The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust 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.
Hi All. As the USA$ is heading for a sink hole the shiny stuff will increase its gains to levels that most think is unachievable. Not sure about the profit increase for Hav but every 1% increase in the POG is multiplied several times for FCF. The miners are about to see a massive increase in value. Not all miners will see a relative rise in SP, only the miners with good management will see the big profits.
Anyone here kind enough to do the sums on FCF increase with every $100/oz rise in the POG. ATB Speedy
Hi Speedie,
I have a spreadsheet model I use to calculate earnings. The inputs for GGP are a 3MTPA operation, 3.3 g/t, 85% recovery and USD 800 AISC.
Using those figures and for 100% of HAV, every $100 dollar increase in the gold price equates to circa AUD 41mil (GBP 22m?) in annual earnings.
Today is a good day to bring up earnings. Our current market cap is GBP 315m. At today’s gold price, 100% HAV earnings would result in gross yearly earnings of GBP 319m. Yes, 1 year earnings is higher than our market cap….we don’t own 100% and still need to acquire it $, but that’s pretty incredible even for 30% which will soon be mined. Some folks don’t seem to understand this…and the above figures are still based on the starter mine without any value in the growing resource.
Nicely explained Texlax - thank you.
Happy Easter all true Greatlanders and may the next few months see the start of the upturn all GGPers truly deserve!!
Hi Texlax
Using a gold only AISC of $1080 gives a clearer picture of what gold increases do for gold.
When you are looking at running Telfer and Havieron 100% the gold revenues cover all the costs and leave around $100m over per year.
The increasing copper price is the one to watch that is all pure profit if the gold pays all costs $150-$300 pa depending on price and grade % received.
Hi Speedie, a more bullish view than Tex would be to assume that GGP have 100% of Hav and Telfer. About 250,000 ozs pa for each mine, gives an extra US$50m. Per annum!!
Getting 250,000oz from Telfer might not be worth it.
The AISC at the moment is over 2,500 per oz.
There will be a limit of 10m tons through one train plus the leach pads.
10mt is 250,000oz at around 0.75 g/t any lower means ounces per 10mt.
Eg:- 15.5mt is 250,000oz at 0.5g/t
The leach pad is for grades below 0.3g/t.
If Ggp get Telfer I would put the open pits on care and maintenance until more exploration finds further targets. This is where the grades are low, Ggp would not have built funds up to fund further cutbacks.
From Newcrests reports the underground grades are 0.3-0.5g/t
Going to be a juggling effect but better to get the ore from Havieron before funding week ore projects
Bamps there is no way that the aisc will be $2500 of any currency. If it was in a past period then that was an anomaly. If Ggp get Telfer, expect them to mine selectively the much higher grades with lower corresponding aisc and higher profits.
The past under Newcrest will bear no relation to the future under any new ownership. Different philosophy and different mine plan.
That’s why I am guessing 250,000 ozs not 350,000 ozs but a much lower aisc helped by some significant cost savings from Jimmy the toecutter……
When you look at Newmont quarterly results they are forecasting AISC$2,470 with a $35m of sustaining capital.
Newcrest results from last June are indicating a conversion factor of 6 or 7% from 29mt down to 2mt for the underground this is quoted as 2.1g/t.
There’s been 6 months of production since then to Dec23 2 quarters
84,000 oz or 4.3mt in Sep quarter
43,000 oz or 2.3 mt in Dec quarter
These 2 are a mixture with a grade of 0.61 g/t.
Newcrest were expecting depletion by early FY25 so that’s Jun24- Sep24 but they stopped production due to the dam, so will be later.
There’s no development costs forecast in Newmont results suggesting funding for another cutback is not there.
From these figures I can’t see where 250,000oz will be achieved and may or may not last into the New Year.
That’s only my opinion from published resources I’ve no idea if they have found more.
So Bamps, in reality, with an ever decreasing ounce of gold production, a higher AISC than the POG, not to mention a rehabilitation costs that as of yet is unknown, can you tell us why Telfer is worth more than the $1 Shaun said he would pay for Telfer as a going concern.
If it wasn’t for Havieron & possibly a few satellites that may or may not be discovered over the next 5-10 years, Telfer was to be confined to the history books.
In my mind, I just don’t get where some think Telfer is worth anything at all.
They’ve spent an absolute fortune on it over the last couple of years just to keep it going until the ore from Havieron starts to come through.
If my memory serves me well, I think somewhere to the tune of $240 million was allocated just to keep the lights on at Telfer.
Now with that 2 year extension almost exhausted, and with no date currently forecast for the delivery of ore from Havieron, is it any wonder Newmont have decided enough is enough !
SD as always stated he’d love to buy the farm back, but at what cost’s, nobody knows ?
There’s still a helluva lot of work to be done and money spent, before reaching the top of the orebody, never mind processing the ore that’s to be extracted.
Do you think Telfer can still be profitable as a gold mine, or are you thinking it’s only worth, is in that of processing ore from other deposits such as Havieron and any other future discoveries, in other words, just a processing plant !
I’m of the opinion of the latter, just a processing plant, and as such, should only be worth scrap value for Telfer.
I’ve heard the arguments about how expensive a 20 million tonne per annum processing plant would cost, but how much would it really cost to dismantle one the size of Telfer’s, transport it to another location, and re-assemble it again ? Probably more than to construct a purpose built new one on site.
The only thing Telfer has going for it is the infrastructure that it provides, runway, accommodation and services such as water gas & lecky. It’s a bit like shoving asylum seekers into a disused Butlins camp at Pwllheli, that was to be Bulldozed to the ground until at the 11th hour something pops up to keep it alive a wee bit longer.
I just hope Shaun and the gang have everything in hand to deliver us everything they’ve said they would. Now is the time to see if their talking the talk, can actually walk the walk !
Let’s blumming hope so, or there’ll be some very peeved LTH’s including me.
If we think Telfer could be worth billions over the next decade for GGP even with the decommissioning costs then why will it not be worth anything at all to Newmont? The project just doesn’t quite fit in with their strategy going forward they aren’t saying there is no profit to be made.
Newmont could sell 51% of Hav and Telfer for the price of taking on the decommissioning costs at the end of the project. Then they get 49% of the profit and don’t have to waste their time on running the project.
Hi Spades and Jerry
I still think buying Telfer is a huge leap forward for Ggp .
Telfer needs careful handling on the last years of its life, by that I mean it will benefit a smaller entity to get more out of it.
Big conglomerates are only interested in big number crunching.
Ggp should a meaningful contribution to Telfer.
There are still some inferred and indicated resources that may be converted to the next category not a great but some more may be able to convert to reserves. Newcrest’s published Reserves report shows the conversion from 29mt resources to 2mt reserves that’s a huge drop, so a chance to recover some of these possibly for a smaller leaner company.
Newcrest have exploring around Telfer for many years so I’m assuming they’ve accounted for everything. The price of strong gold may bring other targets in play.
The only place I’ve seen a potential anomaly is under the camp and airport from a 2002 report.
There are other anomalies further away from the mine that Newcrest have not found anything substantial, now whether a smaller entity would have a different view I wouldn’t like to comment.
There are a lot of rumours and ifs involved.
The EPA submission that I posted should give people a better feel for the rehabilitation procedures / costs. Most of this work has been an ongoing process and there are many photos on that link to prove it, so I don’t believe there will be high costs.
The benefits of Telfer to Havieron are many but the mine side is diminishing rapidly and talk of high production ounces in the foreseeable future looks overdone.
A negative value is probably about right and the -$240m value of Grant Samuel would reflect decommissioning the plant.
Https://groundcover.grdc.com.au/innovation/precision-agriculture-and-machinery/pros-and-cons-of-deep-ripping-on-an-angle
This is similar to how they will remediate the tailings dams, waste rock mounds and the leach pads tops. Top soil if any will be used on the embankments
It would, I think, be a difficult balancing act to mine Telfer at a profit, without further capex, and dependent upon the price at which Ggp may be required to hedge it’s gold output from the mines, and in accordance with any lender requirement.
The JV, what we know of it, refers to intention to process at Telfer, and intention to negotiate tolling fees. As I see it, Ggp’s main priority must be to secure ongoing access at least to the facilities. I think that remains pretty much a certainty in the end. Without it, there will be no near-term benefit from Havieron for anybody at all.
Just considering the basics of Ggp continuing with its original solid plan as with Newcrest, is all, with which people were generally content before Newmont turned up.
Hedging a proportion of production, as with original bank debt facility.
The owner of Telfer owns 70% of Hav so makes sense the ore is being processed at Telfer. Surely it part of the economic equation for both sites.
It is, of course. But you have to get yer basic ducks in a row before moving on to performance. I have little doubt it will be done.
You see some on here been talking of a new processing facility. I don’t see that as helpful just now.
I agree. I imagine it be very costly to build given the environment. Also it’ll have to be permitted, how long will that take. And how long will the build that take. Could add years to first ore. Best avoided.
Looking at least 3 years to build new plant from getting permission, then design and engineering, then purchasing and construction and after pre-commissioning and commissioning and start-up and testing. This is a minimum for a new plant. To buy a second hand plant and install will take 2 years as it will have to be revamped and the above does not include utilities, water, power, gas etc and if we can not tie in into Telfer utilities then forget it. DM
I think talk of the “option” to build a separate processing plant to Telfer is helpful from a negotiating point of view. Whilst processing at Telfer is probably preferably, it’s always best to have possible alternatives when negotiating. It might not be the most rational alternative but at least it doesn’t tie GGP to being forced to “have” to buy Telfer.
GLA
Not the most rational for sure, importantly not the most economic either. It’ll smash down a NPV calculation for Havieron.
It’ll all be aired during discussions, with the possibility of side deals and assurances to secure mutual advantages, on the state of play as it exists now.
I continue to think Newmont will prefer cash on the nail, to satisfy promulgated promises to their own shareholders.
It occurs to me I don’t know what legalities exist around ROLR, ie what sort of deal, cash or otherwise, a mixture, whatever, Newmont could try holding out for.
Cash for NEM share holders will not be coming from Telfer/Havieron but from the 6 tier 2 producing projects some produce > 400,000 oz per year, that's where their 2 billion usd in saving is coming from. We are tiddlers in the scheme of things. As i mentioned on GGP share chat i prefer a deal of royalties maybe 2% x smelter. Can you imagine the monies made over time for NEM especially if we find other deposits to take production over 50 years, will be worth hundreds of millions to NEM, maybe billions. DM
I imagine they could have put that to Ggp and had done with it. Perhaps they have.