The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
To clarify, bulk mining can refer to either block caving or SLC. When Shaun Day talks about bulk mining options alongside SLOS, I suspect he means SLC with SLOS. Block caving would not be suitable near the south east sulfide crescent. The compact ore body means that a SLOS would be within range of disturbance if ore was drawn from the bottom of the ore body and that it where it would be best placed if there was no SLOS.
Newcrest had previously mentioned three stages of operation where they would look to SLOS the south east sulfide crescent, potentially SLC other higher grade portions and then block cave the lower grade material afterwards.
A direct question to Shaun Day on what method he specifically means when he says bulk mining (as he does in his interviews) instead of more vague interpretation would clarify this question mark
Hi Bamps,
Shaun Day has intimated in interviews at the idea of bulk mining in tandem with SLOS. However, this mustn't be confused with block caving. Bulk mining refers to a less selective mining method and relies more on tonnage instead and less on grade (cadia and red chris are examples of this). SLC is a bulk mining method that can operate simultaneously with SLOS.
As you are a regular town hall attender, and as you haven't heard him directly address this question, it would be worth directly asking Shaun if a block cave could run at the same time as the SLOS. I would be surprised to hear him say yes. The only circumstance where I could see this happening is if they tried to block cave the north west pod as it is much shallower than the EB. I do not see this as a preferable option because it would not include all the northern breccia material. While I have not yet attended a town hall, if his comments are similar to interview then I suspect you have interpreted him saying bulk mining and thought of block caving.
A better way (in my opinion) of explaining why to stick to higher grade material for the SLOS would be to say that it is more challenging to extract ore of a wide range of grades, instead of comparing with entirely different style of operations at red chris or cadia. Although, again, this is irrelevant when discussing the context of what companies and institutions value. Ultimately they only care about revenue.
Hi MH01,
Thank you for the suggestion but Newcrest design and run the operation and they are experts at block caving and underground mining, so they will know best. This is likely why they is no discussion of running a block cave alongside a SLOS. As Bamps says, there is a lot more drilling to do before they would do a block cave. I think they will focus on getting the SLOS running, then continue with exploration drilling and decide whether SLC or block cave will be most suitable. The team built at GGP are designed to run a SLOS and/or SLC on their own in case the project is offloaded entirely.
Hi Bamps,
If you didn't mean to compare a 3 mtpa SLOS with a 35 mtpa block cave, didn't mean to compare the two on a per tonne basis, and suggest that it is down to my lack of understanding, then I respect your decision not to explain what you really meant to say. As you now say, cadia is an entirely different project. There is no sense in comparing the two, especially in the context of what institutions and companies would prefer due to the fact that cadia generates far more revenue.
You may have to direct me towards where GGP published plans to block cave the eastern breccia at the same time as the SLOS because I am almost certain that this was only speculation amongst PIs. As you hopefully know, the depth of a block cave increases the size of ground disturbance: subsidence generally takes a 45 degree slope from the extracted blocks to the ground surface. The depth of the EB would almost certainly cause disturbance to a SLOS in the SE sulfide crescent due to the compact orebody and is why I am quite certain that NCM and GGP would never had entertained this idea. I have never heard of GGP nor Newcrest saying a block cave would run alongside the SLOS. Plans would only be made for a block cave after the SLOS operation ends.
This is why a SLC is my preference. A SLC can run alongside the SLOS. This would bring cashflow forwards and increase the value of the company sooner. The higher grade material in the northern and eastern breccia found in the latest drilling campaign may encourage towards SLC (in my opinion) and this is my hope.
Hi Bamps,
Grade is irrelevant when comparing between a block cave and SLOS. Ultimately, institutions and companies will care about profit/revenue. That is linked closely with ounces produced per annum and AISC. In that sense, havieron and cadia are entirely different operations with massively different scales of metal production. This means that companies will value cadia (a much higher revenue-generating asset) than havieron in its current SLOS.
My opinion and investment thesis is based on Havieron being able to (relatively soon) look at a bulk mining method and present this viability to the market in the medium term. I prefer SLC to block caving in havieron's case. It would be faster to set up, less capital intensive and would not have issues around subsidence that block caving can have. Subsidence happening safely is an important milestone in block caves but the ground disturbance near a SLOS would mean it would be unlikely that they would run a block cave at the same time as SLOS at Havieron. SLC can be done at the same time and would help make the project a higher revenue generating company. The higher grade material within the northern and eastern breccias satisfies my outlook on this matter.
Hi Bamps,
GGP's 3mtpa was last planned to produce 240 koz gold and 14 kt copper on its best years (from the 3 mtpa plan shared by GGP). More recenty, SD has said it could get up to 450 koz gold equivalent.
After recovery, cadia is currently producing 560-620 koz gold and 95-115 kt copper. This is more than double the amount of gold and 7-8x more copper every year. There is no room for comparison between the two projects whatsoever. Those projects are comparable.
Hi Bamps,
I hope you have been well.
It is simply untrue to say the 3mtpa SLOS will produce nearly as much as Cadia's 35 mtpa operation. GGP's 3mtpa was last planned to produce 240 koz gold and 14 kt copper on its best years. More recenty, SD has said it could get up to 450 koz gold equivalent.
Cadia is currently producing 560-620 koz gold and 95-115 kt copper. This is more than double the amount of gold and 7-8x more copper every year. There is no room for comparison whatsoever between the two projects.
A lot of value was given to the potential to bulk mine at Havieron by the brokers. We could get near cadia's annual gold production if we had a bulk mining method in addition to SLOS. This is why I have said I would like GGP to also do SLC in our previous conversations.
The Decka target is being RC drilled because it is under shallow cover. Stingray is being diamond drilled. They may have done multiple RC drills because it is cheaper and they can test different IP, gravity and magnetic anomalies. At scallywag have done similar around the pearl target. I am confident that Greatland Gold will make another discovery somewhere in the Paterson.
Hi Bamps,
Slide 6
https://www.newcrest.com/sites/default/files/2023-02/230216_Newcrest%202023%20Half%20Year%20Results%20-%20Presentation.pdf
Cadia is expected to produce 560-620 koz gold and 95-115 kt copper for FY23, so a lot more than 285 koz. This is on top of them having 33 moz gold in measured/indicated.
You also mentioned Red Chris who in the PFS project an average rate of 316 koz gold and 80 kt copper.
Both figures already consider recovery.
True that Havieron can offer good production with lower tonnage. I like the idea of SLC in the northern and eastern breccia because if they target the high grade areas then they can get a good tonnage and better grades than red chris or cadia which would make Havieron a fantastic asset to own.
Hello Bamps,
Thank you for your reply. I did not know if you might have more information from events or other communications with Shaun Day so your reply is useful. He said in the new presentation that the northern and eastern breccias could be bulk mined with SLC. Given that they are on either side of the dyke do you think the dyke is an issue for SLC or do you think it's only not an option for the SE crescent?
Hello Bamps,
I hope you are well. Shaun said there is an option to elect SLC or block cave in the latest Bell Potter presentation. It also said there's option for SLC in the newest MRE upgrade.
You said they could not do SLC but Shaun and GGP are still mentioning this option. Have you had any communication from Greatland on SLC that shines a light on the topic? Does the SLC option change for the northern or eastern breccia based on the dyke position around those areas?
Hi Bamps,
I did not mean to misconstruct what you said so I apologise. At the moment, gold and copper are the only products in play so that formed the basis of my assumption. You previously spent the last few years describing cobalt as a potential additional metal but I remember you saying that you no longer believe this to be the case. There was a series of podcasts on GGPhelp and Norf thought cobalt and other metals were not feasible to extract with gold and copper. He made an exception to silver and he touched on nickel as one that can't be extracted easily with both gold and copper. It would reduce the recovery rates of gold and copper significantly as proven by Antipa recently.
My main question is that if you think anything in the range of those copper revenues is feasible then do you mean over a year (which would be against GGP's estimates) or do you mean theoretically the total revenue for the zone you are referring to?
When you do a calculation of 3 mtpa at 1% Cu or 3mtpa at 3% Cu to get $290m-885m then it implies that you think it could happen. Also, copper credits refers to the revenue from producing copper concentrate so there is not any duplication of copper revenues. GGP are reporting that if you mine 3 mtpa of ore at Havieron then there is no point in its mine life where this is remotely close to being possible, even at the copper prices you used. You said you are looking at one specific zone so are you meaning that $290-885m worth of copper could be produced 3 Mt from a single zone over the course of multiple years? Or are you saying you believe Havieron will achieve that level of revenue in a single year?
Hello Bamps,
Thank you for your reply. I think I understand your point. I think it gets confusing when you do calculations that appear to suggest copper revenues of $290-885 in a single year. I agree that there are some good stopes initially which we do not need to worry about moving material too much. All the best
Just to be clear, I am meaning the first year of the 3mtpa profile given by GGP says 0.7 Mt of plant feed and that the following year is 2 mtpa and plant feed eventually gets to 3 mtpa. Grades never exceed 0.69% throughout the mine life using their production profile. Actual copper produced never exceeds 12.5 kt in GGP's profile so even at peak copper price of $5.02/lb, using 12.5 kt you would end up with $138m. In the first year GGP say it would be less than 5 kt copper produced so using the same spot price it would be about $55m in the first year for copper. I would say that is still very good.
Hello Bamps,
It is important to remember that with the 2mtpa PFS that the total material movement was 0.5 Mt at 0.48% copper. Under 3 mtpa from the resource update GGP predicted 0.7 Mt at 0.69% copper. Your post is far out of line with what GGP say is likely to happen in the 3 mtpa operation. Can I ask why you think your post is magnitudes out of line with GGP's reports? Are you thinking the first year will change from 0.7 mtpa to immediately starting at 3 mtpa and from 0.69% copper to 1-3% (you describe even 3% as conservative)? I hope you do not take my question personally, as I am just wanting to hear more about why you think your estimate is so different, or if you think the FS will change the first year total material movement and grade compared to GGP's 3mtpa production profile
Hi Freddie, you make a good point. There are normally conditions to draw on increments of cash from debt facilities. Those conditions are normally based on meeting stages of development and then the payback period begins on the amount drawn on. I think GGP will first use the equity cash and then draw on debt after FS and DTM. So I don't think there will be a problem for the banks