Greatland – Acquisition of Havieron and Telfer

In this special episode of Aim On-Air, host Liam Reynolds interviews Shaun Day, Managing Director of Greatland Gold PLC, to discuss the company’s strategic acquisition of a 70% stake in Havieron and the Telfer Copper Goldmine. They explore the financial structure of the acquisition, its strategic advantages, and how it positions Greatland Gold for future growth. Shaun delves into the operational plans, market expansion opportunities, and the critical role of shareholder engagement in driving long-term value. This episode offers key insights into the mining industry and the importance of strategic investments in enhancing company performance and shareholder returns.

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Acquisition of Havieron & Telfer Timestamps

Takeaways

• Greatland Gold has acquired a 70% stake in Havieron.
• The acquisition includes 100% ownership of the Telfer mine.
• The transaction was structured to minimize initial funding hurdles.
• Newmont’s investment reflects confidence in Greatland’s management.
• The ASX listing is expected to enhance market visibility.
• A 30 million-tonne stockpile at Telfer provides operational flexibility.
• The acquisition allows for immediate cash flow generation.
• Feasibility studies will focus on extending mine life at Telfer.
• Greatland aims to leverage Telfer’s infrastructure for future projects.
• The journey to this acquisition has been challenging but rewarding.

“Every share you have owns more of Havieron.”

Shaun Day – Managing DirectoR

Transcript

Liam Reynolds (00:32)
It’s the 18th of September 2024 and you’re watching Aim On-Air where specialising in connecting companies with its shareholders is what we do best.

Hello and welcome to another episode of Aim On-Air. I’m Liam and thank you all for joining me today. We’re here because Greatland Gold PLC recently made the headlines with its strategic acquisition of the 70 % ownership of Havieron and certain Newmont Corporation subsidiaries, which include the Telfer Copper Goldmine. I’m excited to delve into the details of this acquisition and what it means to the company moving forward. Today we have the pleasure of speaking with Managing Director Shaun Day. Shaun, thank you for joining me.

Shaun Day (01:17)
Hi Liam, I really appreciate you taking the time to put me on AIM On Air again, it’s appreciated.

Liam Reynolds (01:23)
Not a problem at all. Let’s start by discussing the acquisition itself. Newmont and Greatland have agreed terms. Can you explain to us what it is that you have agreed please?

Shaun Day (01:32)
Yeah, look, further to your introduction. So, Greatland has acquired the 70 % we don’t own in Havieron. So, we’ve bought back the farm, which I think I’ve described it as before. And plus, in addition to that, we’ve bought 100 % of the Telfer Gold Copper mine, together with their other regional interests in the Patterson. So, we’ve really taken over that dominant position in the Patterson.

Liam Reynolds (01:58)
Okay, thank you. What unique advantages does the acquisition of a working mine bring to the company?

Shaun Day (02:04)
look, the benefits of holding a working mine really we think we have a pathway, firstly, to cash flow generation, and secondly, we take advantage of that infrastructure, both the people and the physical infrastructure that’s in place there. And of course, just in addition to that, taking back control of Havieron I think for me is a huge outcome of this because I’ve certainly been living with over the last couple of years, particularly through that Newcrest phase of trying to have some influence on that asset but not having control really limited Greatland’s ability to be clear on timeframes and costs and everything. now we actually have that control back. So I think there’s that confluence of benefits in the transaction that we’ve done.

Liam Reynolds (03:03)
Okay, Greatland recently undertook a capital raise In what ways does this contribute to the success of the acquisition compared to taking on debt, and how do you plan on to allocate the funds?

Shaun Day (03:15)
Yeah, thanks, Liam Well, look, firstly, when you unpack how the transaction was structured. So it was US $475 million, $207 .5 million of that was in cash. Another $168 .5 million Newmont took in stock in us, and we can unpack that later. But that’s not something they did lightly, and I think you should appreciate that they see us as very good custodians of this asset.
Then finally, $100 million is in deferred contingent consideration. That’s around 25 % or at least 20 % of the overall transaction value. And that’s really considerable because what that did is it wasn’t an initial funding hurdle for us to jump over or any additional shares being issued. So I think the flexibility of how we structured that with Newmont was really beneficial. but also gives Newmont exposure to the upside. So in terms of day one, we’ve raised this US 325 million, plus we had a oversubscribed equity issuance. So that was really gratifying and humbling that we were able to get that support from the market. I just mentioned to you before the interview started. This is the largest raise I’m advised from mining company on the London Stock Exchange. Since 2017 so I any of the exchanges main board premium standard. I’m this was the largest since 2017 so this was a considerable transaction What we do is on day one we start I’m going to switch to Australian dollars now because that’s how I tend to think about it and the functional currency of our asset is Australian dollars So we have about a hundred and twenty five million dollars of cash at bank on day one that assumes we expend all the costs of the transaction on day one, things like stamp duty for about $40 million will take nine, 12 months before final payment is due.

But we’ll have at least that starting point of 125 million, in addition, a $75 million working capital facility. So something like $200 million of liquidity on day one. That’s really de -risking, because what we’ll then be doing is starting up what should be a cashflow generating Telfer mine. Newmont will actually do that startup for us. So we’ll come into hopefully a already cashflow producing mine at $1 ,454 all in sustaining costs. That compares to a US dollar gold price north of 2 ,500 right now. So the margin on that. is tremendous. So look, we’re really excited about what that does. And of course, I think one of the most important things to understand is that every share you have in Greatland, you actually own more of Havieron today than you did before this transaction. So each individual share owns a higher proportion, i .e. this is accretive in terms of your ownership of Havieron, plus you’re getting ownership of Telfer as well and the infrastructure there and the benefit of that initial Telfer mine plan. So we think this is compelling for existing shareholders and we think there’s an opportunity to unlock that value over time.

Liam Reynolds (06:48)
It is indeed. Greatland is also planning on listing on the ASX, as you’ve alluded to. How might this influence the company’s market presence and visibility, especially considering the recent acquisition?

Shaun Day (07:00)
Yeah, look, again, we think that ASX is just additive. We want to keep the London listing. We’re absolutely undertaking to do that. And really what we see is this just brings in a whole new area of demand. And that’s the attraction for us as a company. We like that potential indexation opportunity because we love that when you can go through those thresholds and generate additional demand for your stock. So this is about us understanding what we think, you know, create value for shareholders. Again, appreciating what we have in London, but then also, you know, tapping into a new market. For good order when we do that, it will be like we described it, I think it was over a year ago, where we’ll try to put an Australian top hat on top of that, but keep the shares listed in London. And there might also be some share consolidation because I think when I joined the company, there was about four billion shares on issue. So it’s a big number. So I think having a more reasonable number of shares on issue. But again, we’ll talk to the brokers about that, about what they think could be advantageous to get the best outcome for shareholders.

Liam Reynolds (08:19)
Thank you. Newmont is expected to have a 20 .4 % stake. Wyloo would also increase its investment on the successful passing of the vote of the expanded group. What is the importance of these investments for Greatland?

Shaun Day (08:33)
Yeah, look, I knew you were coming from this, so we just touched on that Newmont ownership briefly. But look, again, they didn’t take that ownership lightly. They did reverse due diligence on us. And it’s really important, the values and the way Newmont has approached all, their kind of 10, 12 months of ownership of Havieron has been outstanding. The way they’ve engaged us, I couldn’t be more complimentary about. it’s been a really strong relationship and we’re just delighted to have them in as shareholders. I think they really care about what they’re passing across in terms of the asset, but also their people. And again, that was all part of them gaining confidence that Greatland was the right counterparty for Newmont. Look, that their holding is locked up in a 12 month escrow. In addition to that, we have a 12 month orderly market.

But if people are familiar with the Australian market, something like Evolution, now Australia’s second largest gold company, this started life in similar manner, where Newmont had a very large stake, and ultimately sold down that stake, but did so in a way with the company, where they actually bought in some new high quality institutional shareholders. It was something that actually benefited for the company rather than being an overhang. And look, we, again, couldn’t talk more highly about the company. I think they’ve got a lot of confidence. I think they like what the plans to do with the asset, both Telfer and Havieron. So we view them as long-term holders. There’s short -term protection for us, but I think they’re an incredibly responsible organization. And just to briefly mention Wyloo look, that’s part of the financial credibility that we’re able to take to Newmont. It was important to have them at the table. They stood their corner. So they’ve remained at an eight and a odd percent shareholder So look we went and got the other kind of 92 % But it was really great to have Walu there and we enjoy that we have that ongoing relationship with them and look we’re really appreciative of the support they gave us through this transaction and In terms I said the confidence that gave Newmont knowing that we had that additional lever there if we really needed it

Liam Reynolds (10:57)
Okay, thank you. Looking ahead now, what key benefits or new opportunities does Greatland anticipate as a result of this acquisition?

Shaun Day (11:06)
Look, I think straight away you’ve got that immediate production and the potential for that to leverage, translate into free cash flow. You’ve got, in terms of what we plan to do over the next 18 months, we think the ASX listing is really important. We value and wanna keep what we have in London with the London listing. The London listing is what we’ve leveraged to achieve this transaction. But a number of Australian holders have come in. We think it’s an Australian asset, it’s well understood in Australia. There are Australian funds that are mandated locked to the ASX that have indicated support. We think coming to the ASX adds to the potential demand for our stock plus

We don’t leave any indexation behind in London. So if we get indexation in Australia, that creates this passive buying. we understand that a little bit as shareholders when we see the ETF, VanEck buy stock in the market, that can be a really powerful lever. So being in the ASX 300, perhaps even the 200 is another one of these really powerful passive you know, buying signals. Yeah, we think about Telfer, there’s an it used to be a JORC resource reported asset. Now it’s under the SEC rules. So we can’t describe any of what’s there as JORC. But I think in the March quarter of next year, we’d really like to come out with a JORC resource on Telfer. That potentially can be really significant. Then we’d come out with a JORC reserve demonstrating the mine life. For those that have gone through the documents,

What we do is we start with this 15 month, very high confidence SRK reviewed Telfer Mine Life, but we’re really confident through demonstrating additional reserves we can show the extension of that mine life. And it reminds me a lot of what we achieved at Northern Star where we bought half a dozen assets from Barrick and Newmont, all with very short mine lives. often less than a year in some cases. all of those assets are still in production. So look, we’re really confident about this massive endowment at Telfer that there’s ongoing opportunity to extend that mine life. And that will play out in time with that JORC resource and JORC reserve. And then of course, at Havieron, we now control the timing of the feasibility study. I think a lot of our shareholders are aware a draft was done by Newcrest back in 2022.

That’s kind of sat on the shelf along with their Redcris feasibility study since then. Newmont wants to advance some of that work, but really are passing that across to us. We’re really grateful for that. We’re saying officially that will come out in Calendar to 2025. Obviously we want to do that sooner than later, but we think not only does that finally reveal what Havieron can be, but it gives Greatland the opportunity to think about some of the optimizations of Havieron that we can deliver. So we’re excited about that but it’s a beautiful all body and Those that have gone through the the SRK competence person report would see a 20 year mine life at a eight hundred and eighteen dollars us all in sustaining cost again against a market goal price of over US $2 ,500 an ounce. So that’s a magnificent margin and potentially indicates a strong potential to deliver free cash flow for shareholders. that would actually make us the lowest cost gold mine on the ASX in terms of primary listing. So that’s a pretty phenomenal base to have. And if we can look at working that up even further, yeah, hugely exciting.

Liam Reynolds (15:20)
That makes sense. Thank you. Focusing on operations now, what are the projected timelines of restarting process and operations at Telfer? And what steps are being taken to ensure a smooth restart?

Shaun Day (15:31)
Well, one of the really important elements of the transaction is that Newmont actually restarts the processing again. It’s a requirement of the transaction that they restart processing and that we see deposition into the tailings dam for no less than two weeks. We think that’s a really important de -risking. Again, Newmont, such a great organization, hugely technically capable. So we love the fact that they’re doing that for us. It’s an important time when you restart the mill. This mill hasn’t been run a lot in the last 10 months. So there can be those teething problems. But again, within that Newmont organization, they’re incredibly well placed to manage those issues and pass across to us an asset that’s already up and running. So we think that’s a hugely important de -risking event.

The transaction completes when the condition precedence are completed as outlined in the readmission document. We’d love that to be, the end of October. So effectively, Greatland would own the asset from 1 November. That’s our ambition. Ultimately, that’s a function of how we progress through those conditions precedence. But it’s a relatively short time period.

And during that time, although we understand Newmont will commission and turn back on both the trains, during that time, to the extent safe, Newmont will just try to run a single train, which keeps those stockpiles in place for us. Because again, this is probably the best time to own Telfer since 2005. In terms of at day one, there will be 30 million tonnes of stockpile. about 9 .6 million tonnes of high grade and about 20 million tonnes of what’s called partially costed material, but let’s just call that low grade for this interview. Plus with that gold price we’ve talked about before at over 2 ,500, I can’t think of a better time between now and since they started the mill under this 20 million tonne or took 10 plus 10 million tonne configuration to own Telfer. So really excited about that. It’s a great platform that we inherit. again, credit to Newmont that they’ve invested in this site. Even as custodians just for 12 months, they put a lot of thought into how they’ve tackled this site to make sure it’s a good transition across.

Liam Reynolds (18:06)
they have. And speaking of Telfer, its existing infrastructure seems to play a key role here. How does this infrastructure help in mitigating risks as you develop and operate the Havieron project?

Shaun Day (18:18)
Well, let me talk about that in two ways. Firstly, previously, Greatland didn’t control the infrastructure. We were minority owners in our Havieron Ore, and then we had a separate toll -treating agreement, which was never actually finalized. So we had a broad undertaking that Newcrest would agree to process our ore. this removes all the risk of having a total processing agreement and the cost of that. And we now control that infrastructure and we have the ability to prioritise the best ore for Greatland through that mill, which is almost certainly going to be Haveron ore because it’s such high grade. So that’s hugely de -risking from where we were prior to this transaction. In terms of a broader sense, we’ve got two 10 million tonne trains It’s the second largest gold processing plant in Australia. The fact that it’s configured in two 10 million ton trains gives us the flexibility to run one train, two trains, two trains partially. So we’re going to optimize how we think we can maximize the free cashflow generation. I think one of the disciplines Greatland will bring is making sure that we’re focused on free cashflow. and maximizing that milling infrastructure and optimizing it. So we’ll unpack that over time, but in the immediate term, we’ve got a 22 million ton mine plan over the next 15 months, which SRK has reviewed, and that’s a hugely exciting opportunity where we get to leverage the full infrastructure there to drive immediate free cashflow. And if we can be successful in that, build up a cash balance in our bank account, which again helps de -risk the finalization of the development of Havieron. So we think it’s this wonderful confluence of immediate ounce production, immediate potential cashflow coupled with a world -class project development to take long -term advantage of that infrastructure.

Liam Reynolds (20:42)
That sounds amazing, thank you. Post -acquisition, what are the plans for conducting feasibility studies, releasing resource estimates and other value enhancing options at Telfer and Havieron? And which key areas will this study focus on to ensure the project’s viability?

Shaun Day (20:57)
Yeah, look, again, just to maybe unpack that a little bit more. Look, there’s an immediate focus for us on demonstrating the life extension potential at Telfer. Look, it’s great that we start with this really well -demonstrated or documented mine plan. The buffer of 30 million tonnes at surface has a clear economic benefit to us.

But for me, what’s most exciting of that is about the operational flexibility, the operational buffer that gives us. As I mentioned, know, Telfer really lived hand to mouth where their mining rate was struggling to keep up with that mill capacity. Now for the first time in a long while, there is actually this 30 million tonne stockpile buffer at surface. That gives us a lot of flexibility, so we’re excited about that. Then we can…

deliver potentially a JORC resource. We have some good JORC targets that are described in our presentation. Potentially that converts into a JORC reserve and then you can demonstrate that extended mine life and what we’d like to demonstrate ideally is that Telfer mine life extends at least

until the Havieron line comes on into production. In terms of Havieron, we’ve got this focus on the feasibility study. Again, we like what thinking about optimization and how we can actually even improve Havieron potentially and what we’re in this luxurious position of although we start initial development, we think in 2026, we can actually stockpile all of that really high quality ore.

wait till we’ve started stoping as well, build up the ROM pad. And if we do have Telfer ounces or ore going through that mill, we can wait and do a really efficient cutover where we run one swing on Telfer say and one swing on Havieron. And that’s a really optimized way of running that mill to maximize free cashflow. value, if you don’t have that Telfer or you’re tempted to put your first teaspoon of Havieron ore straight into that mill, by us being able to build up stockpiles, we can optimize the recovery, we can optimize the NPV, optimize the cost of the processing. So I think we can do that the way a major would do it, and we wouldn’t get that opportunity unless we can demonstrate that Telfer mine Life extension.So these are all, think, really important catalysts of potential value over the next 18 months.

Liam Reynolds (23:44)
Wow, thank you. Let’s talk about the hub and spoke strategy in the Patterson region. How does Greatland intend to leverage Telfer’s infrastructure to implement this strategy? And what impact do you think it will have?

Shaun Day (23:57)
Well, again, you know, this is the only operating or the only infrastructure processing infrastructure in the Patterson that gives us a hugely advantageous and indeed dominant position in the Patterson. So we think about how do we leverage that? Immediately you have a Telfer Underground, a Telfer open Pit, and soon we hope to bring on the Havieron Underground. But we’ll really run this as one single asset base. with multiple ore sources, either through discovery or looking at some of the stranded deposits in the Patterson. If we can gather additional ounces, particularly good grade ounces, and add them to our mining inventory and put them through the mill, without having to do any major construction other than say, our mine development and haulage, that can be hugely advantageous. So again, We love the fact that we have this infrastructure. We love the fact that we have this dominant positioning in the Patterson. And we’re open for business. We can be respectful of other counterparties, but still drive a lot of value for Greatland shareholders. And that’s our approach. And we’re really excited about the opportunities that affords us.

Liam Reynolds (25:15)
Wonderful. Thank you so much. Lastly, understand you now have a date planned for the Town Hall in London. Are you able to share those details?

Shaun Day (25:24)
Yeah, look, I think it’s Tuesday the 24th of September. I think it’s American Place or One American Square where we’ve had them before. I think kick off London time is 6 pm So yeah, look, it’s something I think is really important. It gives me the opportunity to engage with the shareholder base. I always really appreciate people taking time out from their schedule. to join and it’s an opportunity for me to be accessible and to answer questions. And I think it was a 577 page admission document, but it only reads like 300 pages. So it’s a page turner, but even so not everyone would have got the opportunity to get through that. So yeah, I’m happy to answer questions, explain that a little bit more and hopefully people will find that. interesting and informative and I think the more you understand this opportunity, hopefully the more people will be excited about it.

Liam Reynolds (26:26)
Absolutely. Thank you, Shaun, for providing such valuable insights into Greatlands strategic moves in future. It’s clear the acquisition marks a significant step forward for the company. Do you have any final words for the viewers of the show today?

Shaun Day (26:40)
look, just really grateful for the opportunity to deliver this. It hasn’t been without its challenges to get to this point. I think some shareholders will kind of been on the journey for a while with us and we had the arbitration with Newcrest, we needed to get bank debt in, we bought in a new board, we’ve expanded the management team, we were able to bring in debt and now complete this transaction. So it’s been a long journey, but I think rewarding. really, although it was a securitas route in terms of from Discovery going into a joint venture with Newcrest, then Newmont, if you look at the acceleration of the asset that that provided in terms of being partnered with a global manager, and now being able to buy it back at this price, which, you know, together with Telfer, is quite compelling compared to the amount of that has been invested in Havieron and in Telfer This is perhaps the best possible way for us to end up with this advanced Havieron. Although it’s been a really interesting strategic and tactical environment, I think we’ve ended up navigating it extraordinarily well and looking forward to sharing that with shareholders.

Liam Reynolds (28:01)
Indeed, Shaun Day, Managing Director of Greatland Gold PLC, thank you very much for joining me. Until next time, my name is Liam and you’ve been watching Aim On Air, where specialising in connecting companies with its shareholders is what we do best. Thank you and good day.