Greatland Gold PLC (GGP.L) H&P research note & Video update

Greatland Gold (GGP) has provided an update on the Pre-Feasibility Study (PFS) released by its JV partner Newcrest Mining on its Havieron gold-copper deposit in the Paterson region of Western Australia. The PFS (defined as a Stage 1 study) focuses on the high grade South East Crescent (SE Crescent) zone.


As a pre-feasibility level analysis, Newcrest’s estimates can, by definition, only consider a Mineral Reserve based on the existing published Measured & Indicated Resources within the SE Crescent, and therefore exclude huge swathes of Inferred Resources in Havieron’s “Breccia Zone”, let alone significant exploration potential at depth. As such, we believe the US$508m NPV outlined by this Stage 1 study represents just a snapshot of a portion of the ultimate value of Havieron. Higher capex has led to a small cut in our (fully expanded) NPV5% to US$3.5bn and a 12% reduction in target price to GBp 24.9p. However, with a 90km drill programme planned over the coming year, we continue to see significant 40% upside from the current share price as the full potential of Havieron remains to be revealed.

2021 a year of major progress as Havieron continues to be de-risked

The PFS outlines a sub-level open stoping (SLOS) mine plan producing 2Mtpa over a 9-year period for a total of 1.6 Moz Au and 73 Kt Cu life-of-mine production. The economics of the study show an NPV4.5% of US$508m and an IRR of 27% with an upfront capital cost of US$381m at gold and copper price assumptions of US$1,750/oz and US$8,992/tonne respectively. Concurrent studies are ongoing looking at a >3Mtpa operation, with the Stage 1 study already demonstrating this potential according to Greatland. The scope of the PFS also did not include the lower grade breccia mineralisation, as the Inferred resources in this zone require further drilling to convert to Measured & Indicated categories and add sufficient further ounces to support a bulk-tonnage operation.

Our DCF model estimates Havieron project NPV of US$3.48bn

We update our DCF model of Havieron based on an initial 3Mtpa SLOS scenario, which will form the basis of the Havieron feasibility study. We have made adjustments to the key parameters from the 2Mtpa PFS study to reflect a larger throughput scenario. We model an 11-year SLOS operation in the SE Crescent, with mining commencing in H1 2024 (mining a total of 28.1Mt), producing on average 213 koz and 9.3 Kt copper annually over the life-of-mine. We continue to assume a subsequent block caving operation will be developed within the lower grade breccia zones, with economic parameters unchanged versus our previous DCF model. Maintaining our gold and copper price assumptions at US$1,850/oz and US$8,500/t respectively, we calculate an NPV5% for Havieron of US$3.48bn, with US$1.13bn attributable to GGP.

Target price decreased to GBp24.9 per share implying 40% upside

We arrive at a target price for Greatland of US$1.18b or GBp24.9 per share, based on our DCF model for the Havieron project as well as a US$100m valuation for the remainder of Greatland’s exploration assets. We apply an NPV multiple of 1.0x to Greatland’s share of the Havieron NPV due to the unique quality of the project. The updated target price represents a 12% drop from the previous target price, driven by a significantly higher capital cost estimate versus our previous DCF model as well as the shortening of our assumed SE Crescent mine life from 20 to 11 years.

Continued progress towards first production from Havieron
The next 12 months are likely to bring an expanded SE Crescent resource arising out of a 90km growth drilling program at Havieron. The full Havieron feasibility study is expected in Q4 2022 with mining envisaged to commence in H1 2024. We view continuing news flow on the rapid progression at Havieron as well as resource upgrades as potential catalysts for a re-rating of Greatland Gold shares.

PDF Link

Roger Bell
Director, Mining Research
[email protected]
+44 (0) 207 907 8534

Andrei Kroupnik
Research Analyst
[email protected]

Jay Ashfield
Director, Mining Sales
[email protected]
+44 (0) 207 907 2022

This Document has been prepared by H&P Advisory Limited (“H&P”). It is protected by international copyright laws and is for the recipient’s use in connection with considering a potential business relationship with H&P only. This Document and any related materials are confidential and may not be distributed or reproduced (in whole or in part) in any form without H&P’s prior written permission

By accepting or accessing this Document or any related materials you agree to be bound by the limitations and conditions set out herein and, in particular, will be taken to have represented, warranted and undertaken that you have read and agree to comply with the contents of this disclaimer including, without limitation, the obligation to keep information contained in this Document and any related materials confidential.
This Document does not represent investment research for the purposes of the rules of the Financial Conduct Authority (“FCA Rules”). To the extent it constitutes a research recommendation, it takes the form of NON-INDEPENDENT research for the purposes of the FCA Rules. As such it constitutes a MARKETING COMMUNICATION, has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of dissemination of investment research.
The information contained herein does not constitute an offer or solicitation to sell or acquire any security or fund the acquisition of any security by anyone in any jurisdiction, nor should it be regarded as a contractual document. Under no circumstances should the information provided in this Document or any other written or oral information made available in connection with it be considered as investment advice, or as a sufficient basis on which to make investment decisions. This Document is being provided to you for information purposes only.
The distribution of this Document or any information contained in it and any related materials may be restricted by law in certain jurisdictions, and any person into whose possession this Document or any part of it comes should inform themselves about, and observe, any such restrictions.
The information in this Document does not purport to be comprehensive and has been provided by H&P (and, in certain cases, third party sources) and has not been independently verified. No reliance may be placed for any purposes whatsoever on the information contained in this Document or related materials or in the completeness of such information.
The information set out herein and in any related materials reflects prevailing conditions and our views as at this date and is subject to updating, completion, revision, verification and amendment, and such information may change materially. H&P is under no obligation to provide the recipient with access to any additional information or to update this Document or any related materials or to correct any inaccuracies in it which may become apparent.
Whilst this Document has been prepared in good faith, neither H&P nor any of its group undertakings, nor any of its or their respective directors, members, advisers, representatives, officers, agents, consultants or employees makes, or is authorised to make any representation, warranty or undertaking, express or implied, with respect to the information or opinions contained in it and no responsibility or liability is accepted by any of them as to the accuracy, completeness or reasonableness of such information or opinions or any other written or oral information made available to any party or its advisers. Without prejudice to the foregoing, neither H&P nor any of its group undertakings, nor any of its or their respective directors, members, advisers, representatives, officers, agents, consultants or employees accepts any liability whatsoever for any loss howsoever arising, directly or indirectly, from use of this Document and/or related materials or their contents or otherwise arising in connection therewith. This Document shall not exclude any liability for, or remedy in respect of, fraudulent misrepresentation.
All statements of opinion and/or belief contained in this Document and all views expressed and all projections, forecasts or statements regarding future events or possible future performance represent H&P’s own assessment and interpretation of information available to it as at the date of this Document. This Document and any related materials may include certain forward-looking statements, beliefs or opinions. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that any of the results and events contemplated by the forward-looking statements contained in the information can be achieved or will, in fact, occur. No representation is made or any assurance, undertaking or indemnity given to you that such forward looking statements are correct or that they can be achieved. Past performance cannot be relied on as a guide to future performance.
This Document is directed at persons having professional experience in matters relating to investments to whom Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (“FPO”) applies, or high net worth organisations to whom Article 49 of the FPO applies. The investment or investment activity to which this communication relates is available only to such persons and other persons to whom this communication may lawfully be made (“relevant persons”) and will be engaged in only with such persons. This Document must not be acted upon or relied upon by persons who are not relevant persons.
This Document is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. In particular, the information contained in this Document is not for publication, release or distribution, and may not be taken or transmitted into: (i) the United States or its territories or possessions, or distributed, directly or indirectly, in the United States, its territories or possessions or to any U.S. person as such term is defined in Regulation S of the Securities Act; or (ii) Australia, Canada, Japan, New Zealand or the Republic of South Africa. Any failure to comply with this restriction may constitute a violation of United States, Canadian, Japanese, New Zealand or South African securities law. Further, the distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this Document comes are required to inform themselves about, and observe, any such restrictions.
H&P may from time to time have a broking, corporate finance advisory or other relationship with a company which is the subject of or referred to in the Document.
This Document may contain information obtained from third parties, including ratings from credit ratings agencies such as Standard & Poor’s. Reproduction and distribution of third party content in any form is prohibited except with the prior written permission of the related third party. Third party content providers do not guarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and are not responsible for any errors or omission (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such content. Third party content providers give no express or implied warranties, including, but not limited to, any warranties of merchantability or fitness for a particular purpose or use. Third party content providers shall not be liable for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including lost income or profits and opportunity costs or losses caused by negligence) in connection with any use of their content including ratings. Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase, hold or sell securities. They do not address the suitability of securities or the suitability of securities for investment purposes, and should not be relied on as investment advice.
In H&P’s view this material is considered as “acceptable minor non-monetary benefit” under MiFID II as it is either: (i) “non-substantive short-term market commentary”; and/or (ii) making a brief reference to existing H&P research and, as such, is in-and-of-itself non-substantive; and/or (iii) paid for by a corporate issuer or potential corporate issuer as part of a contractual engagement with H&P.
H&P Advisory Ltd is registered in England No.11120795. Registered Office: 2 Park Street, London W1K 2HX. H&P Advisory Ltd is authorised and regulated by the Financial Conduct Authority (Firm Reference Number 805667).

Linking Shareholders and Executives :Share Talk

If anyone reads this article found it useful, helpful? Then please subscribe or follow SHARE TALK on our Twitter page for future updates. Terms of Website Use All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned

Weekly Newsletter

Sign up to receive exclusive stock market content in your inbox, once a week.

We don’t spam! Read our privacy policy for more info.