Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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RA, if we receive 5% of a £2 Bn asset (your starting assumption), we have £100 million cash. If we retain 25% of that asset (another £500 million), and the £100 million doesn't cover the cash needed to go to mining and drill Scally all we want, the extra amount needed will be small, and the size of our retained asset will make it easy to secure debt financing for anything extra we need.
1G I disagree with you re what GGP wants to be. In an ever changing world being able to pivot in business is key when opportunities present themselves. If you listen to any gold video on YouTube a highly sought after gold company to invest in is one which receives royalty income from a gold producing mine without the capital outlay, because the CAPEX and Opex is left to the larger mine operating partner. So back to GGP and the opportunity to receive an annual income stream into the future without lifting a finger is literally worth its weight in gold!! That guarantees the future of the company from which it can decide how best to use the annual funds - exploration work, dividends, mergers, etc. Being myopic that we should just explore isn’t the best outcome. Gold explorers burn cash quickly and many don’t survive, without the need to raise cash and dilute shareholders.
Thanks all for the comments on this thread where we were looking at the various options available to GH with regard to Havieron moving forward.
In addition to the main question, we have also meandered into the realms of Havieron and tenement ownership but we appear to have assured ourselves that the various transfers of ownership have simply been made to enable the various licences to be applied for an approved in the most expeditious manner. Neither NCM or GGP are expected to either gain or lose from these machinations.
Back to the original question though. The inital responses would suggest that folks are not keen to call the way ahead and would rather wait for both the MRE and (more importantly) initial reults from Scally. The feeling was that both GH and SB would not want to make a move in this area until more info was available. If this thinking is correct, then we're unlikely to see significant bid movement regarding Havieron until MRE or Scally results. We will, of course see some movement as NCM make their annual report and as we receive the regular exploratory results each 6 weeks. I'm guessing that MRE or Scally results could drop in the form of an RNS at any point - the longer it takes, the higher the probability each morning.
There was a lot of support for JJMack's post where he suggested we should retain at least 25% of Hav and wait for income but also prove up Scally to a point better than we did for Hav. This would then allow us to JV again but at a (possibly significant) different ratio to that which we have at Hav - ie 75-25.
From my perspective, I think that JJMack is in the right ballpark as I'm not convinced that NCM will necessarily want to invest in securing the last 25% of Hav. My concern then turns to the capital demands both Hav decline and Scally exploration would have on GGP. I know that GH has indicated that he can secure loans without loss of equity but what would be the overall cost of capital for the two projects? Open question and not expecting any responses, just trying to identify how things might play out in the future.....all looking positive at present and I have faith that GH has the necessary bases covered.
ATB and GLA.
RA
NCM’s expertise lies in deep mining - in particular block cave mining.
So far, NCM have largely been doing exploratory drilling at Havieron...
1gandhi exactly that
I think some posters are confusing exploratory drilling vs mining.
GGP is / wants to be largely an explorer.
In my books, explorer means drilling to establish a. If there is anything valuable b. how much of that stuff is likely to be there.
They can then hand over, for a much bigger consideration, to an experienced miner...Or am I missing something?
MH01 - absolutely bang on!!
*unrisked not unrivalled
The current JV with NCM for Havieron has changed the fortunes for GGP, under 2p to 14p and broker notes stating 29p unrivalled... that’s just the Hav!! If you cannot appreciate what NCM has brought to the table for GGP and we still retain 25~30% then you’re kidding yourself. If history can repeat and Scally unfolds similarly to Hav and for discussion purposes Scally is worth 30p unrisked, then we’re talking 60p unrisked all thanks to NCM. Again my figures are for discussion only. That means GGP goes from 2p to 60p PLUS retains ownerships stakes in both circa. 25~30%. Providing a future income stream for the cherry on top. IMO this is all possible only because of the JV with a massive global gold mining company. Without such GGP would be under 2p a share. Gervaise is working on behalf of all of us and is well versed as to what needs to happen to maximise the share price. In Gervaise we trust and thus we can sit back and enjoy the ride.
Speaking strictly as a layman and gold newbie, I would think that the 70/30 deal in NCM's favour has already set the precedent from which future negotiations would be based.
Maybe GGP could negotiate a few more percent but I'd be surprised if it was significant.
MH01 and TMT both very much justifying why NCM have the ability to ask for that kind of ownership. Okay they would have had to put the money down for what they spent during the farm in regardless but there is so much you can’t put a price on that as MH01 says turns this from gold in the ground to a genuine resource that will get out of the ground. Connections with govts and indigenous groups, access to machinery, Existing contracts with suppliers, some clout in the industry.
GGP could retain 100% of scally but who knows how long that would take to get up and running going it alone. Think a similar style arrangement would be good and on slightly better terms...but 70/30 in GGPs favour I would agree I don’t think NCM would get out of bed for that. All IMO
Hi, Bamps. You are mostly right on NCM ownership of Scallywag, but it's confusing and you'd probably be better off just forgetting it, LOL. The 8 June RNS explains it somewhat but not in layman's terms, so I'll take a brief shot at it.
NCM temporarily has 40% legal ownership of the entire Hav tenement, which includes Scallywag. GGP still has 100% beneficial ownership. This is until the mining license comes through, at which point we will get our full legal ownership back.
Basically it means we've created a legal fiction that NCM owns 40% of it, but our beneficial ownership means it comes with a wink and a nod that they really don't own anything except part of Hav. But they have to have the same legal ownership of the whole thing to get a mining license for the whole thing. So, temporarily, we've loaned them 40% of the legal ownership while saying, "As far as beneficial ownership, which is what matters, this baby is still ours."
This allows a single mining license for the whole thing so we don't have to go through it again later with Scallywag. The different assets can be retained or sold but it will all be under the same license.
In short, NCM did us a solid by helping us play this legal game. The result is that when all is done, we'll have a mining license for both Scal and Hav, we'll own 100% of Scal, and they will own whatever percentage of Hav that they will have earned by then.
I doubt it will even come into the negotiations over any potential buyout of Hav, however. It's all a legal game NCM agreed to play with us to help us out.
NCM wouldn’t get out of bed for 30%. They have all the skill and expertise not GGP. Look at the SP from under 2p to 14p and GGP will have 25~30% of Hav. If you expect NCM to provide all their expertise then you pay for it. If NCM want a JV on Scally and GGP keep 35% then it’s still a great deal. Without NCM it’ll just be an undeveloped resource. NCM make dreams come true. You guys need to keep it real.
Thanks for your reply Womo.
I agree, I do not think GGP could be in a much better place then we are in currently.
GH praises NCM as a partner, how they help our people on the ground by letting them use facilities at their camp.
To me that is worth a lot.
So I would like to see a good co-operation extended to Scallywag.
But on completely different terms.
GGP 70% and NCM 30% + what they earn on toll processing the ore from Scallywag.
It would make sense to use their facility at Telfer, as long as it is cheaper then building the infrastructure our self.
AIM is a concern for me too. And I think it is for many Institutional Investors as well.
The biggest advantage we currently have is that we are free of stamp duty, despite this I would like to move up to the main market.
Hopefully we will be told well in advance, should such a move take place, so we can decide if we want to top slice beforehand.
SocialistB, I suppose it is all down to the risk factor and capability. NCM are big enough to take the risk and are most certainly capable.
Its looking like the whole area is full of the stuff (High mineralisation).
But the main issue and risk for me would of been that GGP are on AIM and it is cut throat. The fact we are riding the jpourney with NCM has certainly smoothed the ride.
GLA
Hi thelearner.
It seems I need to clarify something.
When I said: " Given 70% of Havieron for free" it was a bit of a tongue in cheek.
70% is a lot to loose of such a fantastic asset as we expect / hope / believe Havieron will become.
Over the last 6 months or so, I have slowly come to realize what a a good deal our BOD managed to secure, when compared to another deal Newcrest made with Antipa.
However it still hurts to see such a high percentage gone.
But there is a grain of truth to the sentence about NCM getting it for free. NCM does not pay GGP a dime for their 70% of Havieron, all of the $65 million are being spent on proving the asset up at Havieron.
This is an expense NCM would have incured anyway, in every single possible thinking scenario had they still been the owners of the tenement.
I think it would have been extremely difficult for the BOD to raise the capital to prove up Havieron and all our other assets on decent terms.
SOLG should have some fantastic assets as well, but to me it seems like everything has gone wrong over there, with the way it has been financed and conducted by their BOD so far.
So having given 70% of one of our assets away, and by doing so, created a good working relationship with one of the best miners in the world, is very well done.
And a price well worth paying, if Scallywag turns out to be bigger then Havieron.
The electromagnetic maps looks promising. There is something down there at Scallywag, and it ain't dust.
So it got value.
Should I be wrong about that, and Havieron be the biggest find of all our tenements, well then it is, that it really annoys me again, that NCM got 70% of Havieron, but I acknowledge it was a gamble worth taking.
However I doubt that Havieron is the most valuable of our tenements.
We know Scallywag is bigger according to the survay's so far, hopefully that will also mean it is more valuable.
I, for one, certainly hope so.
1gandhi, Covid 19 - Where the hell have you been hiding.
Drill, drill, drill is what GGP should be doing. My concern is that that has not been happening. Why?
SWG hi,
Correct !!!!
The only involvement that NCM have ATM is Havieron. Newcrest has the right to acquire up to a 70% interest in 12 blocks within E45/4701 that cover the Havieron target (the “Tenement Blocks”)
What ever happens later is not yet on the table. Some should read the following as it explains everything.
https://greatlandgold.com/paterson/
Its worth reading slowly so to understand. I have read it every time someone queries what is what, then I get confused and have to read it again LOL. I do admit some of it is confusing.
ATB and have a great day.
Tom:-)
ATB
Tom :-)
From memory, it was purely an admin exercise to cover licences etc for Hav & SW - NCM get the SW licences through quicker and then it all reverts back to GGP
Hi SB
The way I see it Ggp own the license 100%.
The joint venture covers the Havieron area. To obtain the Mining Lease E45/4701 Newcrest need to have legal rights to their 40% share and the exploration lease will be split into 2 with Havieron JV having the Mining Lease and Ggp 100% of the exploration area not covered in the Mining Lease i.e. Scallywag and Blackhill South.
I know it confused me :))
Hi Tom
I do find this lease confusing and you're right what you're saying but reading the RNS about the Mining Lease they are going to be taking ownership of 40% of E45/4701 and when the Mining Lease is signed off Newcrest will relinquish the Rights to the license back to 100% Ggp that is not in the Mining Lease.
To my daft mind it would be a perfect opportunity for Newcrest to offer something to remain 40% of the whole license especially if Ggp find something big in the next few weeks.
I would rather see Newcrest spending large sums on exploring Scallywag and PFS than Ggp issuing more shares. They would do it in far less time and Scallywag is closer to Telfer.
Newcrest do have first right of refusal
ATB:))
Hi Bramps21
One of us have have misunderstood the JV big time (and I hope it is not me)
NCM does not own a percentage of Scallywag or any other of GGP's tenements.
The only tenements where they have a percentage is Havieron and here they can earn up to a 70% holding in 12 allotments by spending US$65 million within 6 years.
During those 6 years NCM have a right of first refusel to some of GGP's other asset's, like Scallywag for instance.
It's my understanding that GGP could in principle offer Scallywag to any interested party for multi many Billions. But within the first 6 years commencing in 2019, NCM have the right to say to GGP they want to match the offer from any other bidder.
They don't have to join a bidding war and thereby help increase the price. They don't have to offer a single $ more for the asset.
They just have to accept the terms GPP have reached with another bidder and they can legally walk away with it, but for a limited period only. (6 years, if I remenber correctly)
If GGP decides to mine Scallywag on their own (and I doubt that they will) then I do not think NCM have any right to acquire it. It is only if we consider a offer from 3rd party.
Bamps Hi,
Re your post :-
"Newcrest are soon going to have legal ownership of 40% of E45/4701 until the Mining Lease is signed. That means they have 40% of Scallywag, Havieron and Blackhill South at least for a while".
Have a look at this :- https://greatlandgold.com/paterson/
The 40% only applies to the Havieron part of E45/4701 NOT all of it. The remainder is owened 100% by GGP. Newcrest has the right to acquire up to a 70% interest in 12 blocks within E45/4701 that cover the Havieron target (the “Tenement Blocks”) by spending up to US$65m. Newcrests 12 Blocks :- https://greatlandgold.com/wp-content/uploads/2019/03/HAV_Project-Area_Sub_blocks.jpg
Cheers
Tom :-)))
"Newcrest are soon going to have legal ownership of 40% of E45/4701 until the Mining Lease is signed."
This was done in good faith by GGP to allow early application for the mining permits etc, and there was no real other option that I could see as currently under the T&C's of the JV, Newcrest have sole management rights for Haverion, and there is no doubt they will soon be the partner with the controlling stake. They would not dream on reneging on the agreement they made with GGP, and I very much doubt it would stand up to a legal challenge in the highly unlikely event they did this.
"Newcrest got 70% of Haverion for free" - no they never - they got it as part of a JV agreement for a minimum spend of £65 million US. Still a bargain - but also a good deal for GGP as we could never had progressed this so quickly, and also this has hugely increased the interest in our tenements and those of other owners.
Now we might be unlucky, HAV might be the only real big find in the area, and in that case NC will have been extremely fortunate, but I am greatly encouraged by the confidence CB has in the technology they used to see where to drill at Hav, and that the same technology suggests there is an awful lot more to come in other areas.
The other big + is that large partners will defo want to be involved in any future JV agreement on other tenements, abd GH/CB can negotiate these JV's on better terms, maybe even based on final MRE - to make the gains more evenly spread between the 2 partners.
Why would we JV and not do it all alone by raising the drilling cash. There are probably some Pro's and Cons for both.
GGP doing it alone - after doing a small amount of initial drilling - if we get promising results - could do an IPO placing with a new company owning the tenement - 50% of shares to existing GGP shareholders and 50% sold on open market for the cash raise for drilling. Then if we have found and proved up tier1/2 asset - could be sold at big profit.
Doing it with a JV partner - I think demand for drilling rigs in Paterson and Australia is going to boom - normally that means prices shoot up and it gets much more expensive to drill - a JV partner might b able to secure drilling capability faster, for longer and at less cost than a small company, and they have huge expertise in mining and drilling to bring to the table.
I am still so delighted I found this share - my hands are still sore from sitting on them. I must admit my last top up was around 8.5p, I am not going all in like many others - but I am doing fine.