Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
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https://www.proactiveinvestors.co.uk/companies/news/992431/greatland-gold-shows-how-holding-firm-in-the-face-of-pressure-from-the-big-boys-can-create-significant-long-term-value-992431.html
A few years ago, Greatland Gold PLC (AIM:GGP, OTC:GRLGF) was just another penny stock with licences over some dusty ground in Australia. Companies like that come and go on the world’s stock exchanges all the time, diluting shareholders down to crumbs and then consolidating their shares and starting all over again.
But Greatland Gold proved to be the exception that proved the rule.
In the London market, only one other company, Solgold, has come close to what Greatland has achieved - making a major discovery and then keeping hold of a significant portion of it as the big money comes in to move it forward into production.
Solgold had Cascabel in Ecuador and Greatland has Havieron.
Both companies made early backers overnight millionaires when the extent of their discoveries became apparent, and both companies have subsequently been on a rollercoaster ride in terms of share price as the market struggles to come to terms with what such huge discoveries are really worth when held by smaller companies that are trying to punch above their weight.
Cascabel became the subject of a tug of war between two major mining companies, and some of the intricacies of that fight went on to damage sentiment.
But in the case of Havieron, it’s been more straightforward.
Those who came later to the party are now underwater as the share price has dropped away from the heights it reached last year.
But the recent news of a financing package that will allow Greatland to fully fund its 30% share of the development costs at Haviernon did boost the share price by more than 10%. Concurrently, new board members were announced, including as non-executive chairman Mark Barnaba, who is the current deputy chairman of Fortescue Minerals, a A$50bn company.
Greatland has hit the big time, and the big hitters are accordingly coming in to meet it.
Serial small-cap non-executive Alex Borelli, who was chairman, will remain on the board as “London representative.”
And so Greatland survives the threat of extinction by a major, and lives to fight another day. The arrival of a serious mining investment vehicle on the register in the shape of Wyloo Metals adds strength in depth to any potential defence in the face of a hostile advance from Havieron’s now-majority owner Newcrest.
Newcrest and Greatland have always seemed to get along reasonably well in public, even if Newcrest has at times appeared to downplay the dollar value of Havieron to suit its own ends. The thinking has been that a reduced Greatland price would suit Newcrest very well, and allow it to come in and make a bid at what initially would appear to be a nice premium, but which in fact would be a significant discount on the real value of Havieron.
These debates are purely abstract for the time being, though, and the presence of Wyloo means that it’s more likely now that they will remain so as the mine goes into production. After all, Greatland’s current share price remains a shadow of its former 37p high, since even after the recent bump, it’s still trading at below 10p.
And even broker Canaccord Genuity (TSX:CF, LSE:CF), a supporter, doesn’t reckon it’s going quite back to its former levels. Instead, the broker set a target following the news of the funding and board appointments of 25p, more than two and a half times where it is now, and a valuation, which, if borne out, would take Greatland’s market capitalisation back towards the £1bn mark.
Such a valuation may now be justified given that Havieron looks to be headed towards production with Greatland likely to retain its 30% ownership all the way. But there remains execution risk, and the significant factor that when all’s said and done the ball remains largely in Newcrest’s court.
There may well be significant moves towards a re-rating in the coming months, but nothing like the spectacular rise that shareholders saw at the end of 2020 is likely to be repeated.
And there remains, too, the question of the longer term.
What will Greatland look like in the future?
Will it continue to be an exploration play, working up its other claims in the Paterson Range? Or will it instead simply become a cash cow, focussed primarily on deriving its value from the sizeable dividends that will shortly start to come rolling in from the Havieron operation?
Time will tell if the big company mentality makes itself felt. For now, Greatland remains the beacon for all smaller companies to set their navigation lights by – representing as it does the transformation of dusty ground into hundreds of millions of dollars worth of gold and opportunity.
Nice find… thanks for posting Stocky
The problem with the GGP story is that NCM have 70% and the book is not diverse. This means that the price can be manipulated and eventually when people have had enough, NCM will buy it out.
Morning Quady, that could be argued yes, but they will have to do it quite quickly as Greatland are now fully funded to production and production will be in just circa 18 months… at which point they will be a profit generating outfit… and in a position to simply turn it down unless it’s a huge offer.
In my opinion they have put together a great board, enhanced exceptionally in the last few days, and are making Solg look utterly glacial..
Thanks for sharing Stocky. I think the glaring omission from the comparison between SOLG and GGP is the former holding on to almost all of its Tier 1 asset, while the latter gave away 70% of it in order to move at pace towards production, and share the cost of funding the project.
It remains to be seen which of the two approaches will prove to be more successful. At the moment, I think it's fair to say that the GGP approach has delivered a better outcome and rosier looking future for shareholders.
Ortherncopper,
I'm a GGP shareholder now after waiting many moons for reality to align with the sp and present some decent value. I wasn't lucky enough to buy at 1p before the exploration success and applaud those that got in early although not those that still held on after the 37p+ spike ! But guess what I am saying is that there are phases through exploration and development which suit different types of shareholders. Some will be happy with buying loads of SOLG at 32p+ like Valuestone, Blackrock and Norges. Pi's tend to be the opposite and rather than build positions, they go 'all in' and then often 'all out' as you well know.
But can we stop applauding GGP for achieving full funding and bashing SOLG for apparent failure to fund. They are pl;oes apart and GGP's recent funding was POOR in the context of the overall GGP story. Hanging onto just a 30% stake is POOR too. But that's the way GGP went. SOLG have gone another way. Retained 85% (less recent royalty) and are debt free (no bank loans). Now here's the bit you need to acknowledge... SOLG got away $178m of funding with $78m equity raise at 26p levels and 32p along with $100m from Franco. There was no giving away warrants. No massive dilution or capital raises at share price lows like GGP. There was no major lining of pockets on newly appointed staff (to the level of GGP).
So last and final point... GGP have raised potentially $340m+ inc bank loans and are fully funded. But that's based on 30% of the project and some exploration across folio. It's not $2.7bln is it?? SOLG's challenge is about 9 times that of GGP. SOLG have around (roughly) 20 x the gold resources (as mine plan) that GGP have. Buckets loads of copper that GGP don't have and yet both companies are remarkably valued at about the same market cap today. And that's before GGP's dilution hits post EGM.
So lets keep it comparable. SOLG are a 'proper' Tier 1 asset holding company. GGP have a minor slice of a very small tier 1 if at all tier 1 asset.
You are comparing a 2 bad flat conversion project with a tower block development. SOLG are finding out the reality now of the project task ahead (after all the talk) and we know that it has to be resolved soon or else Lasso et al will be asking for some licence blocks back and starting to create red tape rather than cut it. He needs Alpala moving fast ahead of Ecuador elections in 2.5 years time.
Shark, Performance metrics over the last year apart from this week do not indicate that at all in fact SOLG stronger across the differing timescales, so not sure what you mean
Sharket is spot on.
Hi Novice, GGP was considerably overvalued (in my opinion) throughout 2021. Shaun Day inherited a business with a dwindling supply of cash, and a complex, unfavourable agreement with its JV partner to resolve. The business is now fully cashed up to production, has somehow managed to avoid having to give away a further 5% of its world class asset, and has appointed 3 highly experienced mining executives to its board. I mistimed my entry and bought in first at 15p, but followed a strategy of buying in tranches. My average is now just shy of 10p, so I'm underwater, but fairly confident of a positive outcome over the next 18-24 months of holding. The path to production is clear and the GGP position vs NCM has been strengthened considerably with the addition of Wyloo as a strategic investor. I think the future is bright.
Comparing that with the progress of SOLG, who appointed DC in Nov '21. We have delivered a PFS that saw a decline in SP post publication (people buying the rumour and selling the news I imagine). We have as good as halted all new exploration activity. We have attempted to raise funds in a way that was so offensive to our two major shareholders we had to withdraw it. We have sacked/lost the person responsible for raising funds to supposedly develop and build a mine at Cascabel. We have lost our CFO after 6 weeks or so, and we have made several 'key executive' appointments, from whom we have heard very little/next to nothing (a genuine question - what are they currently doing?). Not to mention the fact that we are going to need to raise funds at some point fairly soon.
Objectively, it's not been great, and the short term outlook isn't good either.
On the plus side, we have managed to retain 85% ownership of one of the biggest copper gold finds of a generation. It's now up to the BoD to work out how we can effectively monetize that asset and deliver some long overdue returns to shareholders who have stuck with the company throughout all of the above. The problem is, we're all left scratching our heads as to how the BoD intend to do this whilst keeping BHP, NCM, CGP, and Nick Mather all happy (I personally don't think this is possible).
SM, surely the point is we've retained 85% thus far, but we don't have the cash for production. In order to get that money (if it's possible), we too would have to give away a similar percentage.
GGP gave me the biggest single return I've ever had on a publicly quoted share and I count myself very fortunate...it would be great to repeat the trick here...but it won't happen if we go down the production route.
Agreed addicknt, and I don't think the current management team have the credibility with money markets in order to secure it. My preference would be to recognize that Cascabel is simply too big for a company of our size to go-it-alone, and to sell it to one or both of our major shareholders. Use the funds to continue exploration across the rest of the portfolio. Rinse and repeat. Perhaps find a smaller project (e.g. Porvenir) and look to develop a mine there to generate regular income over time.
Well done on GGP!
I am left wondering why Wyloo chose to invest in GGP and not in Solg with our depressed share price…. Surely there was a deal to be made if they were looking to invest somewhere…. Unless, just maybe, they choose to also make an investment here too?
Quady, maybe you could explain what 'book' you are talking about? Havieron is a mine not a company. GGP has a book that is so much more diverse than Solgold. Do you think Wyloo will allow NC to go hostile?
Colonel, just to update you on some of the numbers. GGP has said the volumetrics suggest at least 20m ozs of gold and copper is about 20%. (There are some who are saying 30-40m ozs and have the calculations to prove it). Byrnecut are about 40% of the way down the decline and will reach the ore body in 2023.
Sorry to be off topic but just wanted to correct a few errors.
No one has ever suggested that the Alpala deposit isnt so much bigger than Havieron on a resource basis, but where is the plan to get it mined?
Colonel Drake:
"...You are comparing a 2 bad flat conversion project with a tower block development..."
You failed to mention that the 2 bed conversion is in SW 1 and the tower block is in Tower hamlets.
The 2 bed conversion is paid for and ready to move into. The tower block has still only got its foundations showing - after 9 years of "construction", and can't get a mortgage!
Grow up.
OthernCopper - are you for real? Why would Andrew Forrest spend money, time and effort in a charity in Ecuador, compared to a certainty in his own back yard????
Z
Ortherncopper, it would be nice, but the #1 principle for Wyloo's investment strategy is:
"Country: We operate in regions of past experience and avoid areas of political instability."
From: wyloometals.com/investments/
I don't see them expanding their footprint into Ecuador any time soon, sadly.
Sharketmare,
What a load of nonsense ...
Are you aware of Twiggy and Ecuador??
"In Ecuador, Fortescue operates under the subsidiary Ecuador Fortescue SAN/A.
Fortescue are the second-most active explorer in Ecuador after SolGold, with 32 exploration concessions for porphyry copper deposits awarded in the provinces of Pichincha, Bolivar, Guayas, Chimborazo, Los Rios and Zomora-Chinchipe, in lands that belong to indigenous Shuar, Kichwa and mestizo populations. FMG are also exploring for minerals in Colombia and Argentina, with a further 65 concession applications lodged in Colombia for copper and gold." END.
Wyloo and Fortescue go hand in hand. Twiggy being the common denominator. He's already all over Ecuador and many other areas around the world.
Zoros - what's the point coming here and gloating, when you have nothing to gloat about... other than share price destruction? Despite the funding, its still at multi year low. Anyone who bought GGP few weeks ago, SD has royally shafted you and will continue to do so if project needs change.
Oh and more thing.... seems like GGP won't be cash flow positive for quite a long time after production... at least 2032 is where one poster put it, who has yet to be refuted on his calculations. Go on and put up your calculations like he has.
Colonel, Orthern didn't ask about publicly listed and well established Fortescue, he asked about Wyloo. I simply lifted shared their first investment principle from their website, which talks specifically about jurisdictions and political instability. So don't accuse me of posting 'nonsense' and then start rambling on about something else altogether.