HIGHLIGHTS from LSE Webinar - 21 Mar 2022

[DipSard]

HIGHLIGHTS 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

* Updated Probable Ore Reserve
Have been able to bring in more reserves as exploration drilling continues, focusing on the HG (High Grade) aspects and have a 3g ore reserve with >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 Havieron story.

* Resource to Reserve Conversion
Exceptional amount of growth from just 10 months of drilling from Feb-Dec 2021 with a gold equivalent of 3.7g across 2.9Moz and a conversion rate from resource to reserve of 86% that is really unique and talks to the quality of the asset, just the SE Crescent, much broader zonation of the ore body and growth down the SE Crescent ahead.

* Havieron Vertical Profile
Significant expansion across ore body and really significant growth at the top where more drilling has taken place. Really encouraging that where you had an 800m cut-off previously, as infill drilling has been conducted below it, this has all also come into the ounces.
All of these ounces are in a 650m envelope where often you’ll see 2000-4000 ounces across a multi kilometre strike length vs a small envelope, hence the efficiency of the mining and infrastructure to extract these ounces for every vertical metre of development and decline put in is far greater than you usually get.10,000 ounces per vertical metre is astounding, few mines globally match this - even less over such a small strike zone.

* Catalysts for Future Value
Everything discussed so far has been about the SE Crescent as the highest grade part of the mine, but considering the overall volume of the zonation, some 4/5’s is still ahead, together with additional growth in the SE Crescent.
Encouraging that joining of the Northern Breccia and NW Pod is creating a northern structure of relatively HG material, not as high as crescent but good grade and augmented by what is seen in the Eastern Breccia (EB) and have also intercepted a 6g area on the south of the EB. Have never hit that kind of grade outside of the SE crescent and especially over that drill width.
Speculation on whether it is an extension of the SE Crescent, does it enlarge and go down that way or does it have its own HG element? The EB alone adds to the likelihood of a bulk mine by bringing in a larger volume / profile of ounces but if it also has an HG element to it, then it will be a tremendous addition.

* Updated Mine plan
Now has 6 vertical fronts, the updated plan from GGP entailed a lot of work and has been double peer reviewed by Stuart Masters from the JORC committee, SRK Consulting and the mine plan by 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 two vertical fronts, you effectively get a 50% increase of reserve from 2 Mtpa (million tonnes per annum) over 7 years to 3m Mtpa over 12 years, absolutely transformative.
* 5% Option exercise and negotiations
SD Inherited the JV agreement, disappointing to have to sell 5% of primary asset but we will receive financial compensation. Disappointing it is being based on PFS (not solely though) as just scratching the tip of the iceberg but we will see compounded average growth of the asset going forward as looking back in 2019 we sold 65% on a $100m valuation, then moving forward to the PFS in Oct 2021, a value of $250m which goes up to about $450m at current gold spot price and then the benefits of another 10 months of drilling.
FMV will not be assessed just on PFS, the valuation date is effectively 15/12/2021 and GGP’s updated Resource and Reserves (R&R) was dated for 05/12/2021.Reason for this is that this is the last date of assays GGP had prior to the 15th of December.
GGP’s preference wasn’t necessarily to announce the R&R update but always felt it was going to be a very material increase and proved to be the case with over a 50% increase in resource and over a 50% increase in reserve, hopefully giving a good understanding of the speed of growth at Havieron.
Processes like this tend to be opaque around timeframe so Shaun 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. He has a huge amount of confidence in the process the team has run around the updated R&R, understanding of the valuation and putting a team together who are well prepared to protect and understand our own value.

* Scallywag plans
Plan to drill there this year as the best way to unlock value in share price is by having exploration success at one of our 100% owned tenements. Potential to have a discussion with NCM about whether we bring this into the Hav JV or develop ourselves as 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.
Got some really high-quality targets there, will continue to drill and pleased with some of the intercepts we have but equally GGP don’t pattern drill as quite selective. Lots of reasons to feel buoyant about it but crucially it’s about translating optimism and opportunities into defined mineralisation.

* Update on the decline?
Most challenging part of the decline are the early parts when the rock is soft so widths of the cut are much shorter before you have to support the ground. Still in that early part and just about to move from Stage 1 with smallest cuts into Stage 2 with 2-2.5 times larger cuts. With depth, time and pressure the ground becomes more compacted and at some stage will get into the country rock and that’s beautiful mining conditions.
NCM did come out and say they’re a bit behind schedule and advised the market that completion of decline that was pegged for 1st half of the Australian Financial Year 2024 (01/07/23 to 31/12/23) is now more likely to be 2nd half of FY2024 (01/01/24 to 30/06/24). Not talking about a huge change at this stage and once we get into the better ground there’s a lot more that the team can do to apply acceleration.
* Bank funding
$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 (unusual for JV loans), the banks will probably make us deal with that as would be rare that you would have a secured lender sitting above the banks.
Shaun thinks there is an opportunity to bring in some debt and how impressive it is we can do this with a PFS because it’s a Tier 1 asset in a Tier 1 jurisdiction and our JV partner is a major. He thinks we’re going to achieve something rarely seen in the debt market, which is to fund a PFS.

* The DFS
Expected from 01 Oct to 31 Dec 2022, the PFS was released in October 2021 and rule of thumb would be a DFS around 12 months later and should continue to show the growth and progress of the asset. Shaun would like to see it continue to reflect the ongoing drilling and capture GGP’s broader R&R. NCM now have 9 months to optimise GGP’s R&R, which he feels is ample time and would like to think that the JV study team would really improve it and optimise the mining plan.