Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Having the experience of the 5% valuation process, plus this is SD and the boards area of expertise, I am fairly confident of a positive outcome.
I feel similar that GGP is working on buying Telfer+Hav. Shaun has said as much during London TH visits. But there is a process involved and how long that takes........ how long is a piece of string. All GGP stakeholders are well incentivised to make this work and rerate GGPs valuation. Wyloo and Tribeca are cornerstone investors. The Board and Management Team have vested interests here too. Callum Baxter is a large shareholder.
It sucks balls waiting and watching the share price but a lot of the sector is also experiencing similar. There are some companies doing well right now, typically those with gold/copper revenue. We are in the development stage so not so lucky. Sentiment and volume will change this, as discussed previously.
We now know NEM are in Phase 1 of the sales processes and 3 teams set up for different geo's inc. Oz, also that they have activated a 'price discovery' phase and certainly they have at least one bidder for Hav/Telfer you'd presume with GGP. If akin to Aykem where opening bids are due by end of April, hopefully this means negotiations can commence in May for GGP too.
You'd think that GGP has worked at getting close to a funding framework for what all involved deem a fair value range agreed in principle to assist talks with existing and perhaps new members of current syndicate , alongside having performed as much Due Diligence as possible at this stage for all parties around their own perspectives and needs - GGP's aided by current involvement in Havieron as part owners with planned processing at Telfer.
So fingers crossed we could just be a few months away from a resolution, not saying it couldn't take far longer if perhaps some complications arose or there are other bidders where allowance has to be made for all parties to offer, so LROR can be actioned by GGP of course.
No one knows exactly what is going on but NEM have said they're looking to execute or decide all divestments by Q1 2025, and enough reasons to hope that GGP's negotiations move quickly. In terms of sequencing, both the CEO and their investor relations have articulated that they'd expect Oz assets and Aykem to probably be divested before the N.American assets to date.
Yes - maybe
Understand the quote, then understand "maybe" that I put
Expectations for the divestitures is that those will be executed within the next 12 months. Hence, the classification on the balance sheet is assets held for sale. So expectation is through first quarter of 2025 that we will have executed or made decisions around the divestitures. And so the timing is contingent upon that.
Spy - What this tells everyone is that its going to drag out for maybe another year.
What makes you say that?
Thanks Dip for all your hard work on the transcripts. You continue to set the benchmark for the quality of posts that this board can get behind and discuss.
Spy - how we getting to top of ore? Who is paying for the rest of the decline??
Just an of the cuff question, would the reduction in our SP help the potential buyers of the 70% ... for example if we was valued at £500mln for 30% but now only £250 one could use that valuation to benchmark the remaining 70% so weakening our SP could be very advantageous to a suiter for the 70% ? ...just trying to understand the step and seaming less continuous drop.
What this tells everyone is that its going to drag out for maybe another year. what are they going to do once we are at the top of the ore and have to go mining. will they do a u turn if not sold off by then or just go total royalties?
The biggest plus for GGP is that Telfer and Havieron have to be valued as stand alone assets not combined and without combining the 2 its like having a bike with no wheels for sale .
I think the assets for sale figure is probably irrelevant, as indicated in the Q and A.
Price discovery across the assets ongoing, then zero in perhaps, negotiations around those figures on individual assets, knowing broadly the parameters.
Newmont have made it plain they don’t want the assets. Every buyer wants a bargain. Newmont as a seller, will decide how far to go.
I read the transcript different to you, I read it as the BOOK value of the assets held for sale is $5.7bill which is not the price they are for sale. Instead the 5.7bill is the total capitalised costs spent over the years, the book value.
Each asset is on the market and the bidders will determine the price.... ie. 'price discovery'. $2bill total has been touted as the happy point for Newmont.
GGP is only concerned on Telfer+Hav. Dip referred to the Grant Samuels valuation from last year as a guide. The good news for GGP is that given Newmont's large portfolio they won't be concerned about being hard-nosed on a certain price per asset. Because their other assets are profitable and cashflow positive. Compared to a smaller company offloading and looking to get as much as they can, Newmont seem to want to rid themselves of their unwanted assets in order to focus on their wanted assets.
So I suspect buyers for the divested assets are hoping to nab a bargain. Shame we will not know who is bidding for Telfer/Hav and at what price. I gather we will only know once an agreement has been reached and can be announced.
The questioner read the accounts. Newmont has put a price, 5.7 billion, on the total assets destined for sale at this time in the accounts, as they are required to do, on the basis their decision to sell within 12months will take effect. It is, I understand, a combination of book/FMV, but they don’t know how it will pan out. Price discovery ongoing.
They look for 2 billion to achieve what they want. And would like more. I guess there’ll be an element of swings and roundabouts, getting the best bidders will offer whilst not accepting obviously low ball offers. They’re not pushed for cash/liquidity as far as operations are concerned.
Insightful Dip, thanks for the effort in composing your messages. It is therefore obvious why GGP cannot comment on Telfer/Hav. Newmont is the seller and there is a process to follow. And it is not an automatic given that GGP will buy both. GGP cannot make comment on someone else's asset sales, that's not their place. We can all assume that GGP is a contender to acquire both, and so we have to wait for an outcome. Which could take months, many months, we just don't know.
In the meantime we have to hope that Havieron is continuing forward and not stalled.
‘There’s a SET process for Telfer, in the Australian context, and we have a dedicated team looking after that’.
The others only had processes. Telfer/Havieron have a set one. I’m going to take that as a positive.
That's a very useful transcript Dip. Thank you
Hi Barna - yep - it was interesting wasn't it, hopefully on the lower scale or below of the Grant Samuels evaluation then :-)
Great post Dip
I find this interesting
Joshua Wolfson
And then, sorry, just one question if I can sneak in. I noticed the book value for the assets that are held for sale is $5.7 billion, which is quite a large number as compared to the $2 billion targeted. Any sort of comments there on how we should think about pricing or what the targets are effectively?
Karyn Ovelmen
No, not necessarily. I think from an accounting convention perspective and how they're reported from a GAAP perspective will be obviously considered, I would assume by potential buyers. But in essence, the process of going through the commercial view of the assets and the value to the potential buyers that will produce something most likely different whether it's up or down inefficient versus what is recorded on our book from a GAAP perspective.
That makes the asset sale on average about 60% off the Newmont valuation .
Daniel Major
The second one, you've talked detailed a lot of the progress you've made since the integration in Newcrest. In these kinds of deals, I guess there's always positives and negatives. What's the toughest part? What's been the most challenging or almost difficult part of the integration so far?
Thomas Palmer
I picked that one up. The thing by far away, Daniel, is that the tragic loss of Adam Kennedy's life at Brucejack on the 20 of December last year. And as you reflect upon the integration, you reflect upon what things could we have done differently, what decisions could we have made differently that wouldn't have led to Adam being killed that day at Brucejack.
I think, as you've said in some of our remarks as well, I think stepping back from the loss of Adam and safety, I think the two areas that we are working through diligently tailing facilities, and we've talked about Telfer and we've talked about our Cadia and little bit around Red Chris. So just bringing those tailing facilities into the Newmont standard and ensuring that we have the appropriate rigor and discipline around those in managing them here and now, and ensuring those we shepherd those going forward that they have the appropriate standard.
And then the third one would be bringing the ore body knowledge levels up to a Newmont’s standard so that we've got really robust all body knowledge underpinning our mine plans. So that will be the three areas where there's been, I guess the hard work. I think if I step back from that with the perspective of having lived through a similar integration and transaction five years ago, I think, when I stepped back from those three areas, I think the integration has gone very well and I think we had the benefit of being able to apply the lessons we learned from integrating the five Goldcorp assets back in 2019 to this exercise. And that's put us in good stead.
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End
Jackie Przybylowski
And maybe if I can ask as a second question, just going back to your divestment strategy, I know you have a number of assets that you're looking to sell in Canada specifically but also, I guess globally as well. Can you comment at all, like, is do you have a preference of selling that's in sort of groups or bundles? Or are they all expected to be sold individually to different buyers? I mean, I don't know if you can make any comments on how you're thinking about that?
Thomas Palmer
As I mentioned, in the -- asked earlier question, the process has started on all six assets. We have engaged banks and have started a process on all six assets, and we're in the process of price discovery through a Phase 1, and active interest. So we are getting a good feel for the level of interest in these assets and the competitive environment that we're hoping to enjoy. And we're running three separate processes in terms of, because they're in different locations.
There's a set a process for Telfer in the Australian context with a dedicated team looking after that. There's a process for Akyem in the African or Ghanaian context with a separate team looking after that. And there's a process for our North American assets, the four operations plus the coffee project, and a team getting after that for being led by Peter Toth that's Scott Langley. But up and running and very active, as I say, we're in Phase 1, and quite excited about the level of interest and the competitive environment, which we are presenting these assets to prospective buyers.
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cont...
Highlights from Q&A:
Operator
Our next question comes from Josh Wolfson of RBC Capital Markets.
Joshua Wolfson
The team has painted a fairly rosy picture here on what the prospects are for asset dispositions, and then also what the free cash flow outlook would look like absent some of these working capital headwinds. In that context, I'm wondering how flexible is the company's buyback policy? And I'm noticing the stock being a lot higher today than it was when the plans were announced for this at the fourth quarter results.
Karyn Ovelmen
As we go through the divestitures and as I've indicated as our free cash flow picks up in the second half of the year. First priority is to ensure that we've got that our cash replenished on our balance sheet. And then there will be flexibility in terms of as long as we have line of sight in terms of that debt reduction over the next 24 months, we would -- at that point in time, if we were in a position start to think about executing on share buybacks.
Thomas Palmer
And a reminder, Josh, we've got an approved $1 billion buyback program ready to go if or when that scenario, Karyn Ovelmen said out takes place.
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Joshua Wolfson
And then just sort of to clarify, when I look at even what a flat quarter would look like at much higher gold prices today, and again without this, some of the larger working capital challenges, even maybe one or two of these asset dispositions would put you in line of sight of that. Is it fair to say that the prospects for the buyback could happen sooner than maybe what the initial criteria were outlined for the balance sheet requirements?
Karyn Ovelmen
Expectations for the divestitures is that those will be executed within the next 12 months. Hence, the classification on the balance sheet is assets held for sale. So expectation is through first quarter of 2025 that we will have executed or made decisions around the divestitures. And so the timing is contingent upon that.
Joshua Wolfson
And then, sorry, just one question if I can sneak in. I noticed the book value for the assets that are held for sale is $5.7 billion, which is quite a large number as compared to the $2 billion targeted. Any sort of comments there on how we should think about pricing or what the targets are effectively?
Karyn Ovelmen
No, not necessarily. I think from an accounting convention perspective and how they're reported from a GAAP perspective will be obviously considered, I would assume by potential buyers. But in essence, the process of going through the commercial view of the assets and the value to the potential buyers that will produce something most likely different whether it's up or down inefficient versus what is recorded on our book from a GAAP perspective.
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cont...
Newmont Q1 2024 Earnings Call Transcript
https://www.ggpchat.co.uk/viewtopic.php?t=914
Note: unfortunately some missing segments in transcript