Greatland Gold LON:GGP, the AIM-listed mining development and exploration company with a focus on precious and base metals announced earlier this week that it agreed to acquire the remaining 70% of its joint venture Havieron gold/copper project. This comes after entering into a binding agreement with subsidiaries of Newmont Corporation NYSE:NEM, the Colorado-based, multinational gold miner.
Greatland, which operates primarily in Western Australia, also confirmed it had fully-acquired the Telfer gold/copper mine, part of the Havieron complex, as well as other associated properties and assets in the Paterson region.
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The well-followed gold mining and exploration company said the acquisition was still subject to a few approvals. But these have now been mostly passed, including gaining approval from the Foreign Investment Review Board. Greatland has been granted approval from Australia’s FIRB, whilst Newmont has submitted its own approval application which remains pending.
Greatland’s management also said that it had gained consent from Western Australia’s Minister of Mines and Petroleum for the transfer of the relevant tenements associated with the acquisition. The environmental licence for Telfer Part V has also been renewed for another 10 years.
Shareholders ‘overwhelmingly’ in favour of acquisition
Greatland’s many shareholders were also happy with the acquisition, in the company’s words voting: “overwhelmingly [to] approve the acquisition and associated equity raising, with 99.75% of votes cast being in favour.” The company has also progressed approvals for its Telfer Tailings Storage Facility 8. Greatland hopes that all the loose threads will be tied up and the acquisition completed by 4Q24.
The company agreed to acquire the assets for a total consideration and debt repayment of up to USD475m (GBP363m) before adjustments, comprising USD207.5m in cash, including USD155.1m acquisition consideration subject to certain adjustments, and a USD52.4m repayment of the outstanding Havieron joint venture loan; USD167.5m in Greatland shares issued to Newmont and up to USD100m in deferred cash considerations.
Greatland’s is the Number Two gold project in Australia
Havieron, Greatland believes, is a world class gold-copper project with a mineral resource of 8.4 million ounces (Moz) of gold. This would make it the second-largest gold project in Australia. An independent review of the base case scenario estimates a 2.8 million tonnes per annum (Mtpa) mining operation. Average annual production would be 258,000 oz of gold at a lowest quartile all-in sustaining cost (AISC) globally of USD818/oz in steady state (the first 15 years), with a 20-year total life-of-mine (LOM).
The base case scenario includes a 15-month initial Telfer mine plan. It estimates production of 426,000oz gold at an AISC of USD1,454/oz from the restart of processing operations at Telfer. The mine went back into operations on 26th September. The company believes Telfer has the potential to generate significant near-term cash flow once the acquisition is completed. In parallel, Greatland said that several additional potential Telfer ore sources have already been drill-tested. These will be assessed with a view to extending the current Telfer LOM.
New CFO has a baptism of fire
Greatland’s newly appointed CFO, Dean Horton, is an Australian executive with experience in corporate financing, especially project finance and debt-funding. He has had a busy time since he joined the miner in July. The company had to deal with a media leak of the financial structuring of the acquisition. The leak led to a suspension of trading on AIM on 9th September, for two days, until it had announced the successful USD325m institutional placement of new shares on AIM to part-fund the acquisition. This was followed-up with a separate retail placing of GBP6.7m.
Horton has also been involved in structuring the debt funding for Havieron. He proposed a AUD650m (GBP333.4m) seven-year term loan to fund the cost of construction and development of Havieron; a five-year Revolving Credit Facility of AUD100m to pay for operational costs at Havieron and a five-year AUD25m contingency facility to cover guarantees to banks and contractors.
Greatland opened trading on 15th October at 6.1849p, 6.63% ahead of where it was last year but down 35.5% year-to-date. The company’s shares have ranged between 4.95p and 11.7p over a 52-week period and Greatland’s market cap is GBP645.4m.
It seems that it could be exciting times ahead for investors in Greatland Gold.
