Greatland Gold – the Havieron project has ‘world-class’ potential and is well-funded in its progress
Greatland Gold (LON:GGP) is a mining development and exploration company that is focused upon precious and base metals.
The company’s flagship asset is centred upon its 30% interest in the ‘world-class’ Havieron gold-copper deposit in the Paterson region of Western Australia, that was discovered by Greatland and is presently under development in a Joint Venture with the ASX gold major Newcrest Mining.
Havieron is located some 45km east of Newcrest’s operating Telfer mine, which has been operating for over 37 years.
In September 2016 Greatland acquired the prospect from a private miner for A$250,000.
The Havieron licence area, was previously relinquished by Newcrest after some exploration activity in the late 1990’s had intersected mineralisation.
Subsequently the company identified around 50 iron oxide copper gold targets in the area and reported its first drill results in 2018.
In March 2019 Newcrest, Australia’s largest gold producer, agreed a $65m farm-in agreement, taking in exploration work and the delivery of a Prefeasibility Study to assess the potential of a mining project.
It is intended to leverage the existing Telfer infrastructure and processing plant, giving access to Telfer will de-risk the development, helping to reduce capital expenditure and lowering the project's carbon footprint.
Since the initial inferred mineral resource estimate of 4.2Moz in Q4 2020, the mineral resource has grown considerably, advancing over 50% by Q1 2022 to 6.5Moz at 2.2 g/t Au-eq which underpins a long mine life.
The box cut and decline to the orebody commenced in February 2021 and continued to accelerate with record advancement achieved in the December 2022 quarter.
In August 2022, Newcrest released an updated Mineral Resource for Havieron for 85Mt at 2.0g/t Au and 0.26% Cu for a total of 5.5Moz of Au and 222kt of Cu, based on a November 2021 drilling cut-off date.
Greatland has a proven track record of discovery and exploration success.
It is pursuing the next generation of tier-one mineral deposits by applying advanced exploration techniques in under-explored regions.
The company has multiple projects across Australia with a strategy to become a multi-commodity mining company of significant scale.
It is focused on safe, low-risk jurisdictions and is strategically positioned in the highly prospective Paterson region.
The group has a 49% interest in the Juri Joint Venture, which consists of the Black Hills and Paterson Range East exploration licences in the prospective Paterson region and is operated by Greatland under a joint venture with Newcrest.
Newcrest has the right to earn up to 75% in the project by spending up to A$20m in total as part of a two-stage farm-in over five years.
Scallywag, 100%, is adjacent to the Havieron mining lease and contains 20 km of strike of the Yeneena Group metasediments directly north-west of Havieron.
The Greater Paterson, 100%, includes the Rudall, Canning, Pascalle, Wanman and Salvation Well exploration licences. The licences collectively cover more than 1,000 sq km of ground which is considered prospective for intrusion-related gold-copper systems and Havieron and Telfer-style deposits.
Ernest Giles, 100%, is located in central Western Australia, covering an area of approximately 1,950 sq km with approximately 180 km of gold prospective geology. The eastern Yilgarn Craton is one of the most highly mineralised areas in Western Australia and is considered prospective for large gold deposits.
Panorama, 100%, consists of three adjoining exploration licences, covering 157 sq km in the Pilbara region of Western Australia. The tenure is considered to be highly prospective for gold and cobalt.
Bromus, 100%, is located 25 km South-West of Norseman in the southern Yilgarn region of Western Australia. Bromus consists of two licences, covering 87 sq km of under-explored greenstone and intrusive granites of the Archean Yilgarn Block at the southern end of the Kalgoorlie-Norseman belt.
Firetower and Warrentinna, Tasmania, 100%. Firetower is located in central north Tasmania and covers an area of 62 sq km. Warrentinna is located 60 km North-East of Launceston in north-eastern Tasmania and covers an area of 37 sq km with 15 km of strike prospective for gold.
Newcrest and Newmont – bid situation
On 6 February 2023, Newcrest announced that it had received a conditional and non-binding indicative proposal from the Newmont Corporation to acquire 100% of the issued shares of Newcrest by way of a scheme arrangement.
It is claimed that foreign ownership of the Australian gold industry could exceed 50% if Newmont succeeds in its takeover of Newcrest.
Wyloo Metals – strategic placement
On 12 September 2022, Greatland entered into an agreement for a strategic equity investment with Wyloo Metals, a privately owned minerals investment company. Wyloo subscribed for 430,024,390 shares for A$60m (£33.5m), at 8.2p per share, Settlement occurred on 14 October 2022 at a converted share price of 7.8p per share.
As part of the equity subscription, a further £35m may be raised from Wyloo in the future through the conversion of warrants with a strike price of 10p per share.
Latest Results – Interims 6th March 2023
The company reported that the six months to end December 2022 saw the group cash position at £59.8m (June 2022 £10.4m) which reflected the fundraising in the period.
Gross equity proceeds in the first half year were £63.3m, which included £33.5m from Wyloo Metals, the private mineral investment company.
In the period the group signed off a debt commitment letter for £130m with ANZ, HSBC and ING in order to support the future Havieron development.
Total debt was £43.5m (June 2022 £43.1m), while investment in the development of Havieron was £12.2m, with exploration expenditure of £2.7m (£3.1m).
The operating loss was £3.5m (£2.9m), while the statutory loss was £13.3m.
The group’s net assets stood at £62.8m at the end of the first half.
A further £0.4m was spent on exploration and evaluation for drilling to test geophysical targets outside the known Havieron system.
A total of 283,084 metres from 342 holes have now been drilled to date, with all the latest completed holes continuing to intersect mineralisation, and 19 reporting significant mineralisation.
Managing Director, Shaun Day, stated that:
"Greatland has continued to execute on its growth strategy to build a world-class mining company. During the half year, Greatland favourably resolved the Havieron option process, raised equity capital, secured debt commitments and added high quality talent to its board and management team.
The Havieron gold-copper project in Western Australia has continued to advance with the Mineral Resource having grown to over 6.5Moz AuEq. The advancement of the underground achieved record advance rates with over 1,800 metres of development complete.
Together with the recent strategic investment by Wyloo and debt commitments, Greatland is now in a strong financial position as we progress towards production and cashflow from Havieron."
The Group’s Equity
With 5,057,126,282 shares in issue the company is capitalised at £374m.
The group’s largest shareholder is Wyloo Consolidated Investments with 8.50% of the equity, other large holders include Van Eck Associates Corp (4.14%), Five Diggers Pty (2.75%), Tribeca Investment Partners (2.58%), Callum Baxter (2.25%), BlackRock Fund Advisors (1.23%), and Michael Borelli, Dir, (0.52%).
Analyst Opinion – Target Price range 19p - 20p
Analysts Richard Hatch and Charlie Rothbarth, at Berenberg, view the results as neutral and do not expect them to move the share price.
They consider that Greatland Gold offers near-term catalysts, both around Havieron (ie a feasibility study, drilling results and resource expansion potential) and elsewhere (exploration in the Paterson region, business development).
They base their 19p Target Price on the Newcrest evaluation and the assumption of further ounce delineation.
“Given that Greatland is at the development stage of the asset cycle, there is little in the financial results that will move the shares, we think.”
At Canaccord Genuity their analysts, Alex Bedwany and Paul Howard, have a 20p Target Price. They consider that the results are of limited value given the pre-production status of the Havieron gold project.
They note that progress on the Havieron decline continues and, in their view, the project is fully-funded.
“The key upcoming catalysts/pieces of news flow are:
1) the completion of the DFS (which we note will likely only represent a microcosm of the project’s ultimate potential),
2) continued drilling to expand the resource size (currently sitting at 85 Mt @ 2.0 g/t & 0.26% Cu), and
3) a potential agreement in the Newmont-Newcrest takeover discussions, which may render the Telfer plant as peripheral to the overall portfolio and offer GGP the chance to acquire the plant and 100% of the Havieron project.”
Conclusion – climbing back above 10p
With experienced management this group is now scaling up its interests. It has strengthened up its operations.
With solid strategic partnerships that have put forward long-term funding, the group now has sufficient debt facilities for its future development.
There is no doubt that the company has massive potential, but it will take some time to come to fruition – but then nothing is quick in the mining business.
It is going to take a long time for the group’s shares to recover to its December 2020 peak of 37p, however at the current 7.4p they should really gain more investor interest.
A year ago, they were trading at around the 17p level and there is so much more to the company than this time last year.
The group’s planned listing on the Australian Stock Exchange this year should prove beneficial to its overall marketability.
A climb back above the 10p line appears very possible, in anticipation of the declaration of its Feasibility Study due later this year.