TIDMGGP
RNS Number : 2688T
Greatland Gold PLC
21 July 2022
21 July 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED
UNDER THE UK MARKET ABUSE REGULATIONS. ON PUBLICATION OF THIS
ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION
IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
Greatland Gold plc
("Greatland" or "the Company")
Option for additional 5% Havieron JV interest set at US $60m
Outcome represents a substantial uplift at over five-times
compared
to the price implied by the October 2021 Pre-Feasibility
Study
Further to the announcements on 21 December 2021 and 28 April
2022, Greatland Gold plc (AIM:GGP) is pleased to announce that the
process for determining the option price for the 5% joint venture
interest under the Havieron Joint Venture Agreement (JVA) has been
finalised. This has resulted in an option price of US$60m at which
Newcrest Mining Limited (Newcrest) can acquire an additional 5%
interest in the Havieron Joint Venture from Greatland.
Price determination
-- Option price represents a 5.3-times or around US$1 billion
increase in value in Havieron when compared to the NPV implied by
the 2021 Stage 1 Pre-Feasibility Study (PFS) covering part of the
South-East Crescent issued in October 2021
-- This substantial increase at over five-times was achieved
notwithstanding the option price being determined as at 15 December
2021, only 64 days after release of the PFS
-- The significant uplift was built on Greatland's updated
Mineral Resource and Ore Reserve estimate which, when compared to
the October 2021 PFS Mineral Resource and Ore Reserve estimate,
represented an increase in total gold content of 53% and 50%
respectively. The updated estimates by Greatland were based on a
December 2021 drilling information cut off and were independently
confirmed ahead of announcement by Greatland on 3 March 2022
-- Pursuant to the JVA, Newcrest has 30 business days to
exercise this option and, if exercised, Greatland will be in the
enviable position of being debt-free with a world-class, low cost
and long-life project which, subject to a positive decision to
mine, will move towards first production
Highly prescriptive JVA process and principles
-- Determination of the option price of US$60m as at December
2021 was in accordance with the highly prescriptive process and
principles agreed in the March 2019 Havieron Farm-In Agreement and
November 2020 Havieron JVA and, as such, does not in Greatland's
view represent a true market value for Havieron. This included a
prescribed process where an adjudicator had a binary choice between
the option prices proposed by each of the two parties, and
therefore was not permitted to independently determine a different
option price. The JVA included a number of valuation principles,
including in respect of commodity prices, which Greatland considers
materially impacted its ability to advocate for a higher option
price
-- Furthermore, given the option price was determined as at 15
December 2021, only geological data available up to that date could
be considered. The option price does not take into account the
subsequent growth drilling and development progress at Havieron
since that date
-- The significant uplift over the two-month period demonstrates
the value creation trajectory of Havieron, with the expanded
Feasibility Study remaining on track for the December 2022 quarter,
the future potential to define the bulk mine zonations and
continued benefit from the ongoing growth drilling to deliver
exploration success
Looking ahead
-- Havieron has significant growth potential with the full size
and scale of this high-grade gold and copper orebody continuity
still to be delineated
-- In Newcrest, Greatland has an experienced global-major, as a
joint venture partner and operator of the Havieron project
-- Greatland and Newcrest are working together to accelerate the
development of the project and maximise its future value
-- Feasibility Study remains on track for December 2022 quarter
with an expected rapid pathway to commercial production
-- Management is confident that Havieron represents a
world-class, low-cost development being fast-tracked to production
through leveraging the existing Telfer infrastructure
-- The combination of gold and copper diversifies Greatland's
revenue with Havieron expected to be a lowest quartile cost
asset
Shaun Day, M anaging Director of Greatland Gold plc,
commented:
"Greatland has delivered a tremendous result in delivering a
value uplift of over five-times when compared to the Stage 1 PFS
which was released just two months before the option pricing date.
To achieve this uplift is testament to the strength of the
technical and commercial teams that we have built here at Greatland
as well as the relentless growth of Havieron.
"Earlier this year, Greatland delivered a 53% increase to the
JORC Mineral Resource and an updated mine plan, supporting a 50%
increase to the JORC Ore Reserve, which formed the foundation of
shifting the paradigm to achieve the uplift in the option price to
around US$1 billion above the price implied by the limited Stage 1
PFS on the South-East Crescent.
"Looking ahead, Greatland looks forward to working to realise
the tremendous opportunity at Havieron to develop a low risk, low
capex and world class gold-copper mine. The substantial uplift
demonstrates the value creation trajectory of Havieron is
exceptional with an upcoming expanded Feasibility Study, the future
potential to define the bulk mine zonations and the continued
benefit from the ongoing growth drilling to deliver exploration
success.
"We are focused on delivering Havieron into production and are
excited to unlock its growing potential. As we move beyond this
stage of Havieron, we can turn our focus onto our tremendous
portfolio of assets which provide the potential to create
substantial additional value from exploration success."
Background to Havieron and Joint Venture Agreement with
Newcrest
The Havieron copper-gold project is operated by Newcrest under a
JVA with Greatland. Newcrest holds a joint venture interest of 70%
(30% Greatland). The JVA provides Newcrest with an option to
acquire a further 5% at a price determined by a prescribed process.
If the option is exercised, Newcrest will be entitled to an overall
joint venture interest of 75% (Greatland 25%).
Under the terms of the JVA, the option price has been determined
by a highly prescriptive process, including being based only on
drilling data up to 15 December 2021 and using long term estimates
of commodity prices (which are significantly below prevailing
market prices). In particular, the adjudicator had a binary choice
between the option prices put forward by the two parties, and
therefore was not permitted to determine its own independent view
on the option price. Accordingly, it was not in the Company's view
designed to achieve a true market value.
Higher offer
In March 2022, Greatland submitted a non-binding offer to
Newcrest to acquire a 5% stake in Havieron for a substantially
higher value than determined as the option price. Greatland did so
because it considered the value of Havieron to be well above the
value implied by the option price and would, in the opinion of the
directors, still have presented a financially compelling outcome to
Greatland shareholders. Newcrest did not engage on this offer.
Use of funds
Subject to Newcrest exercising its option, the proceeds will be
used by Greatland to repay in full its existing US$50m debt
facility and become debt-free. This facility was a valuable source
of funds used to finance early work construction of the exploration
decline and growth drilling programme from December 2020 to June
2022 and this repayment allows Greatland to de-leverage its balance
sheet.
Havieron growth continues
This option price determination reveals that Havieron's growth
continues with a 5.3-times uplift in value to a NPV of US$1,200m
(100% basis) as at December 2021 when compared to the Stage 1 PFS
NPV of US$228m released only two months prior(1) . This comparison
has been made against the Newcrest released Stage 1 PFS NPV, as
this NPV also did not incorporate the prevailing spot market
commodity prices. The Stage 1 PFS was based on a Mineral Resource
estimate with a drilling information cut-off date of February 2021
and the mining of Ore Reserves.
Since the PFS, Greatland has announced, on 3 March 2022, an
updated Mineral Resource estimate at Havieron demonstrating +50%
growth to 6.5 milli on Oz AuEq, based on a drilling information
cut-off date of 2 December 2021, and has developed a mine plan that
incorporated this additional Mineral Resource to deliver an
expanded Ore Reserve. These updates were used by Greatland to
advocate for an improved option price.
The updated Mineral Resource estimate formed part of Greatland's
thorough preparation, which combined the Company's in-house
capabilities with the sourcing of external submissions
including:
-- Stuart Masters (Resource Competent Person; former JORC
Executive Member, AusIMM)
-- Entech (Reserve mine planning)
-- SRK Consulting (Resource and Reserve review and technical
advisory)
-- PricewaterhouseCoopers Securities Ltd (financial
advisory)
-- Sternship Advisors (corporate advisory)
-- Omnia (team led by Neville Power for corporate and technical
advisory)
-- Senior Counsel (JVA interpretation)
Collectively, this preparation allowed Greatland to successfully
shift the paradigm to achieve the significant uplift in the option
price above that implied by the limited Stage 1 PFS on the
South-East Crescent , in circumstances where the PFS had only been
published approximately two months prior to the option price
determination date.
Competent Persons' Statements for JORC 2012 Mineral Resources
and Ore Reserves
The information in this document that relates to the Mineral
Resources and Ore Reserves for Havieron is extracted from the RNS
announcement titled "Updated Mineral Resource substantially
increases Havieron Resource and Reserve" released on 3 March 2022,
and available on Greatland's website. The Company confirms that it
is not aware of any new information or data that materially affects
the Mineral Resources and Ore Reserves for Havieron in the original
RNS announcement.
Forward Looking Statements
This document includes forward looking statements and forward
looking information within the meaning of securities laws of
applicable jurisdictions. Forward looking statements can generally
be identified by the use of words such as "may", "will", "expect",
"intend", "plan", "estimate", "anticipate", "believe", "continue",
"objectives", "targets", "outlook" and "guidance", or other similar
words and may include, without limitation, statements regarding
estimated reserves and resources, certain plans, strategies,
aspirations and objectives of management, anticipated production,
study or construction dates, expected costs, cash flow or
production outputs and anticipated productive lives of projects and
mines.
These forward looking statements involve known and unknown
risks, uncertainties and other factors that may cause actual
results, performance and achievements or industry results to differ
materially from any future results, performance or achievements, or
industry results, expressed or implied by these forward-looking
statements. Relevant factors may include, but are not limited to,
changes in commodity prices, foreign exchange fluctuations and
general economic conditions, increased costs and demand for
production inputs, the speculative nature of exploration and
project development, including the risks of obtaining necessary
licences and permits and diminishing quantities or grades of
reserves, political and social risks, changes to the regulatory
framework within which Greatland operates or may in the future
operate, environmental conditions including extreme weather
conditions, recruitment and retention of personnel, industrial
relations issues and litigation.
Forward looking statements are based on assumptions as to the
financial, market, regulatory and other relevant environments that
will exist and affect Greatland's business and operations in the
future. Greatland does not give any assurance that the assumptions
will prove to be correct. There may be other factors that could
cause actual results or events not to be as anticipated, and many
events are beyond the reasonable control of Greatland. Readers are
cautioned not to place undue reliance on forward looking
statements, particularly in the current economic climate with the
significant volatility, uncertainty and disruption caused by the
COVID-19 pandemic. Forward looking statements in this document
speak only at the date of issue. Greatland does not undertake any
obligation to update or revise any of the forward looking
statements or to advise of any change in assumptions on which any
such statement is based.
(1) See the Company's RNS announcement dated 12 October 2021 -
Havieron South-East Crescent - Pre-Feasibility Study release for
details of the Newcrest released Stage 1 PFS and the key parameters
of the PFS and economic assumptions used.
Enquiries:
Greatland Gold PLC +44 (0)20 3709 4900
Shaun Day info@greatlandgold.com
www.greatlandgold.com
SPARK Advisory Partners Limited (Nominated
Adviser)
Andrew Emmott/James Keeshan +44 (0)20 3368 3550
Berenberg (Joint Corporate Broker and Financial
Adviser)
Matthew Armitt/ Jennifer Lee/ Jack Botros +44 (0)20 3207 7800
Canaccord Genuity (Joint Corporate Broker
and Financial Adviser)
James Asensio/Patrick Dolaghan +44 (0)20 7523 8000
Hannam & Partners (Joint Corporate Broker
and Financial Adviser)
Andrew Chubb/Matt Hasson/Jay Ashfield +44 (0)20 7907 8500
SI Capital Limited (Joint Broker)
Nick Emerson/Sam Lomanto +44 (0)14 8341 3500
Luther Pendragon (Media and Investor Relations)
Harry Chathli/Alexis Gore +44 (0)20 7618 9100
Notes for Editors:
Greatland Gold plc (AIM:GGP) is a mining development and
exploration company with a focus on precious and base metals . The
Company's flagship asset is the world class Havieron gold-copper
deposit in the Paterson region of Western Australia, discovered by
Greatland and presently under development in Joint Venture with
Newcrest Mining Ltd.
Havieron is located approximately 45km east of Newcrest's Telfer
gold mine and, subject to positive decision to mine, will leverage
the existing infrastructure and processing plant to significantly
reduce the project's capital expenditure and carbon impact for a
low-risk and low-cost pathway to development.
Construction of the box cut and decline to develop the Havieron
deposit commenced in February 2021. An extensive growth drilling
programme is presently underway at Havieron with a view to further
expanding the understanding and scale of the ore body.
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 is focused on safe, low-risk
jurisdictions and is strategically positioned in the highly
prospective Paterson region. Greatland has a total six projects
across Australia with a focus on becoming a multi-commodity mining
company of significant scale.
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END
MSCGUGDRCUDDGDB
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