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@Paddy, Re: He's (SD) fully aware of the importance of this asset to the development of GGP as a viable mining business and IMO there is not a cat's chance in hell of it getting sold on the cheap and preferably not at all in his eyes.
Exactly my sentiments, I want a GGP dividend now and again, which might well be achievable should we become a miner, albeit a 25% miner, irrespective of what NCM want out the whole JV.
That's all fine and dandy and nobody minds if Havieron is acquired 100% by NCM once the price is fair and reflects the value that Havieron would represent for GGP over the following five year period - I'm sure that's what Shaun alluded to in a couple of his interviews/presentations over the past few months.
If NCM are prepared to de-risk Havieron for GGP and bring forward the value that it would be worth, then he said that he's not allergic to making money, but it would be with a tear in his eye. He's fully aware of the importance of this asset to the development of GGP as a viable mining business and IMO there is not a cat's chance in hell of it getting sold on the cheap and preferably not at all in his eyes.
I agree Havieron will be acquired at some point. What investors need to do their own assessment of fair market value for the asset. Discounted future cash flow seems to be the method used.
Telfer has processing capacity of 22Mtpa with head grade of 0.89g/t at recovery 78%. The PFS for Havieron stated grade 3.72g/t 88% recovery rate and anticipated 2Mtpa. This is a key factor for life of mine valuation before the ore body has been fully explored. The amount of ore Mtpa is only limited by the decline. Anyone can run the numbers for your own base case assumptions size of ore body, amount of ore processed per year (Mtpa) head grade g/t, recovery rate x (PoG - AISC) - Debt and put that into a discounted future cash flow model. We know the PFS understates mineral gold and copper reserves. As these grow with every drill intercept so does the life of mine and therefore the future cash flow. GLA.
For me, both can be true - the position GGP is in, with a proportion of a fantastic and growing asset,in a great jurisdiction, with potential finance lined up,a portfolio of other prospects, etc, means it can make a success of it without a takeover but if a takeover does happen (I hope not) it would have to be lucrative to get SH support.
"...The goal of most junior miners is to be acquired by a larger company." Although this was undoubtedly the plan while GH was at the helm, SD has made it perfectly clear that the new objective, under his leadership, is to grow the company into a multi asset producer utilising Havieron as the catalyst and funding vehicle. This change to the companies ethos means that we are no longer looking for the buyout, but instead SD is actively building a team with assets that will make the buyout prospect less likely if we can gain some additional success in exploration over the coming months.
Zoros- good post, and it’s important I believe to add that GGP currently ticks all the boxes (or is working on them - such as financing) of what they recommend looking for in a junior mining co looking to develop a discovered asset.
I agree with TT on this one. I invested in GGP primarily because I firmly believe it will fall under a M&A. There should/will be more meat on the bone down the road if GGP becomes a JV miner after the bulk underground mine goes into production but that is years ahead. And for me, time IS money. I struggle to list many juniors who have survived a M&A. Of the 3000 juniors who have existed over the last several years, I can think of two. The main success story: Fortescue Metals with Twiggy Forrest @ the helm and of course we can never forget Northern Star who had Shaun Day as their CFO! I am sure there are a couple or so more but there are only 50 majors.....QED! This link by Crux is easy reading, though a long one. Very good homework for anyone who wants to understand the fabric of the junior miner business.
"...The goal of most junior miners is to be acquired by a larger company. It’s become increasingly common for major and mid-tier mining companies to dedicate their extra cash to acquiring junior miners, rather than exploring for new deposits. M&A is the best way for junior miners to survive. The costs of building and operating a mine are so high that only mid-tiers and majors can sustain them. Keep this in mind when evaluating junior mining companies. Good juniors will complete all the technical and logistical work required to get the mine into production, positioning themselves for acquisition. Look for juniors who are transparent about their data and financial status, and are open to working with partners...."
"...some investors choose to hang onto their junior mining shares for longer time periods. This strategy can pay off big if a junior miner’s discovery gets into production and they sell the project to a mid-tier or major...."
The good news here and now is that we are watching poetry in motion, where a major is running the show, spending millions, pressing all the buttons to get Hav to market.....and GGP is along for the (almost free) ride! What's there not to like? Z