The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
If you had spent $Xm drilling the Blackhills and PRE plus all the geological reports and modelling, storage of samples would you look favourably on a Junior explorer taking all this over without hardly paying anything towards it.
There’s over 300 drills gone into the Juri jv, there’s a lot of information changed hands there.
Most big miners do not pay much for them to go into a joint venture they want the Juniors to find a Tier 1, they are not really interested in Tier 2 and most Juniors only find Tier 3s.
Newcrest have not paid out big sums for any of their exploration jv they just put a foot in the door.
20 years ago the big players pulled out of exploration and just buy good targets.
Look what’s happening at De Greys with a takeover hotting up.
The big boys only want big assets and will pay for it.
Havieron and Telfer together make a Tier 2 at the moment next weeks MRE May get it close to a Tier 1 status but more likely by next February. This may stir interest to take out Newcrest/ Havieron having a joint venture complicates the issue for that to happen
Socialist. While I might agree with your sentiments, business is tough and uncompromising and NC are only doing what most other organisations would do in that situation. Look after their shareholders best interests.
Unless and until there is another processing plant in the region (Rio at Winu?) NC should always be in a better position on any JV negotiation. So if we were to go it alone on say a small Scally discovery, we will still have to process the ore at Telfer and that will be at a lot higher cost than cost +10% imo.
So we will just have to deal with NCs monopsony power and just hope they dont abuse it. Too much.
Truth is .....somebody is determined to keep us at this level with all the sustained block selling, little new buying interest, most holding and we are not generating any income..... the only catalysts for an improved SP IMO are
- a new mineralisation hit
- a buy out offer for Hav or GGP
- NC starting to promote Hav again and give us a realistic MRE 2 next week
Unfortunately not optimistic on any of the 3 ..... just a waiting game until FS / 2023
Yes...
Deep sand at that.
Always tricky wading through that.
Yes bellers very few things in life go in a Straight line - odds are a fall under 11p short time. sandeeps could just be sand!
Well, either that or back up Siverhorse. We don’t have 2 many options. I’m hoping up as we near Sandeeps update.
10june it was 11.20p slipped to 10.40p 14june chart says that lets see
@ JerrySpaniel, thanks for your pretty sure confirmation that the loan agreement might be related to the Juri JV.
I do not mind a JV in Juri,
But I do mind the giving up 70% for peanuts from the outset and not a single penny going into GGP’s coffer to help the company stay afloat while we are not cash generative.
In my view it is not the right way to treat a business partner.
I am fine with the concept of: I’ll scratch your back if you scratch my back.
By that concept, I mean: 10% of Juri for providing a loan facility at 8% when no one else was willing to lend us any money and then the possibility for Newcrest to earn in further percentages in the future and a right of first refusal.
I am not going to diss GH and the BOD for the deals they made as I fear that not even SD could have gotten a better deal under the circumstances.
I say that because, I really fear that we were bullied by Newcrest into accepting conditions that should be unheard of in a JV.
I agree with your assessment of all the times that Newcrest could potentially have twisted our arm and made demands that was highly unfavorable to us.
And that is why, if that is the case, I do not think we should enter into any more JV’s with Newcrest.
Because if that is the way they treat a business partner, you really got to be a masochist to ask for more of the same treatment.
It is all assumption and guess work how and why the different deals got struck, but for me the proof is in the pudding, namely the way Newcrest goes out of the way to argue for a low-ball offer for the 5% option.
They could and should in my view have come up with the number SD and team came up with, in fact it should have been even higher.
If that had been the case, I would have been in doubt about my recent expressed assumptions, but as it stands, I am not.
You’re right it is better to look forward to a time with SD at the helm and the prospect that he can replicate the trajectory for GGP, that he created as part of a team at Northern Star.
And he has clearly expressed how important a catalyst Havieron is, to get the ball rolling in that direction.
Like you, I have also been to the hustings at America Square, and I too am impressed by SD, but if Newcrest keep playing the way I fear they have been up till this point then I am afraid we are still gonna face unwanted behavior in the future.
We are already lined up for 2 JV’s where I fear we can see more of this behavior. I do really not think we should willingly line ourselves up a third time.
No, let’s have a professional courteous relationship at Havieron and Juri, but let’s try to go alone on the rest of our other tenements or find another company to JV with.
Having said that, if @Taverham is correct in his 07:13 post about Australian business culture then it could very well be worth to stick to the devil you know.
But I am not a fan of the idea.
Socialist. I am pretty sure that GH answered a question of mine that the Juri JV was a condition of the loan agreement. We couldnt get bank debt at that stage so the alternative would have been a huge amount of new shares issued.
But besides the cost +10% clause, I dont think GH played his hand that well. If he took advice, it wasnt that great, but I think he realised he was way out of his depth. The change in the 5% from FS to PFS was a terrible decision but that too might have been a condition of the loan. I think Scally wasnt included as it was in the process of being drilled at the time.
Having met SD a few times now, I think he is of a completely different calibre.
I think you need to look forwards with SD not backwards at GH.
You have to remember though, droverman….most of these posters on these bb’s are experts in the field of exploration, mining and corporate deals and obviously couldve struck a much better deal than GH. ;-)
Hi all, most people don't understand that when GH negotiated the HAV JV and the 5% came as part of that deal, GH also within the JV sorted out the toll plus 10% costing and i believe that in itself is worth 10s of millions over time especially if the mine life is more than 30 years. The toll deal is now fixed as is the 5% and is worth a fortune. DM
Hi Ben
That’s what it’s all about to have 25% of a jv with lots targets where a n other pays 75% of the costs.
If there was no jv on Juri very little exploration would have been completed.
Take Goliath 2 drills have found gold but not HAD005 quality. It’s a massive undertaking to keep exploring there it’s a huge target maybe 20x larger than Havieron. It’s going to take some commitment to explore that target.
Let’s go back to the Juri’s best target Saddlereef, a Telfer lookalike. That means a number of reefs sat above each other with possibly a large ore body underneath.
Ggp have sunk over a dozen holes in there + many historical holes none of them are really deep and have only scratched the surface here with maybe one or two reefs identified.
The targets footprint is way larger than Havieron we may be looking at 200-300 drills to get any sort of PFS study here, a lot of money needed.
For those of you thinking this is a bad deal, probably was but Ggp may have been sat on this licence for years trying to prove up one target and sadly a lot of us haven’t got those years to wait so it’s no point as investors waisting money in holding on to those licences.
A major will speed up exploration especially if one looks promising and Saddlereef looks promising.
25% of a promising target is far better than 100% of a licence.
We still retain 100% of Scallywag, on that licence all we have at the moment is a slightly promising target at Swan which could be linked to the Blackhills targets.
Other targets maybe left till revenues start being achieved elsewhere and Swan progressed slowly .
The benefits of having this jv will be the speed at which a target can progress to a FS especially at Blackhills Saddlereef
Two mines producing 25% revenues is better than one
Also I would be very surprised if he has negotiated a worse deal for two reasons!
1. This is what he has been bought in for!
2. He is in a lot stronger position ( he has a HAV in the bag)
All in my opinion of course
Socialist, your post is spot on wrt NCM and I am not surprised having had some in depth conversations about contracting in Austrailia it is quite clear to me that win -win is alien to the business culture. As with sport winning is everything whatever the cost is engrained from an early age imv but at least we know where we stand and what to expect - as they say every dog has his day.
Good morning All
For me I would rather have 25% of a lot rather than 100% off nothing!
Give GH his dues and SB it worked out well for both ( in hindsight possibly better now for SB) but it is what it is!
Let’s see what today brings!
Good luck all and happy trading
Part 2.
But if my assumptions in the last 2 posts are more correct then wrong, then based on the experience dealing with Newcrest up to now, I do not like the Idea of JV'ing another single ounce of gold to them from our other tenements.
I know SD has mentioned the possibility to renegotiate the percentage deal on Havieron and Juri if we strike gold at Scallywag and does a JV with Newcrest on this tenement as well, but I feel I have been to to burnt by them with the report that Newcrest produced to justify their offer for the 5% at Havieron.
I would want to see amends from Newcrest, before reconsidering my stance.
The best amend I can think of, is declining the 5% option, because that is an absolute fortune in future income it will be handing to GGP.
So the question that remains is: Can a leopard change it's spots?
Part 1.
I do not have any intention of slamming GH with the post that I wrote earlier.
I am sure that he and the BOD did the best that they could during the negotiations of the Juri deal.
I am just sad that if my assumptions are more correct then wrong about demands from Newcrest, that our JV partner have used their position of power to get one over us at GGP.
And no, do not come and tell me that is how it has to be in business, because it is not.
Years and years ago, I had the pleasure of working for a guy who had started a company from scratch and done all the hard manual work himself. Many decades later, and with several hundred employees and operations in several countries and the son's and various professionals having taken over the day to day running of the business, the opinion was still that the company had only done a good deal if both parties was happy with the deal.
I think, that is a good motto to live by while doing business.
But as the saying goes: "A Leopard cannot change it's spots" and that is why I after Newcrest's attempt to justify a lowball offer for 5% extra at Havieron with a first class well writen report are more scared of them then ever before.
SD have a point when he say's it a bad idea to have a win loose scenario written into a contract.
From my point of view, I can see why originally a cut of deal has been accepted or proposed, assuming it has had something to do with not risking that the funds a 5% sale of Havieron would raise, could be kicked into the long grass.
To be fair to Newcrest, they have without a doubt spent a lot of money at Havieron so far.
But those expenses are on exploration and justification to go mining.
I do not remmeber that they have actually paid as much as a dime to GGP.
TO BE, OR NOT TO BE. THAT IS THE QUESTION.
Buying or not buying the 5% option, that Newcrest have a contractual right too, is a perfect chance for Newcrest to show that they appreciate that GGP choose them as a JV partner, by offering a decent sum for the 5%. The first sum of money from Newcrest and directly down into the coffer of GGP. Or by deciding not to take up their contractual right they can show the same respect.
In my view it is unlikely that they will not take up the option. And they have truly shown their spots with the report that they used to argument for their lowball offer.
I am therefor fearful that Newcrest will also in the future try to behave in an undesirable way towards GGP, given they get the chance to do so.
But I do think that it will be more difficult in the future with SD on board and our knowledge of how Newcrest operates.
Personally it is my opinion that we have 2 JV's with Newcrest and we should leave it at that.
I am glad that SD and SB get on well and equally so the geological teams.
And please keep that going for our 2 current JV's.
Bottom line...I don't think we will see any more new GH type suspect deals moving forward with SD do you?
A lot of what is to follow will be with the caveat: " if memory serves me right"
I have never understood the motivation for entering into the Juri deal and I do not feel that we have been given a proper explanation as to why such a poor deal was accepted.
After having experienced Newcrest produce a report, a couple of hundred pages long and from what I have heard very well versed and with solid arguments for what they wanted to pay for 5% extra of Havieron, should they decide to take up that option, I am scared of that company.
Having heard that the GGP team managed to 5 double the sum, I have to assume that the offer from Newcrest for 5% of Havieron was in the region of 12 million. This is an assumption as I have no knowledge of what Newcrest offered. But this assumption makes me even more scared of Newcrest.
So, I cannot help but wonder if Newcrest twisted GGP's arm when they made the loan facility and demanded a chunk of Scallywag, but instead ended up settling with a gigantic piece of Juri instead. GH seemed so pleased when he announced that we kept all of Scallywag.
If that is the case, then we are in a situation where our JV partner acts like a bully in my view.
I hope I am wrong, but I fear I am not.
From where I stand, GGP got nothing out of the Juri deal. Nothing worth to talk about, from what I gather in the RNS's released at that time.
Newcrest paid us nothing.
Yes, they have to spend money on exploration, but had it been their own piece of land, then that would also have been the case, so why did GGP not get some money for letting Newcrest in on the action in Juri?
A mutually good deal between JV partners on another tenement and project (Havieron) could among other options have looked like this:
Newcrest would have gained 10% of Juri for 2 million paid directly to GGP with no demands attached other then keeping the license going. And then Newcrest would have the right to buy further instalments at various higher prices up to a maximum of 30-40% of Juri. Should GGP decide to sell their share of Juri, Newcrest would have a right of first refusal.
If it had been announced that Newcrest had agreed to give a loan to GGP at 8% to finance their share of Havieron and in return the deal above had been agreed, then I would have been more then happy and found it to be a symbiotic relationship between 2 JV partners.
But it was not that kind of a deal that was made with Juri.
I am therefor still to this day disappointed that we did not retain it 100%, because in less then 2 years we are likely to be cash generative, and then we could have spend all the money we wanted to throw at it.
How can Newcrest improve my impression of them as a company?
Not take up the 5% option at Havieron.
And simply state that they do not do so, because they value the JV with GGP and despite it is ENTIRELY in their right to excersize the option, they find it unfair to do so, because Havieron is expected to become so big.
I suspect it was part of the deal for our loan from NCM and that’s why it was a poor deal in our eyes. Both were announced at the same time if memory serves me.
GH wouldn’t give way on Scally but was willing to give them Juri deal. IMHO
When it comes to mining majors & explorers in the mining industry, it's largely, IMHO, a roll of the dice, for both parties. Joint venture agreements are, naturally, based on one point in time, generally early on, and much can change, of course, both positive, or negative, for each party in the agreement.
If you hit a Havieron, or anything even close, you maybe, 'kick yourself', for what was agreed before, and, as a perfect example, as we all know, Shaun Day, as well as the GGP shareholders, are largely frustrated, by the 5% legacy issue. But, it was, and is, a done deal, so nothing more to do...we move on...!
If you hit dust, then the shareholders will be pleased that the BOD did what they did.
It is, IMHO, a bit of a casino, roll the dice, or spin the wheel.
What is vitally important though, IMHO, is having an excellent MD at the helm, together with a very experienced team, and that is crucial as we grow as a company, from not just an explorer, to a miner!
It does seem like GGP has mush confidense in this tenement?
"This does seem cheap. Having no HD05 drill results may explain it."
You basically answered your own 'question'.
Newcrest receives 25% interest in the Juri JV for entering into Stage 1 Commitment. Newcrest earns an additional 26% interest in the Juri JV when it incurs $3m and can proceed to Stage 2. Newcrest incurs an additional A$17m in expenditure in relation to the JV then Newcrest earns an additional 24% in the Juri Joint Venture. Newcrest for a total outlay $20 m gets 75% of Juri.
This does seem cheap. Having no HD05 drill results may explain it. Worried about inflation here as Newcrest have committed a a few million.
https://greatlandgold.com/projects/juri-joint-venture/