an overhang of the EU… I know Boris is not there for much longer but write a letter to Boris now and see if he can kind of get some reforms on this through before he has to depart office!
- It is disappointing, we would have liked to have done it, we have extended out to some of the retail brokers to try to bring some people in
- But look, this is institutionally weighted and focused, but our hands were tied and we’re a bit disappointed by that.
* Shaun just back to… you mentioned before about Newcrest not exercising that option, given the attractiveness of Havieron, were you surprised by that?
- Yeah Andrew it was a bit of a curveball, we see the fundamental value there, I think we’re reasonably open there that we were pleased with the process that we ran through the option price discovery process but at some point in time (i.e. having to use a cut-off date of 15/12/2021 for valuation calculations and submissions)
- We were still really disappointed to be giving away what effectively was one sixth of our prize asset at that price
- Now I can’t know the mind of Newcrest but you know it’s a little bit of a head scratcher there why they didn’t pick that up but I think from my perspective the fundamental value is increased by this being the best possible outcome
- And I think further, that consideration was actually effectively going to be non-cash, again we told people that this was going to effectively pay off the Newcrest loan of USD $50m in the first instance, so the incremental cash that was going to bring in was not that fantastic
- So, it’s probably worth it then me commentating on the funding process and the banks, we always worked on the basis of funding it on a 30% ownership and the simple basis to that was it’s always easier to go bank to ask for less money than go and ask for more
- So we baked in the flexibility of different ownership percentages in the term sheets in the discussions with banks
- As I said a bit earlier Andrew that’s now resolved, we can press the button and move forward with that and this equity piece complements and indeed enhances confidence around that.
* Just a quick word Shaun, you mentioned in the announcement also about a cross listing on the ASX, what are you hoping that will achieve?
- Well I think this equity raise demonstrates that… Tribeca is effectively an Australian fund, well a South East Asian fund but with a lot of focus on Australia but what this demonstrates is the interest Australian funds have and there were a lot of Australian funds that came in
- And they should have an interest, they understand resources very well, they’re familiar with the asset, they know the history of Telfer and they know myself and a lot of the management team here
- So it is a natural fit, it is a great endorsement that these local knowledge, experienced investors want to come in and invest in Greatland
- So I think those are all really positive and what you find is that some of the Australian funds are mandate locked onto the ASX or at least they need to see a pathway onto the ASX, this does that, we want to keep the best of both worlds, we value and treasure what we’ve got in London
- And I think what people should understand is that there’s a couple of ways to do the listings, you know you can do an IPO in Australia and you know raise money or something like that
- Or you can also do a Compliance Listing where you achieve what you need to achieve for those funds in terms of having that ASX platform but they can come and buy on the London market which has the deeper liquidity
- And there’s a great example of that of Kirkland Lake last year where they did a compliance listing onto the ASX and tried to get the best of both worlds, they were TSX listed but they retained their TSX as that was their main board, that’s where their liquidity was but they brought in some ASX listed institutional buying.
* Good to speak Shaun, thanks for your time this morning.
- Yep, lots going on Andrew so appreciate the chat and thanks for your support and of the people who’ve tuned in, thanks again.
Download link:
https://www.mediafire.com/file/19ox6p1q ... 2.pdf/file
Interview: https://youtu.be/kGw3FSdtis4
Placing RNS: https://polaris.brighterir.com/public/g ... ry/w08ypnr
Post Placing RNS: https://polaris.brighterir.com/public/g ... ry/xo146mr
* A significant update this morning, news of a capital raise of at least £25m, you saw a good response.
- A really good response, really important for us, been heavily oversubscribed
- And in what is a relatively choppy market it is testament to the quality of Havieron and Greatland as a whole in terms of the team we have assembled that we’ve been able to access equity markets at this point in time
- Think those choppy markets have kind of manifested in a depressed share price across a number of companies right now
- But I think what people should know, look we’re about.. to drive medium to long term value and that should drive our short-term value as well
- But look we’re really comfortable in terms of how we’re moving forward and how that creates value in that medium to long term view.
* Well, I suppose you mention the choppy markets, the uncertain backdrop this was done against, so considering this was done against a 15% discount, you can live with that?
- Yeah look, I think of course, I’m a shareholder as well and bought some more stock as part of this but it’s…. you know, more is more but we would like it to be higher
- But at the end of the day, to have the certainty of this being done, to be able to bring in some high-quality institutions I think is really important and the success of this I think just continues to mature the platform.
* Well on that, tell me a bit more about the involvement of Tribeca Capital Partners as a cornerstone investor?
- Tribeca has come in as a cornerstone as you say, we’re wrapped to have them onboard as a very meaningful shareholder, they’re a very well-respected group
- You know particularly, they’ve got very specialist skills around resources, they’re very well known in Australian resources
- I think their involvement is a tremendous endorsement for the asset and again the team, but I think is also a great demonstration to other funds in the market and you’ve kind of seen this as we’ve built the equity raise book
- It gives others confidence to come in as well, so I think their involvement was really critical to the success we’ve had with this process, we’re really grateful for them, we’re looking forward to working with them
- I’ve known them previously you know from roles such as at Northern Star where I have a relationship with them, but I think they will be tremendous shareholders and the fact that I think they can see the value, that they can see the opportunity here should give everyone a lot of confidence.
* And you say in the announcement that they’ve agreed to work with you to provide an additional funding facility apparently?
- Yeah so look I should talk about why we’ve raised equity in terms of that, we are solving to be fully funded and I think of that in terms of debt
- You know, that’s what we fundamentally want to do, we want to bring in a substantial debt piece and that leverages the benefit to equity holders, you know… I understand the magic of leverage in these things
- Like if you’re buying your own home, you know the banks will never lend you 100% of the value, they want some equity to sit alongside them and I think people should view this as part of that step
- It gives a lot of confidence to the banks and with that now in place, I think we can now go to the banks and say look, we’re all ready to go with this
- We’ve needed two things to happen that we’ve needed to solve for the equity and we’ve also needed to know how much of the asset we own
- You know, we found that out on Friday and we found out in a really positive way that we own 30% of the asset, that was the best possible outcome for us, our fundamental value is increased by that
- But if we think about the debt piece, you know we have the equity in place, now we bring on the debt and this all helps us be fully funded
- And the fact that we had an opportunity to go to the market now, corner stoned by a really well respected fund in Tribeca… the opportunity was too good to pass up
* What about the opportunity Shaun for your considerable retail base, did you give that some consideration?
- Yeah absolutely, my preference was to extend this to retail shareholders as well, this is not about… I think I’ve been pretty open with people that I want to build the institutional base but we really want the best of both worlds
- We want to continue and engage our retail base and you know that’s one of the reasons we’re chatting this morning again Andrew but also bring in the stability that institutions give you, you know that buying on the dip and have the best of both worlds
- Unfortunately under UK prospectus legislation you can only offer up to 8m euros of equity in a 12 month cycle, we offered that equity in October last year so kind of 10 plus months ago
- You know that was really disappointing from my perspective, this 8m euro cap feels like a bit of an overhang of the EU… I know Boris is not there for much longer but write a letter to Boris now and see if he can kind of get some reforms on this through before he has to depart office!
- It is disappointing, we would have liked to have done it, we have extended out to some of the retail brokers to try to bring some people in
- But look, this is institutionally weighted and focused, but our hands were tied and we’re a bit disappointed by that.
* Shaun just back to… you mentioned before about Newcrest not exercising that option, given the attractiveness of Havieron, were you surprised by that?
- Yeah Andrew it was a bit of a curveball, we see the fundamental value there, I think we’re reasonably open there that we were pleased with the process that we ran through the option price discovery process but at some point in time (i.e. having to use a cut-off date of 15/12/2021 for valuation calculations and submissions)
- We were still really disappointed to be giving away what effectively was one sixth of our prize asset at that price
- Now I can’t know the mind of Newcrest but you know it’s a little bit of a head scratcher there why they didn’t pick that up but I think from my perspective the fundamental value is increased by this being the best possible outcome
- And I think further, that consideration was actually effectively going to be non-cash, again we told people that this was going to effectively pay off the Newcrest loan of USD $50m in the first instance, so the incremental cash that was going to bring in was not that fantastic
- So, it’s probably worth it then me commentating on the funding process and the banks, we always worked on the basis of funding it on a 30% ownership and the simple basis to that was it’s always easier to go bank to ask for less money than go and ask for more
- So we baked in the flexibility of different ownership percentages in the term sheets in the discussions with banks
- As I said a bit earlier Andrew that’s now resolved, we can press the button and move forward with that and this equity piece complements and indeed enhances confidence around that.
* Just a quick word Shaun, you mentioned in the announcement also about a cross listing on the ASX, what are you hoping that will achieve?
- Well I think this equity raise demonstrates that… Tribeca is effectively an Australian fund, well a South East Asian fund but with a lot of focus on Australia but what this demonstrates is the interest Australian funds have and there were a lot of Australian funds that came in
- And they should have an interest, they understand resources very well, they’re familiar with the asset, they know the history of Telfer and they know myself and a lot of the management team here
- So it is a natural fit, it is a great endorsement that these local knowledge, experienced investors want to come in and invest in Greatland
- So I think those are all really positive and what you find is that some of the Australian funds are mandate locked onto the ASX or at least they need to see a pathway onto the ASX, this does that, we want to keep the best of both worlds, we value and treasure what we’ve got in London
- And I think what people should understand is that there’s a couple of ways to do the listings, you know you can do an IPO in Australia and you know raise money or something like that
- Or you can also do a Compliance Listing where you achieve what you need to achieve for those funds in terms of having that ASX platform but they can come and buy on the London market which has the deeper liquidity
- And there’s a great example of that of Kirkland Lake last year where they did a compliance listing onto the ASX and tried to get the best of both worlds, they were TSX listed but they retained their TSX as that was their main board, that’s where their liquidity was but they brought in some ASX listed institutional buying.
* Good to speak Shaun, thanks for your time this morning.
- Yep, lots going on Andrew so appreciate the chat and thanks for your support and of the people who’ve tuned in, thanks again.
Download link:
https://www.mediafire.com/file/19ox6p1q ... 2.pdf/file