Greatland – 30th April 24
Liam engages in a discussion with Shaun Day, the Managing Director of Greatland Gold PLC, delving into the recent Havieron Quarterly update and recapping the developments of the past quarter. Additionally, they seize the chance to address the challenging inquiries that shareholders have raised.
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Liam
It is the 30th of April, 2024, and you’re watching Aim On Air, where specializing connecting companies and its shareholders is what we do best.
Liam
Hello, and welcome back to Aim On Air. My name’s Liam, and today I’m pleased to be hosting Shaun Dahey from Greatland for a Q1 quarterly catch up. Welcome back to the show, Shaun.
Shaun
Hi, Liam. good to see you again and appreciate you taking the time to catch up and compile a long list of questions.
Liam
Likewise, I really appreciate you sitting here. For our icebreaker today, I simply want to know if you had a book or an author that you were particularly fond of?
Shaun
Yeah, look, I do. What I’m reading presently is the Churchill history. The author, which is Manchester, he actually passed away after writing the first two books in the series. And then the third book, which has come out more recently, was Shadow written, which was a tragedy because he’d written a magnificent history. So I’m only doing the third book now after some delay.
Liam
Okay. Okay, cool. Thank you. This morning in the quarter update, you announced that you’ve updated predictive hydrological model and the water balance has been completed.
Shaun
Yeah, correct. I think it was a really positive quarter. And I think also we’ve benefited from Newmont coming in and an increased focus and increased technical capability that they’ve brought to it and just the discipline through which they approach. So that’s been worked through. What we’ve found is the flow rates in that lower contained aquifer is lower than anticipated and that’s really a function of the porosity of the rocks, just the spears which the water can travel through those rocks is less than, as I said, less than anticipated. So a positive finding and then that right throws right through to the pumping capacity required and the infrastructure to deal with that water. So all in all, this has been a helpful and positive process.
Liam
Wonderful. Thank you. Whilst we’ve not heard much about it, further construction works have been completed. What have Greatland and Newmont been developing recently?
Shaun
Yeah, look, there’s been a range of, you know, constructions kind of moving forward. A lot of this was around the ventilation system. So this is that they’re getting airways down. I think there was a really good picture of some of that kind of airway pictures, which was good. And it just shows some of the scale and just the mechanical engineering that goes into these underground mines. So that was a lot of work that was set up, a number of pads for when we bring down the updated bores to also join up additional ventilation systems. So it’s really getting in that ancillary infrastructure to support the mine and take us down deeper into the basement rock.
Liam
Awesome, thank you. Greatland holds the last right refusal and has the debt facilities available. This morning, you’ve openly stated that should there be an opportunity to consolidate the asset, you will. Would you care to expand on this in your own words on what you mean by it and why you would publish this in an RNS?
Shaun
Well, look, we’re excited and I think our shareholders should be as well about the opportunities ahead of us. Yeah, and actually Liam, we spoke briefly just as you were getting kind of ready to set up the call about, I joined in 2021 and I think I was reasonably open that I saw this platform having an opportunity to bring back ownership of Haveron 100 % into the vehicle. And in that regard, I think we’ve built the organisational capacity, we’ve brought in a very sophisticated board, the debt banks which is undrawn that you referred to, which is $220 million on a 30 % basis that potentially extrapolates to a $700 plus number, the strategic shareholder, and now we have a joint venture partner which has publicly stated that within the next 12 months, and I think they said this back in late February, that they’d like to complete a divestment. So this is an exceptional confluence of events and opportunities. And look, we think we’re really well positioned to take advantage of that opportunity. And there’s the opportunity within that is important to us. And I think people should be confident that we would think about that in a very financially disciplined way. And I think I’ve got a history at Straits, at Sakkari, and then at Northern Star of being part of teams that have been very financially disciplined and have managed to undertake transactions that have created value. They were accretive to shareholders. And I think people should have confidence about that. And I don’t know the future, but I think people should feel that the team is working hard to position ourselves for that success.
Liam
It is a shame, that this is audio, not video. People would be seeing me smiling from ear to ear right now. Thank you. Thank you. I really appreciate the candid response there. On the 25th of April, Greatland announced it’s gained access to a large area, the Ernest Giles area under the Mount Smith license. Are you hoping to get a drill up there in 2024 to see what’s under the cover?
Shaun
Yes. Well, let me break that down in two parts. I think Meadows, we want to get a rig onto that in 2024. I think that new area, there’s probably some additional geotechnical work that we want to do to identify the best positioning of the drill pads. But I think if people cast their mind back to that announcement, you’ve got this arc structure and that is the geological feature on that Archean Greenstone. We’ve now effectively consolidated that entire arc structure. The really prospective parts of Ernst Giles. We don’t believe we could have a better platform there. Archean Greenstones are tightly held in Western Australia. The majority of West Australian Golds are within these Archean Greenstones, within these kind of associated with these structures. So we’re really positive about the opportunity that presents for us. So we’ll definitely get a rig on there this year. There’s been a bit of rain up there, so it’s been hard to get up on that site. But as that clears and the roads open again, I think you’ll see quite a meaningful amount of activity in the second half of the year. And that’s exciting, including the drilling.
Liam
Wonderful. I know of a few shareholders that will be very excited to be start scouring the satellite data as it appears every five days in the coming months. Thank you. Newmont released their annual reserves and resource statement. And I know that the company said, Newmont’s updated Havieron mineral resource estimate is particularly pleasing in how closely it correlates to Greatland’s estimate in the higher confidence indicated minimal resource category and a significant increase relative to the previous Newcrest indicated minimal resource. Could you give me some context on that, please, and what you mean by it?
Shaun
Yeah, well, look, we’re really pleased. What we have from memory, five million ounces of indicated resource. Now, it’s the indicated resource that can be translated into reserves. So you have a high confidence about those ounces being in the ground because you’ve got a higher level of density of drilling or an increased density of drilling. So we feel really positive about that and then to have Newmont come in under a slightly different, under their SEC rules for resources to, and as such to their own independent process and come up with a number that validated our own, we thought was really positive. So again, it’s around this validation, it’s around this consistency, it’s nice to have that alignment.
Liam
Wonderful, thank you very much. This has been the quietest quarter in some time with not so much happening. I thought it’d be prudent to change direction and look forwards for a change to ask the questions that your shareholders are wondering. Sorry to drop this on you, but with the dwindling share price, questions are being asked, and I feel it’s my duty to ask them. The show is supported by members of the community who buy me the odd coffee to help pay for the show’s running costs, and I thank them for that support. In return, I try to include the odd question. Today’s is from TallChapJG, who says, What do you mean by the phrase option value for shareholders? And with a follow -up of how do you see that value?
Shaun
So when I talk about option value, and look, I sometimes refer to that in the context of geology or perhaps in the context of being able to take our ownership from 30 to 100%, but what I really mean around that option value, and let’s use the geology or exploration geology as the example for this discussion. That clearly, and Greatland shareholders understand this because expiration success can create just a huge amount of value for shareholders. Now, not every drill will necessarily deliver a Havieron type intercept. In fact, they’re quite rare. But what it shows you is the value it can be correct. So by having these drill opportunities within the portfolio, it means there is this future opportunity to create that shareholder value. And that applies to exploration. It applies to the opportunity to execute an accretive transaction where there are events or catalysts that can create this value for us. And I think I’d like to think we’ve created a platform which is catalyst rich in terms of providing those opportunity for out performance for shareholders.
Liam
Okay, thank you. I really appreciate that. You mentioned in a recent interview that more pond liner has been ordered. Do we need to wait for new ponds to be built or can you start to drain the lower confined aquifer now?
Shaun
It’s a little bit in parallel but yes, we we also want to get those additional ponds built. And part of that additional ponds we are putting in place are more needed just for surge capacity than necessarily steady state. You know, for instance, a confluence of pumping and a rain event. So look, you obviously don’t put in exactly, install exactly the infrastructure you need. So you can do these things in parallel and you can start before it’s all in place. But it’s not linear in sequence, but having said that, we do wanna get those under sail. And one of the great benefits of having a Newmont as a joint venture partner is they were very proactive in even in parallel as the studies being done, saying, well, let’s line up what we need, the long lead time items, in this case, the liner. So that is on -site and ready to go as soon as we confirm, through technical analysis, the size of those ponds that we want to have in place. Yeah, you don’t normally see that in the mid -cap or small -minor space. Yeah, it’s really nice to see just the proactiveness that a major can bring to something like this.
Liam
Yeah, no, that must make a huge difference to how a project plays out. Have you got any timelines on your mind as to when that would restart with the emptying of it so you can commence the drilling?
Shaun
Oh, look, I think that will play out through the quarter. I think if we were definitive on that, we would have kind of weaved it into the March quarter. And again, we might have our own view on this internally at Greatland, but that also needs to be agreed at the upcoming joint venture meeting.
Liam
You said on the proactive interview that you can take shortcuts from what was originally planned. Does this mean a new revision of the plan needs to be submitted to the DMP for approval? When would you expect the plans to be approved?
Shaun
When I referred to a shortcut, I was probably trying to say that briefly in the confines of what is a shorter proactive interview session. So really what it is, is the contact between the layer and the basement rock is not absolutely flat or horizontal. It actually has a slope in one direction and so there are places where the basement rock and the ore body are actually closer to surface than other areas. Basically, with the increased density of drilling that we’ve done around the ore body, and as part of that were the boreholes, we’ve been able to refine the path of the decline to both take what we think is the safest route through the LCA, but also to have a path that leads us in a shorter vertical distance to actually getting to the basement rock.
Liam
Over the last few years, we’ve had many jobs appear in public spaces for working at both Havieron and Telfer, with contracts ending in June 24. Despite not having any correlation with the new owner or being part of the sale process, we find ourselves only a month away and rumours of all sites being in care and maintenance. Will the projects be affected by this if the contracts are not renewed and staff leave?
Shaun
Yeah, look, there’s a little bit to unpack there and actually correct, Liam. So firstly, I think, look, project development staff are almost always on contract because they’re not normally the same team that move into steady state. It is a specific set of skills that, and there’s people who spend their careers in project development. So it’s not unusual to have those people on contracts. So that is in the ordinary course. In terms of the project itself, we just talked about the installation of infrastructure going on, the refocus on the study and the positive outcome. To our mind, well, I think I can be more definitive than that. There’s no intent to put the asset into care and maintenance. So it’s probably worth just speaking to that directly and nipping that in the bud. But we have a great relationship with Newmont and also they’ve talked about wanting to a divest, have her on Telfer, let’s say within 12 months. So there’s actually probably greater alignment right now in that they want to present this asset in the best possible light to the eventual buyer. So I think they will be thinking in their own interest about how do they continue to advance and de -risk this project in a sensible way optimise their own value outcome.
Liam
Okay thank you and just to clarify and reiterate neither Havieron or Telfer are currently in care and maintenance.
Shaun
Correct and look I’m not the owner of Telfer so I’ve got to be a little bit cautious about what I say here because I don’t know all the facts but yeah I I think Newmont has publicly stated that it’s in pause whilst they upgrade the tailings dam, but they continue to mine, the site is very active. So I think people should feel really confident about that. And look, I don’t know the mind of Newmont, but again, if they’re looking to divest that asset, they are going to be thinking about optimising that value and that means a divestment of an asset that is a going concern and continuing operation. And I should add, it’s actually quite expensive to demobilize a site. So it’s not something you just do and then say, I will remobilize it a bit better. And you wanna keep those people in place, which I think is part of the underlying sense of that question.
Liam
Okay, that’s fair. Thank you very much for clarifying that. I really appreciate it. Should shareholders expect timeframes on the feasibility study to slip again now with Newmont signaling the Q2 2025 for all divestments. We could see the whole project shift sideways for a few quarters. What guidance can you give with your own expectations?
Shaun
Look, I think our expectations remain consistent with what I think we even said in this quarterly, which is an expectation that the feasibility study can and will be completed by the end of calendar year 2024. So that progresses and again, I think comes under that alignment concept that Newmont have additional horsepower and capacity that they’ve brought to the table and solving issues such as the water balance only continue to advance that progress.
Liam
Okay, thank you. Are you worried that you might run out of cash before the oil starts to make it to the surface for processing and on that are you able to specify how much cash we have left and can we sustain the spend with the current wage bill that we’ve got currently?
Shaun
Well I don’t want to add to kind of what’s already in the marketplace on that which would be in our cash balance at three months ago at 31 December but you know we also have a $60 million, sorry, $50 million Wyloo facility that’s undrawn. And of course that broader $220 million facility in place. And I think, again, I’ve spoken about that and said that 220 million would really like to bring that online as part of the feasibility study. So that’s, yeah, I see that as 2025 onwards funding. So we feel we’re well placed. So again, I think we’ve put in place the structures to make us confident about managing liquidity.
Liam
Okay, so the exploration program for 2024, what funds are available for it? And are you comfortable that you can operate this outside of the Havieron infrastructure, Havieron program?
Shaun
Yeah, look, the Greatland exploration program team works independently from that of Havieron or indeed Telfer. We sometimes utilize some of that infrastructure, be it roads or refueling, but fundamentally they’re all independent, as are all the other explorers up in the Paterson. So there’s really no change from our end, although those pieces of infrastructure continue to be there and just make everything a little bit easier. And what’s nice about that is having medical facilities, having an all -weather bitumen airstrip at Telfer, provide additional comfort around risk management safety plans if there is an injury in that area, because otherwise it’s very remote. So some of the infrastructure already installed in the Patterson I think benefits everyone.
Liam
Okay, thank you. The share price sadly continues to decline as uncertainty of our future goes on. None of the exec team have been seen to be publicly talking about the project. We’ve heard repeatedly the words such as transformational, a creative and option value, but nothing seems to be happening towards making any of this happen. What are the board’s intentions? You have achieved so much during your tenure as managing director securing our future and owning 30 % of Havieron. But what do you say to those who critique that without Havieron on coming in line, you failed to meet the most important of your objectives? Tough question, sorry.
Shaun
No, I appreciate Liam that you ask these questions. And look, the fact that we have a really engaged shareholder base is something we celebrate. And I try to make myself available with you, with other interviews, but also at the town hall meetings. And if I only wanted to get questions I want to get asked, I can do pre -recordings of that. But, so look, we think we’ve been, yeah, I like to, I’m really proud of what we’ve achieved at Greatland. I think the organisational capacity we’ve built with the team is tremendous. just being successful in that 5 % process to maintain the 30 % holding was incredibly important. I think that was otherwise an existential threat. Bringing in the strategic holder, shareholder, bringing in a world -class board, putting in that debt letter of support, the 220 million I mentioned before, and the names we brought in with ANZ, ING and HSBC are all incredibly important achievements. Now, what I’ve come into is a situation where we have a joint venture partner and we’re a minority holder. That’s been really helpful for us. I think when you look at the normal cycle time from discovery to development, the Newcrest and now Newmont involvement has accelerated that amazingly. I think this was a very late 2018, really 2019 Discovery and in February 2021 we are putting in a box cut and decline. Now that is unheard of to have a two -year cycle time from Discovery to Commencement and that would not have been achieved without having a major in place. So we should celebrate that and we should celebrate that that structure was put in place. But now we have an opportunity to potentially the major to exit and that is an opportunity that is exciting for us as a management team and should be for shareholders. We think that ultimately delivers Havieron and whether that’s delivered by Newmont or they exit and we’re given the opportunity to take the reins and and deliver the project, I think that would be tremendous. And I think if we were in the driving seat, I’d feel really confident that we would be able to complete the task in front of us. But I think equally, I’m really confident in the organisational capacity of Newmont. People should have confidence that the underlying project is a really high quality gold copper project. You look at gold and copper prices, it’s a pretty good time to be a producer of those products, especially in Australian dollars, because the Australian dollar is historically weak at this level of gold and copper price. So it is a tremendous opportunity. I think the financials only look better. So yeah, I don’t know the mind of Newmont. I don’t know exactly how they think about the exit opportunity, but anyone coming into this, including Greatland, I think will have a burning ambition to complete the development.
Liam
Okay. Thank you very much. I really appreciate that. And for one tough question to the next. We cover this one fairly regularly and I hate asking about it, as your answer is always fairly similar. But why are the board not out there talking about the company or the project in the public space?
Shaun
Thanks, Liam. Well, look, I’m one of the directors of the company and I certainly seek to be out there as much as possible people presenting the narrative into the market, both with opportunities like this, town halls and other interviews and R &S releases and communications. And I don’t think you’d expect to see non -executive directors taking on that role. And to some extent, I’m really appreciative that the board has the confidence in the management team to fulfil that role, and it’s something we seek to put a lot of effort into. I think if you were in the market, often in the Perth market in this case, for a number of directors, I think you’d see their advocacy for the company in terms of engaging with advisors, bankers, funds, potential shareholders, and the connectivity that they bring. and also how people differently perceive Greatland as a counterparty given the maturity and the quality of some of the people we have in the management and very much so on the board. So I think I see it as hugely positive and I think a strength of the organisation.
Liam
Okay that makes sense, thank you for clarifying. It’s also been noted that none of the board have done what’s expected of them in AIM and put their hands in their pockets to show support and solidarity by buying on the open market. I appreciate that you have their incentives, but they’re not seen to be suffering losses like some of the shareholders. So what would you say to those who claim that the board are not supporting the company?
Shaun
Well, look, again, I think a number of Directors, including myself, have bought shares. So I think that’s important to understand. Again, I’ll just reference back to the broader support that the board has, but also the alignment. Principally, they’re aligned with those options, which are significantly out of the money right now. So you have a board here, and indeed a management team along with them, hugely incentivised to deliver exceptional share price growth for the benefit of everyone. Now, I think that’s wonderful alignment and I think people should celebrate it. I personally like that structure. I like that my board actually wants to see shareholder appreciation and are willing to pursue strategies that they think will be value -creative and not just risk -adverse. So I think it’s a really mature structure. I think it’s a good structure. And I think we should celebrate the team that that’s helped us attract.
Liam
Okay. Thank you, Shaun. That really, I think that will really put that one to bed for some time now. These ones put me outside of my comfort zone as they’re so forward -looking, and we all know I don’t like looking forward so much. But it’d be wrong of me not to ask at this time. Tom Palmer has said indivestments will happen in the Phase 1. Any idea when that will conclude?
Shaun
Oh, look, I don’t know the mind of Newmont, but look, we certainly feel we’re well -placed to engage with Newmont when they feel they’re ready to go. These things typically take a little bit of time. And remember, this is actually a really new asset for Newmont to own. They only bought it in late November, while some of the other assets they’ve owned for years. So these things do take a little bit of time to play out. But again, I think people should be excited about the opportunity. Certainly the management team is, you know, some patience is needed with these things, but equally, you know, we think we’re extremely well positioned and working hard to position ourselves for that success. And I’m really excited about the opportunities that presents to us.
Liam
Okay, thank you. So what about the scalable finance? If we wanted to, if we were to buy the farm, do you have enough scalable finance to take it, both Havieron and Telfer?
Shaun
Look, I think these questions are hard to define until the vendor kind of sets a price. But having said that, I think this is all about us having an exceptional confluence of events, the capacity, the board, the strategic investors, but also that support letter from tier one banks, ANZ, HSBC, ING. 220 million, I’ll do the maths for people, that’s on 30%, that extrapolates to 733 million. Now I’m not saying that that’s specifically the amount that could be borrowed, but it’s certainly a really meaningful war chest and I understand through my career the benefit that debt leverage can deliver to amplify equity returns and make financially disciplined transactions incredibly creative and value creative for shareholders.
Liam
Okay thank you. One of the questions that does pop up from time to time is if you do it as a JV or if it’s something you would want to do alone is that anything you’ve given thought
Shaun
to? Oh, I think people should be confident. I give thought to a lot of things, Liam, but look, I think I’m an options kind of guy. I enjoy having the optionality in place and we would consider sensible approaches, but equally we feel we’ve built an organisation that is capable to be in the driving seat and successfully deliver Havieron.
Liam
Okay, a slight change of thought. What happens to the percentage of Juri that’s currently under ownership of Newmont?
Shaun
Well again, look, I don’t know the mind of Newmont, but if we take at face value what I understand they’ve said publicly, which is that Telfer and Havieron are non -core and that they intend to exit those assets, you’d think it’s logical. There’d be an industrial logic to Newmont also exiting its surrounding exploration tenements. I doubt they would keep an exploration foothold in a geological area where they’ve exited the infrastructure.
Liam
That’s fair, thank you. Newmont have initially said that Telfer and Havieron were available for divestment individually. In later terms, they’ve said that they’ve combined them together. Is this because Telfer is such a large liability on its own? And does that play into our hands from a valuation standpoint?
Shaun
So, look, again, I don’t know the mind of Newmont whether they would consider selling them as a package or as a standalone. Ultimately, when they start a process, I think that will be disclosed. That said, I think if you have a look at the Newmont’s latest disclosures, they have a carrying value for Telfer. That is, it also discloses the liabilities associated with rehabilitation and other provisions, which is really meaningful. So look, there’s certainly a balancing act when you think about Telfer, both the potential for cashflow during its remaining mine life, which is relatively short, I understand from public statements, offset by reasonably meaningful liabilities.
Shaun
By contrast, Havieron is new. Its best days are ahead of it and it hasn’t got that historic site works rehabilitation obligations. So, you know, to some extent I celebrate that our asset Havieron has its best days in front of us and without commenting on Telfer it’s certainly a more complex beast buying assets that have had, you know, the wonderful life Telfer has has had over 30 plus years.
Liam
Okay, thank you. Should we get to Telfer? Would you sell royalties as part of a package as Northern Star have previously to raise funds? I suppose I should say that.
Shaun
Yeah, I think during my time at Northern Staff, if I can comment just in terms of Northern Staff, during my time at Northern Staff, and I think subsequently to my mind, royalties were not sold. I think when you’ve got an asset, a development and a growth asset, there’s a lot of upside to the future and the longevity of that production which royalties can participate in just because of their in perpetuity kind of status. So again I think all options should be considered but we would view any decision as great land on any opportunity about creating shareholder value and about being accretive and And if we thought that was amplified with royalties, we’d consider them, but equally often I think simple structures are often, which are the most transparent, create the greatest value over time.
Liam
Okay, thank you. I’m expecting a fat no comment from you on this one, but are you able to comment that Regis Resources have been linked to both Havieron and Telfer in recent times, and is Jim Byer one by the Great Land Office by any chance?
Shaun
Well, look, no comment, but I will say, Jim’s a good person. I know him as I do most people in the West Australian gold sector. And look, overall, I think we should only be flattered if there’s a whole lot of speculation about high -quality companies wanting to own Havieron because it is a world -class asset.
Liam
Wonderful, OK. Sadly, Shaun, he says, looking for his teleprompter. That’s the end of this webcast, ladies and gents. If you want to reach out to us, you can contact us on Twitter with the address on the screen. And before you close this page, I’d be grateful of any thumbs ups. This interview is supported by your donations. So if you enjoyed or learned something today, please consider buying me a coffee on the link on the screen now. Shaun Day, Managing Director of Grayling Gold PLC. Thank you so much for coming to the show to discuss the previous quarter and answer some of these tough questions. Do you have any final words for your shareholders today?
Shaun
Look, just to say thank you to yourself, Liam, and the Aim On Air platform. And in terms of shareholders, we really appreciate the engagement. Yeah, I think my vision for the platform and I think the board’s vision for the platform has not changed. and yeah, I think we are really well positioned for success. So appreciate that support and the excitement we have for the future, hopefully, is conveyed in this discussion.
Liam
Wonderful, thank you. Until next time, my name’s Liam and you’ve been watching Aim On Air. We’re specialising connecting companies to shareholders. It’s what we do best. Thank you.