Member Info for AM90

Very nice. For every 1 MOZ = additional $200 million in value.

So even if Havieron is a (very) conservative 9MOZ - that's an additional $600 million in value - approximately double our market cap.

Similar scenes at Scallywag to what has already been reported as of today. There is still activity at the same place at the London target, but no obvious ground disturbances, so i presume it is still in the prep phase. Drilling commencement must be days away now.

Wonder if these means we will get an updated broker note today...

0 - 4 weeks: Broker re-rate - either from Hannam, new broker or both. I guess this could be anywhere from 18-25p. Could give the SP a very rapid boost if its north of 20p

2 weeks: Scally drilling commencement

3 weeks: Newcrest financial results - Will almost certainly get a few quotes from Sandeep about how great Havieron is.

6 weeks Interim - more info on the NW - its going to get bigger

6 weeks onward - Scally results could drop at anytime! Build up to the MRE, possibly in October. Going to be very exciting.

All whilst gold price continues to rise in the background.

Updated figure with the new drilling results. https://ibb.co/4jwvcCb

Already there is plenty to get excited about for the next batch of results in 6 weeks.

'The crescent zone and proximal breccia mineralisation at the Havieron deposit remains open to the north-west, has been observed to over 1,000m below post mineral cover, and remains open at depth. The extents of the Havieron system are still to be defined.'

This is a monster.

https://greatlandgold.com/wp-content/uploads/2020/07/20200723-GGP-Presentation-July-2020.pdf

Jul 21 2020, 10:42 12.275 150,000 12.20 12.30 Buy £18,412.5 O
Jul 21 2020, 10:42 12.26 350,000 12.20 12.30 Buy £42,910.00 O
Jul 21 2020, 10:42 12.30 200,000 12.20 12.30 Buy £24,600.00 O
Jul 21 2020, 10:41 12.30 200,000 12.20 12.30 Buy £24,600.00 O
Jul 21 2020, 10:40 12.30 250,000 12.20 12.30 Buy £30,750.00 O

Merc, Don't there is anything new there that Paddy has not already highlighted. Not entirely sure what you mean, but if its the large linear scuff feature - then its always been there. I should have mentioned the zoom into Hav was more of a comparison for the rigs to the object near Scally. There was some change, but nothing i would deem as exciting e.g. new step outs or further activity in SW

I work with satellite imagery... researchers get some access for free ....

Its possible - but too early to tell i think. Will have a look the next couple of days.

https://vimeo.com/438481952

Speaking of which a large vehicle has appeared on the satellite imagery today in the Scallywag area. Difficult to tell from one image if they are there to start some serious work, or just having a little breakfast stop and admiring the scenery on the way to camp havieron

Three month average-daily-trading volume of at least 1 mln USD at a review and also at the previous two reviews.
At least 250,000 shares traded per month over the last six months at a review and also at the previous two reviews.

Jan volume: 1.62 Billion; Feb volume: 2.52 billion; March volume 1.3 billion = Jan-Mar total: 5.44 billion

I am not sure of the average share price, but even at 2 p that equals £108 million - which is greater than the require 1 million USD per day.

Not 100% sure if i have calculated this correctly, but seems we will meet this at September?

'The Havieron Project is the primary target of the Newcrest-operated farm-in and potential joint venture with Greatland Gold. The Project is located in the Paterson Province, Western Australia, approximately 45km east of Newcrest’s 100%-owned Telfer mine.'

Any ideas why they refer it to the 'primary target', does this imply there is a secondary target within the JV?

Does anyone know what data actually feeds into a corebox model? Do you not need drill results to feed into it? or is this done by the geophysics?

On a side note i do find it funny that if you search 'corebox model' on google and click on images... CB is on the first row

Volume looks very low today. Is there any chance the pattern will change this time and have some sustained increase after the results? Particularly if there is no 'Sprott type' event? It has already changed slightly with the lack of retrace this time around.

Thanks Paddy - This one is beautiful! Picks out the 9 rigs perfectly!

https://twitter.com/GreatlandGold/status/1277890595797659648/photo/2

Now, Macmahon management (and let’s be clear, CEO Finnegan was the head of surface mining at the time so this was surely his baby) has always accepted full responsibility for the original stuff. There were reports in 2016 that the deal was supposed to generate $62 million annually in revenue. Based on Macmahon’s current average margins, it should be making between $5 million and $7 million a year in that. Instead, a poor introductory period through 2016 saw it lose $29 million.

Then, having returned to something near an even keel through 2017, the contractor’s business case was then apparently crushed by Newcrest’s decision to keep Telfer going but to operate its pits in a far more targeted way.

The Macmahon position is that Telfer’s current, very agile mine design targets specific pods of richness in the pit. As a result less material is being removed to get at the ore, which suits Newcrest because it reduces costs. But one miner’s cost is another miner’s revenue. So this change of approach suits Macmahon not one little bit. And there remains a potential that it might get worse.

Recently Newcrest entered into a $70 million exploration farm-in agreement with a UK listing called Greatland Gold. The deal involves the Havieron tenement, which is 45 kilometres east of Telfer and hosts exciting early exploration success.

A blended future?
In a note published during Macmahon’s trading hiatus, Credit Suisse analysts painted a Telfer future beyond 2023 as a one-train rather than two-train operation where 9 million tonnes a year of pre-screened low-grade open-pit material was blended with 2 million tonnes per annum of much higher grade ore trucked in from a new underground mine at Havieron.

Meanwhile, Newcrest is getting on with trials of an ore-sorting plant that can discriminate between high- and low-grade ore. Work so far suggests screening can triple ore grades, making viable the one-mill plan.

The Credit Suisse case for a Telfer’s blended future is based, in part, on open-pit mining costs remaining “consistent with the past two years”. But it is more than apparent that this is not a case Macmahon can afford to live with.

Oh, and what was the controversy that accompanied Telfer’s opening? Well, there was a difference of view as to who actually found the thing.

The mine’s original sponsor was US gold leviathan Newmont, which claimed Telfer in 1972. But a Frenchman named Jean-Paul Turcaud laid claim to the title of discoverer, saying he had found it two years earlier. In the early 1980s Newmont paid him $25,000 worth of go-away money. Turcaud didn’t, continuing to make a public case, to little or no effect, for another decade and more.

Telfer a break-even ... for Newcrest
To be clear, Telfer is a very big operation with high fixed costs, a large estate and valuable estate of infrastructure but naturally declining grades that at a point soon might not sustain the business. It is Newcrest’s highest cost operation and, according to recent analysis, it is a break-even proposition. It must be fair, then, to assess that if Macmahon made any sort of money from its contract, Telfer would make a loss.

Last week, eight days after going into a trading halt, Macmahon revealed it had triggered protections in the Telfer contract that allow for “facilitated” negotiations over the deal’s terms and conditions.

The discussion must end no later than August 5 and Macmahon has reserved its right to trigger the mediation available under the dispute resolution processes defined in the 2015 contract.

If facilitation or mediation fails, Macmahon has threatened court action to resolve the dispute.

The delay between signalling a material issue and announcing the move to introduce independent direction to efforts to settle its differences with Newcrest is said to indicate the expanding gold miner’s last-minute attempts to avoid this contest going public.

This might indicate Macmahon originally had determined to go straight to mediation but pulled back at Newcrest’s invitation.

Macmahon’s statement last week warned that if the Telfer matter were not settled by “next reporting date”, the contract would be recognised as onerous and it would likely make a non-cash provision “in the order of $25 million-$35million ”.

Given that provision is based on a January 2023 contract completion, the number would appear to confirm the speculated level of monthly losses.

There are two connected flaws in the fateful Remembrance Day deal. The contract was built on Telfer survival assumptions that were not matched by eventual reality. As a result, the contract was priced on a matrix that did not allow for anything like a positive return given that the Telfer mine plan has changed since 2016.

Let me try to explain.

The deal that didn't work
Macmahon did the Telfer deal expecting the mine would close in or about 2020 and that Newcrest would run the operation very hard indeed over its final four years to generate production volume and returns.

Given that anticipation, it made a lot of sense to sign a schedule of rates contract that sees different tasks earn different fees. Effectively, Macmahon banked on two big pits being worked very hard indeed.

Telfer is the white dwarf of the Patterson Province, a dying sun of gold in Western Australia’s Great Sandy Desert. Though current owner Newcrest is doing all it can to build a case to extend Telfer’s life, the mine is slated to close in 2023.

Since Telfer was opened in 1977, it has generated more than 6 million ounces of gold, and over the past few years it has become the lead indicator for a review of the prospectivity of the Patterson by miners bearing a whole new generation of exploration techniques.

It was Telfer, for example, that invited Rio Tinto to the north-east of its Pilbara iron ore country to make what may yet prove to be a world-class copper-gold discovery at the Winu prospect.

The rapid increase in exploration tempo in the Patterson east and west of Telfer over the past 18 months generally, and Rio’s success particularly, would suggest that investment by Newcrest in fully assessing surrounding options might well be fruitful.

But, just as proved to be the case in late 2017 when Newcrest invested another $100 million to add four more years to Telfer’s productive life, any further life extension would be good for pretty much everyone but the poor bugger that currently does the hard yards in the gold mine's two open pits.

On Remembrance Day 2015, the then struggling contract miner, Macmahon Holdings, signed a life-of-mine deal to run Telfer’s open pits and tend to all the mobile equipment needed to do that digging.

The deal, which saw Macmahon’s introduced to the Telfer pits in February 2016, has routinely proved a serious loser for the contractor.

Poor management scoping, and the operational hiccups that necessarily follow such lapses, saw Macmahon’s lose $29 million through the first year of the contract. The company’s lost $1.7 million in 2017. But for Telfer, it would have made money.

Pretty much every six months since reporting that 2017 loss, successive Macmahon management teams have complained the Telfer deal is too tough, that they were working to improve its sustainability and that they were discussing ways of doing just that with Newcrest.

The P/L neutrality of 2017 was a passing phase. Over the past two years, the Telfer contract has been a consistent lossmaker, to the point that the issue of whether the contract should be declared onerous was the subject of public discussion by the firm’s auditors, KPMG, in the 2018 annual report. KPMG’s assessment reported the issue but offered no opinion on management’s view, which was to avoid declaration.

We have heard estimates that the contractor’s Telfer contract losses are running at about $1 million a month. So certainly you could forgive Macmahon’s chief executive, Michael Finnegan, if he is making the case that his company’s shareholders are carrying a cost burden that effectively sustains Newcrest’s economic case for Telfer.