Transformational Acquisition of Havieron and Telfer
Underwritten US$325 million Placing and Proposed Retail Offerof up to ~US$9 million
Publication of AIM Admission Document and Notice of General Meeting
Greatland Gold plc (AIM:GGP) and certain of its wholly owned subsidiaries have entered into a binding agreement with certain Newmont Corporation subsidiaries (Newmont) to acquire, subject to certain conditions being satisfied, a 70% ownership interest in the Havieron gold-copper project (Havieron) (consolidating Greatland’s ownership of Havieron to 100%), 100% ownership of the Telfer gold-copper mine (Telfer), and other related interests in assets in the Paterson region (together, the Target Assets) (the Acquisition).
The Company has agreed to acquire the Target Assets for total consideration and debt repayment of up to US$475 million (before adjustments), comprising:
- US$207.5 million cash, including US$155.1 million Acquisition consideration (subject to certain adjustments) and a US$52.4 million repayment of the outstanding Havieron joint venture loan;
- US$167.5 million in the form of 2,669,182,291 new Greatland shares to be issued to Newmont at the Issue Price (as defined below); and
- up to US$100 million in deferred cash consideration.
Completion of the Acquisition is subject to the satisfaction of certain conditions precedent described in the “Further Information” section at the end of this announcement. Completion of the Acquisition is targeted to occur during Q4 2024.
The Company has published an admission document in relation to the Acquisition and Readmission (as defined below) (the Admission Document) that is available on the Company’s website at https://greatlandgold.com/investors/regulatory-news/ to persons within permitted jurisdictions.
The Company has therefore requested the restoration of trading in the Company’s securities on AIM, which is expected to take place at 7.30 am, 11 September 2024
Transaction rationale
The acquisition of Havieron and Telfer is a highly accretive and strategically compelling transaction that has the potential to deliver material value to Greatland’s shareholders.
As the discoverer of Havieron and an existing joint venture owner, Greatland’s team has an unrivalled knowledge of the project. Consolidation of 100% ownership of Havieron and the acquisition of Telfer provides Greatland the opportunity to control the integration and optimisation of the combined assets, with the objective of creating a generational Australian gold-copper mining complex.
Key highlights include:
- Highly accretive acquisition: 1.4x accretion on an attributable Mineral Resources per share of the enlarged Greatland group (the Enlarged Group).
- Havieron: Havieron is a world class gold-copper project with a Mineral Resource of 8.4Moz gold equivalent metal content. The independently reviewed base case (the Greatland Base Case), set out in the Competent Person’s Report in the Admission Document, estimates a 2.8Mtpa mining operation with average annual production of 258koz gold equivalent at a lowest quartile all-in sustaining cost (AISC) globally of US$818/oz in steady state (first 15 years), with a 20-year total mine life. The Greatland Base Case will be refined and optimisation opportunities will be assessed in a feasibility study targeted to be completed within 12 months from Acquisition Completion, including potential mining throughput expansion utilising a bulk ore handling solution.
- Telfer production: The Greatland Base Case includes the high confidence 15-month initial Telfer mine plan, as set out in the Competent Person’s Report in the Admission Document, and such plan includes total estimated production of 426koz gold equivalent at an estimated AISC of US$1,454/oz from the restart of processing operations at Telfer (expected to occur in late September or October), which has the potential to generate significant near-term cash flow for the Company from Acquisition Completion. In parallel, a number of additional potential Telfer ore sources have already been drill tested and will be assessed with a view to extending the current Telfer mine life.
- Consolidation of mine, infrastructure and control: Telfer infrastructure substantially de-risks Havieron’s development and provides expansion optionality. Acquisition of 100% ownership of the Target Assets gives Greatland the opportunity to optimise and develop an integrated Telfer-Havieron mining and processing operation.
- Alignment between Greatland and Newmont: Newmont is expected to hold up to 20.4% of the Enlarged Group, with an initial 12 month voluntary lock-in, a further 12 month orderly market arrangement and a relationship agreement in place to affirm alignment. Up to US$100 million of the Acquisition consideration is deferred until Havieron commences commercial production and is also subject to a gold price hurdle. Realisation of any deferred cash consideration is linked to a successful operational scenario, demonstrating Newmont’s support of Greatland’s stewardship of Havieron and Telfer.
- Clear pathway to fully fund Havieron development: Greatland has executed a non-legally binding Bank Debt Letter of Support for A$750 million in proposed banking facilities for the development of Havieron, with Tier-1 lenders ANZ, HSBC and ING Bank. Combined with working capital from the Equity Raising (as defined below) and expected cash flow generation from Telfer, the Company considers there is a clear and non-dilutive pathway to the Havieron development being fully funded.
- Upside potential: Greatland considers that there are significant upside opportunities as a result of the Acquisition, including potential extension of the current Telfer mine plan, optimisation of Havieron throughput potential and Telfer processing capacity, supplementation of Havieron ore with Telfer ore, and a potential regional ‘hub & spoke’ strategy enabled by Telfer infrastructure.
- Underwritten, cornerstone supported equity raising: Approximately US$325 million institutional placing is underwritten by Canaccord Genuity Limited (the Placing Agent or the Bookrunner), with support of up to US$100 million by Wyloo Consolidated Investments Pty Ltd (Wyloo).
Following completion of the Acquisition, the operating strategy for the Enlarged Group is to renew and develop an integrated Telfer-Havieron mining and processing operation, to create a generational Australian gold copper mining complex. Further information about the Enlarged Group’s operating strategy and objectives is set out in the Admission Document that is now available on the Company’s website at https://greatlandgold.com/investors/regulatory-news/.
Within approximately six months from Acquisition Completion, Greatland intends to undertake a listing of the Enlarged Group on the Australian Securities Exchange (ASX), following which the Enlarged Group would be listed on both ASX and AIM.
Equity raising overview
In connection with the Acquisition, the Company intends to conditionally place new ordinary shares (the Placing Shares) at 4.8 pence per Placing Share (the Issue Price) for a total equity raising of £248.6 million (approximately US$325 million) (the Placing). The Issue Price represents a discount of approximately 30% to the pre-Acquisition announcement undisturbed price on 6 September 2024.
The Placing Shares are being offered by way of an accelerated bookbuild available to qualifying investors, which will be launched immediately following the release of this announcement, in accordance with the terms and conditions set out in the Appendix at the end of this announcement. Certain directors of the Company are intending to participate in the Placing by subscribing for up to US$0.4 million in aggregate at the Issue Price.
In addition to the Placing, retail investors will have the opportunity to participate by a conditional offer for subscription for new ordinary shares (the Retail Shares) at the Issue Price via PrimaryBid for a total equity raising of up to €8 million (approximately £6.8 million and US$8.8 million) (the Retail Offer). A separate announcement will be made shortly regarding the Retail Offer and its terms and conditions. The Retail Offer is expected to close at 4:45 pm on 12 September 2024 and may close early if it is oversubscribed.
Pursuant to the Placing and Retail Offer the Company intends to conditionally raise up to approximately US$333.8 million by issuing up to 5,319,736,029 new ordinary shares (the Equity Raising). The proceeds of the Equity Raising will be used to finance the US$155.1 million cash component of the Acquisition consideration, repayment of the US$52.4 million outstanding Havieron joint venture loan to Newmont, repayment of the outstanding balance of approximately A$7.1 million under the Wyloo working capital facility, the stamp duty payable by the Company on the Acquisition, the payment of transaction costs and expenses in connection with the Acquisition and the Equity Raising, and working capital requirements.
Canaccord is acting as Global Coordinator and Sole Bookrunner in connection with the Equity Raising. Merrill Lynch Markets (Australia) Pty. Limited is acting as financial adviser, and Simmons & Simmons LLP is acting as legal adviser, in relation to the Equity Raising and Readmission (as defined below). King & Wood Mallesons is acting as Australian legal advisor in relation to the Acquisition. SPARK Advisory Partners Limited (SPARK or Nominated Adviser) is acting as Nominated Adviser in connection with the Equity Raising and Readmission (as defined below). Sternship Advisers Pty Ltd and SCP Resource Finance LP are acting as Co-Lead Managers in connection with the Equity Raising.
Settlement of the Equity Raising and admission of the ordinary shares issued pursuant to the Equity Raising to trading on AIM is conditional upon, amongst other things, existing Company shareholders approving the Acquisition and the issue of such shares, but it is not conditional on completion of the Acquisition or on Readmission (as defined below). A general meeting of the Company’s shareholders will be convened pursuant to a notice contained in the Admission Document for 10 a.m. on 30 September 2024 (the General Meeting), and admission of the shares issued pursuant to the Equity Raising to trading on AIM is expected to occur shortly thereafter on at 8 a.m. on 1 October 2024.
The Acquisition constitutes a “reverse takeover” under the AIM rules for companies published by London Stock Exchange plc (the AIM Rules for Companies), and is therefore conditional upon the approval of existing Company shareholders at the General Meeting. A reverse takeover involves the cancellation of the existing ordinary shares of the Company from trading on AIM and a new application for the enlarged share capital of the Company (after completion of the Equity Raising and the Acquisition) to be admitted to trading on AIM (Readmission).
Commenting on the transaction, Greatland’s Managing Director, Shaun Day, said:
“We are delighted to be combining the Havieron and Telfer projects under our single ownership, making Greatland a material producer of gold and copper. Through constructive bilateral discussions with Newmont, our joint venture partner at Havieron, we now have a compelling opportunity to create value for our shareholders.
“Havieron is a truly world class orebody with a defined pathway to become a low-cost long life gold-copper asset of significant scale.
The acquisition of Telfer, with a defined mine plan that is materially de-risked with substantial ore stockpiles, and significant mine life extension prospects, provides us the opportunity to take advantage of present gold market strength. Telfer production is expected to generate free cash flow, which we expect will help to self-fund the Havieron development.
“The acquisition will allow Greatland to finalise and complete the Havieron feasibility study, to determine the optimal mining throughput rate and development plan to deliver maximum value from the project by leveraging the existing Telfer infrastructure. Additionally, we look forward to integrating an experienced and knowledgeable existing workforce into the Greatland team.
“We have debt funding support for our plans from a syndicate of leading banks, and cornerstone shareholders that are supporting the equity placement being launched today. The capital raising has been structured to allow our shareholders to participate, and we hope they share our excitement in this transformational step in creating an ambitious new gold and copper producer in an exceptional and established Australian mineral province.”
Commenting on the transaction, Greatland’s Chairman, Mark Barnaba, said:
“The consolidation of 100% ownership of Havieron and acquisition of Telfer is the opportunity which Greatland has been coveting for the past three years, so we are delighted to be announcing the transaction today.
“On behalf of Greatland I extend my sincere gratitude to the Newmont team, for the collaborative approach they have taken to reaching this agreement. We warmly welcome Newmont as a future major shareholder of Greatland and will continue our strong working relationship to make this transaction a success for all stakeholders.
“We also extend our thanks to Wyloo as the cornerstone investor in the Equity Raising in support of the Acquisition. This is a transformational deal for all Greatland shareholders and we are excited to see our business develop to become a major Australian gold and copper producer.”
Irrevocable undertakings
The Company has received irrevocable undertakings from the Directors that they will vote, or will procure that the relevant registered holders vote, in favour of the resolutions to be proposed at the General Meeting in respect of 40,342,372 ordinary shares, representing, in aggregate, approximately 0.79% of the Company’s existing ordinary shares.
The Company has also received irrevocable undertakings from Wyloo that it will vote, or will procure that the relevant registered holders vote, in favour of the resolutions to be proposed at the General Meeting in respect of those 430,024,390 ordinary shares it is interested in, representing, in aggregate, approximately 8.45% of the Company’s existing ordinary shares.
Shareholders should note that if the resolution to approve the Acquisition is not passed, the Acquisition and the Equity Raise will not be completed, in which event the Company will continue to pursue its existing strategy in respect of the future operation of the Havieron project in joint venture.
You must read the whole of the Admission Document and not rely on only part of the Admission Document or this announcement. In particular, you are recommended to consider carefully Part 6 (Risk Factors) of the Admission Document.
Contact
For further information, please contact:
Greatland Gold plc
Shaun Day, Managing Director | Rowan Krasnoff, Head of Business Development info@greatlandgold.com
