GGPChat

Notes from LSE Webinar - 21 Mar 2022

Webinar: https://youtu.be/WqvRBj9Wwlw?t=219
Slides: https://static.lse.co.uk/files/220321-g ... tation.pdf
Interim Report: https://greatlandgold.com/wp-content/up ... r-2021.pdf

Presentation:
Only included notes for new slides or interesting points in this section.

* Updated Probable Ore Reserve
- Reminds PI’s to cast mind back to initial update that showed a tailing in of the ore body was not a function of the actual mineralisation, just where drilling had taken place
- As exploration drilling continues, they have been able to bring more reserves into the mine plan and update R&R (Resource & Reserves)
- Really a focus on the HG (High Grade) aspects so have a 3g ore reserve with plus 0.4 copper, really HG and fits into GGP’s plan to drive into the HG SE Crescent, take that ore through the Telfer mill to generate cashflow to reinvest back into the asset to develop a much broader Hav (Havieron) story
- Tailor made process for a mid-cap to do this in stages and focus on the HG material from the outset.

* Resource to Reserve Conversion
- Exceptional amount of growth from just 10 months of drilling from 5th Feb 2021 to 5th Dec 2021
- Firstly, a gold equivalent of 3.7g across 2.9Moz but perhaps most excitingly the conversion rate from resource to reserve of 86% tells you that this HG material sitting just off the decline we’re taking down the SE Crescent, that material comes straight into the mine plan
- That 86% conversion rate is really unique and talks to the quality of the asset and opportunity to continue to infill this ore body to continue the high ratio and bring more and more material into the mine plan which ultimately drives the FCF (free cash flow)
- This is just the SE Crescent, much broader zonation of the ore body ahead of us together with growth down the SE Crescent.

* Havieron Vertical Profile
- Ounces per vertical metres is a wonderful rule of thumb when evaluating an underground mine
- This new chart shows the significant expansion across the ore body
- Up the top where more drilling has taken place you have really significant growth
- Really encouraging is that where you had that cut-off previously at around 800m, as infill drilling has now taken place below that, all of that has also come into the ounces
- All of these ounces are in a 650m envelope, often you see 2000-4000 ounces across a multi kilometre strike length as oppose to a 650m envelope
- Meaning that the efficiency of the mining and infrastructure to take out these ounces for every vertical metre of development and decline put in is much much more than you usually get
- 10,000 ounces per vertical metre is absolutely eye watering, very few mines globally would have this and an even small number over such a small strike zone
- As we continue to drill away, we should continue to see this correlation with where we’ve drilled and where we have ounces continue to grow the ounces per vertical metre to add ounces to the mine plan - which is exceptional.

* Catalysts for Future Value
- Notes everything talked about so far has been about the SE Crescent which is the highest grade part of the mine but when you look at the overall volume of that zonation, some 4/5’s of this is still ahead of us together with the growth in the SE Crescent
- Really encouraged by this joining of the Northern Breccia and NW Pod creating this northern structure of relatively HG material, not as high as crescent but good grade material
- And then augmented by what we see in the Eastern Breccia (EB), exciting as down on the south of it have they intercepted a 6g area and have never hit that kind of grade before outside of the SE crescent and especially over that drill width, so that’s really interesting and going to attract the drill bit
- Is this an extension of the SE Crescent, does it enlarge and go down that way or does the EB have its own HG element which would be tremendous upside
- The EB on its own adds to the likelihood of a bulk mine by bringing in a larger volume / profile of ounces but if it also has this HG element to it, then it will be a tremendous addition
- (Closes by covering the listed catalysts on the slide).

* Updated mine plan
- Now has 6 vertical fronts, the updated mine plan from GGP entailed a lot of work and has been double peer reviewed by Stuart Masters from JORC committee, SRK Consulting and around the mine plan with NTech and SRK again
- Used same parameters of the PFS which is a conservative plan but in the long run can move the Sub-Level Open Stops (SLOS) from 50m vertical heights to 100m to increase cost and production efficiency
- Significantly, found that for a very moderate increase in CAPEX to open up another 2 vertical fronts you effectively get a 50% increase of reserve from 2mtpa (million tonnes per annum) over 7 years to 3mtpa over 12 years, absolutely transformative.

Q&A: (Only useful questions/points covered)
* Highlights from Interims?
- Delivery and quality of documentation shows the increasing maturity and the enhanced capability of GGP’s organisation structure post PFS and this also shows in the update of an increased R&R.

* Why have you agreed to an increase in the range of valuations in the 5% Option exercise (formerly 10% and now 20% disparity will be allowed for a mid-point to be used VS going into arbitration now)?
- Inherited the JV agreement, disappointed to have to sell 5% of the primary asset but we do receive financial compensation
- Disappointing for us all it is being based on the PFS as just scratching the tip of the iceberg but what we will now see is the compounded average growth of the asset
- Go back to 2019 where we sold 65% on $100m valuation, then move forward to PFS in Oct 2021 of a value of $250m which goes up to about $450m at current gold spot price and then show the benefits of another 10 months of drilling
- People can see this continuous increase in value in the asset, shame that we’re not taking all of that through to maturity but it will show the trend of that compound average growth rate, won’t need a lot of imagination to say “what is another 2 years’ worth of drilling going to do here and the impact of bringing in that bulk mine”
- Think there will be a lot of interest in it and show a roadmap that will actually be very encouraging.

* What has been included in those negotiations, are you using the PFS, the GGP MRE update from March? What gets included, presumably you want it to be as much forward looking as possible?
- Correct, our preference is always to update the R&R with NCM
- For a confluence of reasons that didn’t happen
- From some of the conversations had, it was very clear it would be updated with their annual update but ultimately for whatever confluence of reasons that didn’t transpire
- Where shareholders (SH) should see the positive is that we now have the organisational capacity in-house as we have invested in mine planning, processing and resource geology so actually able to put together our own R&R
- What we put together was actually deeply conservative but consistent with the approach in the PFS and think that was the right balance
- SH should take a great deal of confidence in the augmentation of the team and determination to advocate for the value of Hav
- Have a good relationship with NCM and a lot of the reasons we’re able to do that is the strength of the relationship with the geology, mining and processing teams
- Have good connectivity with Sandeep and the relationship is strong there but ultimately felt we needed to be advocates of our own value.

* Is there a timeframe for these negotiations?
- Mechanisms like this tend to be opaque around timeframe so doesn’t want to set expectations in the market
- People should have confidence that GGP will take the time needed to maximise and optimise value
- Having said that, Shaun would like to get this behind us, part of transition period and an important milestone so eager to complete it but will not accelerate anything but to do it as well and thoroughly as possible
- Has a huge amount of confidence in the process team has run around the updated R&R, understanding of the valuation and putting a team together to understand our own internal resources, well prepared to protect and understand our own value.

* Question related to having sight of all of the shared information from NCM and that everything is made available to the GGP team.
- Ultimately the JV agreement specifies information is provided to both teams and they do indeed have a shared and common perspective and understanding
- Changes since Shaun came onboard is that GGP’s augmented team now harvest all the information with our increased internal resources to understand and be a good owner of the asset and we are also so much more engaged with NCM in a respectful and collaborative way that hopefully creates the best opportunity for Hav to be successful over time, which is where we have beautiful alignment.

* When will the Pacific Trends Resources shares be issued? (GGP acquired the Havieron project from them and a 2nd and last tranche of 145,530,000 ordinary shares of 0.1 pence each will be made at some point).
- Just an issue of timing so either at DFS in December quarter of 2022 or perhaps earlier when NCM hit 75% ownership mark, already factored in by the market.

* Please be explicit, is the 5% FMV to be calculated exclusively on the PFS and JORC resources on which that was constructed?
- No, not exclusively on the PFS, the valuation date is effectively 15/12/2021 and we updated out R&R for 05/12/2021
- Reason for 5th of December is that was the date of last output of assays so effectively the last information we had prior to the 15th of December
- We want to recognise that additional value and again people should understand that the reason we took the energy, time and effort to create that R&R was to understand the value better
- Our preference wasn’t necessarily to announce it but always felt it was going to be a very material increase
- Proved to be the case with over 50% increase in resource plus over 50% increase in reserve and once you have material information, we have an obligation and a desire to share that with our SH
- Hopefully that gives a really good understanding of the speed of growth at Hav.

* Question related to if it will be galling to not be able to depend on the future because the future is going to be so rosy? (note: confusing question IMO)
- Reason to buy GGP is same now as two years ago in that continued drilling will continue to deliver the kind of intercepts we have to date
- Can get accustomed to 100m plus intercepts, these are world class and exceptional and we should all be delighted to be seeing that
- If he had one wish on that 5%, that it wasn’t being valued on December 2021 as originally it was post DFS and that would have given us an extra year of value but would have liked to push it out even more so it had to reflect the bulk mine
- That's not what the JV agreement did and it’s a transition process and what SH should understand is we’ve built a team to optimise that value, not a perfect point in the cycle of development but we can optimise that value in this point in time for SH.

* Plans for Scallywag this year given its proximity to Telfer and Hav?
- Plan to drill there this year as best way to unlock value in SP is by having exploration success at one of our 100% owned tenements
- Then could have a discussion with NCM about well do we bring this into the Hav JV or do we develop this ourselves
- Thinks if we were to bring it into the JV then it would give an opportunity to revisit the JV from ‘First Principles’ to both GGP & NCM’s mutual benefit so it would be a tremendous opportunity for us to have.

* Have you found anything at Scally that indicates that you have something special there or still hoping?
- Got some really high-quality targets there, continue to drill and pleased with some of the intercepts we have there but equally we don’t go and pattern drill as we’re quite selective
- Lots of reasons to feel buoyant about it but at the end of the day it’s about translating that optimism and opportunities into defined mineralisation
- Also really like our Ernest Giles (EG) asset and we’ve broadened our footprint in the Paterson so we have more opportunities than we previously had.

* An update on the decline?
- Most challenging part of the decline is the early parts of it when the rock is soft and more mud and sandstone so the widths of the cut are much shorter before you go in and have to support the ground
- Right now, still in that early part and just about plan to move from Stage 1 with the smallest cuts into Stage 2 with 2-2.5 times larger cuts and then move into 4.5 (note: interference but assume larger cuts was mentioned again?)
- With depth and with time and pressure the ground becomes more compacted and at some stage we get into the country rock and that’s beautiful mining conditions
- So really just getting through this Permian stage, NCM did come out and say they’re a bit behind schedule on it (note: more interference so can’t listen to it again!)
- Having said that they also guided the market that completion of decline was pegged for 1st half of the Australian Financial Year 2024 (01/07/23 to 31/12/23) and now more likely to be 2nd half of FY2024 (01/01/24 to 30/06/24)
- But not talking about a huge change at this stage and think once we get into the better ground there’s a lot more that the team can do to apply acceleration so still quietly confident about it but still something we continue to watch and measure.

* Bank funding, previously told us you weren’t keen on equity, going to be bank funding and you had some term sheets from the banks, wonder what the latest is on your conversation with the banks?
- $123m required, have $50m loan from NCM so leaves a gap of $73m USD although most likely given the JV provided security to NCM on that loan which is a lit bit unusual for JV loans, the banks will probably make us deal with that
- It would be rare that you would have a secured lender sitting above the banks so we work through that
- I think there is an opportunity to bring in some debt and again why can we do this at a PFS which is not normally when you can ‘bank’ these in the cycle?
- Because it’s a Tier 1 asset in a Tier 1 jurisdiction and our JV partner is a major
- All of those confluences in the same way that this is an excellent equity opportunity actually apply to banks, so I think we’re going to achieve something rarely seen in the debt market, which is to fund a PFS which again is a credit to the quality of the asset and the team we have.

* The DFS is expected around 4th quarter of 2022?
- December Quarter (01 Oct to 31 Dec 2022) is the planned release, from memory the PFS was released around October 2021, rule of thumb would be 12 months later and it should continue to show growth and progress of the asset.

* What can we expect in that Feasibility Study?
- It’s a JV document so have to be measured as it’s a joint process but would like to see it continue to reflect the ongoing drilling and some of that we’ve shared
- Like to think it largely captures this broader R&R, to some extent we’ve put that together in short order and again tremendous effort by the team to get that out in a timely manner but NCM now have 9 months to optimise that, which is an absolute eternity
- So, one would like to think that the JV study team would have a huge amount of time to take that and really improve it and optimise that mining plan.

~The End~