Greatland Gold PLC (AIM:GGP) Update on Havieron Consideration

Successful renegotiation of contingent consideration due under original 2016 Havieron acquisition

Vendor has agreed to a two-year restriction on dealing with the Greatland shares to be issued, reflecting their support for Greatland and conviction in the Havieron project

Reduction of 4.5% in the number of Greatland shares to be issued a saving of over 6.5 million shares

Greatland shares to be issued by 29 July 2022

Greatland Gold plc (AIM:GGP) is pleased to announce it has successfully renegotiated its obligations with respect to the contingent consideration due under the original 2016 acquisition of the Havieron project.

The requirement to pay the contingent consideration, in the form of Greatland shares, remains from the highly value accretive acquisition by Greatland of Havieron.

The consideration for this 2016 transaction comprised an initial payment of AUD25,000 in cash and 65,490,000 new ordinary shares and (originally) a further 145,530,000 new ordinary shares conditional upon Greatland’s ownership interest in Havieron reducing to 25% (or less) or upon a decision to mine at Havieron (whichever occurs earlier). This latter tranche of shares (modified as described below) will be issued to the vendor’s nominee, a private Australian investment vehicle, Five Diggers Pty Ltd.

In return for removing the conditionality on the contingent element of the consideration, the following modifications have been agreed:

  • a two-year restriction on dealing with the Greatland shares to be issued to Five Diggers Pty Ltd, comprising:

– 12-month lock in, which prohibits any disposals of the shares in this period, subject to carve outs (such as recommend takeovers), plus

– a subsequent 12-month orderly market arrangement, requiring that, during this period, the shares may only be traded in consultation with the Company’s broker and through the Company’s broker (subject to customary carve outs); and

  • a reduction in the number of shares being issued by 4.5%, being a reduction of over 6.5 million shares, to a total of 138,981,150 new ordinary shares (with a value of approximately £14.1 million in aggregate at 10.15p per ordinary share, based on the closing price on 13 July 2022, and representing approximately 3.3% of Greatland’s enlarged issued share capital).

Shaun Day, Managing Director of Greatland Gold plc, commented: “This is an excellent outcome, simultaneously removing the uncertainty of this long-standing share issue, reducing shareholder dilution by decreasing the number of shares being issued and introduces a two-year restriction on dealing with the shares.

“The acceptance of these terms demonstrates the confidence Five Diggers has in Greatland, together with their conviction in the Havieron project, reflecting the tremendous evolution in its understanding and potential .

“Resolution of this share issue is timely given the current process under the JVA to determine the option exercise price for the 5% interest and with a Feasibility Study expected to be released in the December 2022 quarter.

“Resolving transition issues such as this share issue has been a priority and I’m very pleased with the outcome which improves and brings to final resolution this long outstanding contractual obligation.”

Peter Davis, from Five Diggers commented: “We have been thoroughly impressed with the rapid progress and growth of Havieron since acquisition by Greatland and we are pleased to become a shareholder in Greatland. Our intent is to be a long-term shareholder in Greatland and participate in its value creation as the full potential of Havieron and its exploration holdings are revealed.”

Amended acquisition terms

The purchase consideration was previously payable by Greatland in two tranches:

  • Tranche 1: Paid in 2017 at completion of the acquisition, being the issue of 65,490,000 Greatland fully paid ordinary shares and AUD25,000 in cash; plus
  • Tranche 2: An additional 145,530,000 Greatland fully paid ordinary shares which was payable conditional on Greatland’s ownership interest in Havieron reducing to 25% (or less) or a decision to mine at Havieron (whichever occurs earlier).

The revised arrangement signed with Pacific Trends Resources Pty Ltd and Five Diggers Pty Ltd announced today resolves and amends the Tranche 2 consideration, by reducing the Greatland shares to be issued to 138,981,150 fully paid ordinary shares, introduces a two-year trading restriction not previously contemplated in the transaction and removes the contingent triggers for the share issuance. The 138,981,150 Greatland shares will now be issued by 29 July 2022.

The Greatland shares will be issued to the vendor’s nominee, Five Diggers Pty Ltd, which is a private Australian investment vehicle and which has signed a lock-in and orderly market agreement with the Company.

Admission of shares and total voting rights

The new ordinary shares will be issued by no later than 29 July 2022 and application for these shares to be admitted to trading on AIM will be made as soon as practicable thereafter.

Following Admission, the total issued share capital of the Company will consist of 4,209,528,321 ordinary shares. As each ordinary share carries the right to one vote, the total number of voting rights in the Company will be 4,209,528,321. This number may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA’s Disclosure and Transparency Rules.

Background to the Havieron acquisition agreement

The Havieron exploration licence (E45/4701) was originally acquired by Greatland in 2016 from Pacific Trends Resources Pty Ltd, as referenced in the announcement of 26 September 2016.

The original area of E45/4701 included both:

  • the area which is now the subject of the Havieron mining lease (M45/1287) and on which the Havieron Project is located; and
  • the remaining area of E45/4701 on which the Company’s 100% owned Scallywag Project is located.

Background to the Havieron Project

The Havieron Project is located on mining lease 45/1287 which is held by the Joint Venture between Greatland and Newcrest Mining Limited (“Newcrest”), Australia’s largest gold producer. Greatland holds a 30% interest in the Havieron Project through the Joint Venture (Newcrest 70%).

The Havieron Project is currently in development. Newcrest assumed management of the Joint Venture in March 2019 and has since been undertaking the ore body definition and technical studies required to support regulatory approvals and investment decisions for a staged development plan. The Havieron Project, which contains a world class ore body, provides Greatland with a strategic position in the Paterson Province of Western Australia, one of the leading frontiers for the discovery of tier-one gold-copper deposits.

The Stage 1 Pre-Feasibility Study (PFS) on only the South-East Crescent of the Havieron deposit was released on 12 October 2021. The PFS outcome was positive, showing that a fraction of the initial resource supported the total capital of the project, justifying a fast start approach to early cashflow generation and reinvesting back into Havieron development and infrastructure. This supports the Company’s belief that the profile of Havieron makes it a globally unique opportunity for bringing a low risk, low capex tier-one gold-copper mine into production.

In December 2021, Newcrest issued a notice to the Company to begin the process under the Joint Venture Agreement (JVA) to agree or determine the exercise price for its option to acquire an additional 5% interest in the Joint Venture from Greatland, as determined under the JVA principles.

Proceeds from the exercise will first be used to repay the outstanding balance under the existing Newcrest loan facility. If the option referred to above is exercised, Newcrest will be entitled to an overall joint venture interest of 75% (Greatland 25%).

In addition, on 3 March 2022 Greatland announced an independent Havieron Mineral Resource update. This increased the Mineral Resource, including Ore Reserves, to 5.5 million oz Au and 218kt Cu or 6.5M oz AuEq, an increase of 2.1 million oz AuEq since the last Mineral Resource update. Probable Ore Reserves now stand at 2.4 million oz Au and 109kt Cu or 2.9M oz AuEq compared to the 1.7 million oz AuEq in the Initial Ore Reserve estimation. In addition to the Mineral Resources within the Havieron Breccia complex, growth drilling has now defined an initial Mineral Resource within the separate Eastern Breccia complex. This is the first Mineral Resource in a mineralised system outside the Havieron Breccia system and remains open at depth and to the south. This Eastern Breccia Mineral Resource does not capture the recent high-grade intercepts to its south, which is of similar grade to the South-East Crescent Zone. The updated Mineral Resource incorporated an additional ten months of consistently impressive drilling results since the February 2021 drilling cut off used for the last Mineral Resource update.

The Company’s 30% interest in the Havieron Project had a book value of approximately £22.8 million as at 31 December 2021 (unaudited ), which is largely made up of capitalised costs. The loss attributable to Greatland’s interest in Havieron for the financial year ended 30 June 2021 and the 6 months to 31 December 2021 was approximately £0.2 million and £0.9 million mainly relating to foreign exchange losses as a result of the US denominated project loan and new greenfield exploration costs testing geological targets outside the known Havieron system including Zipa which, in accordance with the Company’s accounting policy, is expensed .

Background to the Scallywag Project

The Scallywag licence is 100% owned by Greatland, which formed part of the Company’s original acquisition of the Havieron licence, sits adjacent to the Havieron mining lease, containing a further 20km of strike of Yeneena Group metasediments located directly to the north-west of Havieron. Based on geological interpretation of a comb ination of gravity, magnetic and airborne EM datasets, Greatland has identified multiple targets on this project area.

Under the Company’s accounting policy for exploration and evaluation expenditure, the Company does not capitalise the exploration and evaluation costs until commercial viability of extracting the mineral resource are demonstrable (at which point, the Group considers it probable that economic benefits will be realised). Based on this accounting treatment, the Scallywag Project had nil book value as at 31 December 2021 (unaudited). The expenditure attributed to Greatland’s interest in the Scallywag Project for the financial year ended 30 June 2021 and the 6 months to 31 December 2021 was approximately £1.0 million and £0.9 million respectively, with all project costs expensed.

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.


Greatland Gold PLC

Shaun Day

+44 (0)20 3709 4900

[email protected]

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