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Hello hydro,
I'm glad my post was food for thought. I think Havieron is lower risk than Red Chris was at the time as NCM have improved their understanding of block caving. Also, the ore body at Havieron lends itself to that sort of method.
Norf mentioned the Single Pass Cave Establishment method in block caving and it sounds like it will make a big difference to the mining industry if achievable- telfer, cadia and red chris are all either had trial running or are being considered for SPCE. The mentality of NCM which brought them Red Chris so cheaply is seen in their NextGen Caving strategy and now that the market has seen how successful block caving is, I think it widely recognises that Havieron is ideal for that sort of method and has a partner which will be able to deliver on it.
Some detail on how NCM managed to get a good price on Red Chris is in this article:
https://www.afr.com/companies/mining/newcrest-secures-footprint-in-north-america-with-11b-red-chris-deal-20190311-h1c837
Good evening StarBright,
My understanding is that Red Chris was initially an open pits with lots of ounces discovered but low grades made a lot of ounces not very cost effective to mine. The mining plan at the time didn't include a lot of ounces for this reason, and the open pit was relatively low output. NCM are experts in underground mining and believed they had the competency to deliver a substantial block cave. This has been proven to be correct and they are benefiting from it. It's one of the reasons I'm very happy NCM are our partners on our JV- they are the best partner to have for our underground mine. The relatively low price/oz for the 70% reflects the ounces which weren't going to be mined at Red Chris.
Some detail on how NCM managed t
Should be due GGP's annual report & financial statements soon. Last year we received them Nov 5th. It will be interesting to read about the new direction of the company (a lot has changed in a year) and get a snapshot of the balance sheet & cash flows.
Hi bamps,
Here is the link for the NCM 9th Sep 2021 Exploration report:
https://www.newcrest.com/sites/default/files/2021-09/210909_Newcrest%20September%202021%20Interim%20Exploration%20Update.pdf
I'm just using this one as it's the most updated version and shows the cross section across a good few parts of the orebody.
Figures 15 and 16 show it nicely. You can see how figure 15 and 16 show a substantial pocket of cemented breccia at the top of the orebody. Most of the ore body at the very top is crackle, but that cemented breccia will definitely be mined IMO and is likely to have bigger boundaries by the time we get to mining it.
Also whilst I think I know what you mean in your posts when you say sulfides in the SE (the higher grade SE crescent), it's worth knowing that there are sulfides in the cemented breccia and crackle, so if talking about sulfides then it's best to refer to the target zone or location so people know which area of sulfides is being discussed (as you did just now).
I'm hoping they plan on mining the cemented breccia around the SE crescent. It's worth asking because I'm sure there's a considerable amount of gold in the adjacent breccia
Hi bamps,
I don't think the crackle will be the last thing out of the mine, as from the base of the overall breccia pipe to the top of it (as of to date), there is a range of crackle and breccia, including the higher grade NW crescent/NW pod which is being considered for the bulk mine. Whilst they have a degree of flexibility with which drawbells to extract ore from, it will overall be a process of bottom to top extraction for the area planned. Because crackle and cemented are both present at the top of the ore body, we are likely to see cemented and crackle breccia being mined together at the end of the mine life.
Like you say, in a few years time the point regarding the crackle may make it very economical if the gold price rise outweighs any potential inflation in cost, so discussion at the moment on the matter isn't important at all. I reckon by the end of Havieron's mine life we will have other assets under production anyway, and the telfer processing plant will have many more sources of feed!
Hi hydro,
I tip my hat to your acquaintance and bamps for what currently appears to be a reliable estimate of roughly 0.2g/t. I had said previously that I would be happy to accept a figure of 0.2g/t as being true for the crackle if confirmed by SD. Whilst it's only an estimate I am happy to maintain what I said and will gladly think of the crackle as having around that type of grade (I'm going with around 0.15-0.25 in my head, and I think it's a mistake for you to think it can only be 0.2g/t or above). I disagree with the idea that people can't argue about the economic viability of the crackle breccia without having no credibility, especially if it can only be argued to be 'marginally economical' like you describe it. If it were marginally economical, I don't think miners would be willing to invest massive amounts of cash (in the billions) to risk something like an unforeseen aspect of the costs or a small fluctuation in the commodity price suddenly making the operation uneconomical. That in and of itself would make the overall mine development uneconomical.
Whether you want to consider it as either doesn't actually matter because they're not looking at bulk mining and thinking "the gold from crackle breccia will underpin our bulk mine". It's the NW pod, northern breccia and eastern breccia which are all cemented and the true target of the potential to bulk mine if/when their boundaries are proven to be large enough. Whether it's 0.1g/t, 0.2g/t or 0.3g/t doesn't matter in the context of Havieron. Whilst it will all get mined and whilst the crackle will be likely to produce some gold/revenue, the processing pipeline will be optimised for the cemented breccia targets at the expense of the crackle. If it were a homogenous 0.2 g/t, few hundred million tonne crackle like your hypothetical then it could definitely be looked at more seriously. Although when you have something like Cadia being considered an incredibly cost effective bulk mining operation at around 0.5g/t, the question is then how something less than half the grade can then beat one of the best block caves in the world. I'm sure the vertical ore body would help with a lower capex but I seriously doubt that the economics are as black and white as you make it out to be. It's not a serious issue when the Havieron bulk mining operation will be designed for something else entirely and the economics of the crackle are redundant point, but it's always fun to speculate on the 'what ifs'. You see what SD says as meaning it's economical and I see what SD says as meaning the opposite, so we'll have to wait and see what is/isn't included as significant in the NSR. I'll be here for a number of years to come so am happy to set a date on the calendar until then.
Hi bamps,
Whilst the discussion on the crackle breccia wasn't related to the topic of the PFS, I imagine if you sent a question to GGP then they would be happy to answer it for you. I think where there's any ore that contains a reasonable amount of gold it will end up getting processed.
I'd be curious to know how you think the mine plan will change for the FS. What do you suspect will change and what do you think it will change to?
At the end of the day, whether you think it's economical or uneconomical is besides the point, because it's the fact that we're seeing less crackle breccia (averaging around 0.2g/t) being replaced by significantly mineralised cemented breccia (1.1g/t but improving significantly) which is important and making a material difference to the economics of the mine. I said it multiple times previously, and the improving boundaries of cemented breccia was what I was trying to ask bamps the other day. When you got feisty about the language being used and started explicitly attacking me, it was a disproportionate response and I think you tried to argue a redundant point. In terms of the technicalities, I still think that if GGP started drilling and only hit 0.2g/t, NCM would never have gotten onto a JV, they would have never tested the depths of the ore body and we would never have mined it. The cemented breccia and SE crescent is what is truly economical, and SD said the same when he made it clear that those are the drill targets, not the crackle.
Hello hydro,
I did hear the question in the presentation. I take it that you asked, in which case thank you because it was a good question. I did hear him say that the crackle "might run at, you know, 0.2g/t". It sounded more like an estimate rather than something that has been calculated (they haven't done any kriging for the crackle so that makes sense), but whether that true number runs at 0.15 or 0.25 (around that 0.2g/t number) I think based on his answer, it doesn't really matter so much. His point about them not focussing on that material is indicative of it being uneconomical. I do imagine there are areas where pockets of crackle breccia are running at higher grades (most likely near the boundary of cemented breccia). But based on the drilling, it seems like it's mostly barren. If it were economical then it would be part of the focus of the drilling campaign and then the drill programme would make more sense if they just drilled through the ore body in a regular grid pattern with the cores oriented appropriately (quite similar to how De Grey and antipa drill) in order to systematically achieve the drill spacing. They'd need to get that tight drill spacing to do any estimates which could be used for NSR calculations and this isn't something they have said they plan on doing.
I was speaking with someone about this and a point they made was that the metallurgy would make the lower grade ore less optimal to extract because the processing plant will be designed to have optimal conditions for the higher grade ore, meaning the conditions for extracting gold from low grade crackle breccia would be sub-optimal and a significant amount of that auriferous crackle material will get lost in the process. That's not to say that we wouldn't get some gold out of the crackle whilst doing the bulk mining (SD said so himself that it's nice to get a little bit of mineralisation if you're taking bulk material). But, when you have ore which is for example 0.2g/t and other ore running at around 1.1g/t (breccia inferred), then that breccia material has 450% more gold in it, and that difference has a material impact on the recovery rate. That's why they've decided not to blend the telfer open pit ore (0.44 and 0.64g/t) with the SE crescent ore (3.9 & 4.0g/t). That case is more extreme with the difference in grades being 490-790% higher, but the principle is the same, where the lower grade ore would be extracted in sub-optimal conditions and produce less gold.
(continued)
Hello again,
Lots of upside to the mine, like you say. Although I have seen mention of using 1.6m oz of gold for 14mt and applying it across the total tonnage of the overall breccia pipe, and I do not agree with using it as there will be different types of ore with different average grades, all lower than that crescent zone (although the grades in the lower SE crescent look to be much higher grade). Either way, now that the ~$400m USD is going to be spent for the capex, you won't need to spend that sort of money for every 1.6m oz gold, so the capex/t will get lower as we prove up the resource and we will get an increasingly economical mine where for every ounce we find, the free cash flow will become easier to come by.
I like when questions like the one you made are posted because it helps people to think about what information we have and use it to build our understanding of the company. So thank you for a great topic and please make more topics like this!
Hi spoon_key,
At the moment, based on the production profile for the SLOS reserve case on 2mtpa (Figure 3 of GGP's version of the PFS), the first year of production (2024) is supposed to produce 50k oz gold and 2000 tonnes copper. Doing the POG minus AISC (1750-643) gives you USD$1107/oz. Multiply that by the 50k oz produced in the first year and you get ~55m USD per year. For GGP's share, that makes it ~16.6m USD per annum, so ~1.4m USD per month in the first year. That number is likely to be lower as the AISC provided included the copper credits and was based on the average AISC for the LOM, meaning the copper credits are going to be less initially (2000 tonnes) compared to the average (6900 tonnes). On the flip side, the maximum gold produced looks to be around 220k oz per annum and in that year it will be around 8000 tonnes copper. Using the same method for calculating the monthly revenue, you end up with ~$244m USD per annum, so GGP's share would be ~$73m USD per annum, or ~$6.6m USD per month. Because of the same point with the AISC being an average, the copper credits in this case are likely to be higher, so a lower AISC and more revenue in the years where the copper production is above the LOM average.
If we end up moving to 3mtpa rate then the production profile will look a bit different. To use a crude method you could multiply the revenue for both cases by 1.5x (for the 50% increase in throughput) and get ballpark numbers of $2.1m USD/month and $9m USD/month in revenue for GGP in the first year and highest rate of gold production (FY28). The profile wouldn't be the exact same though so might be a bit different, but it's a rough idea of what you could expect.
Pretty good for only 1.6m oz reserves. When the ore reserves are expanded then they might change the production profile.
Zoros, both the Canaccord and H&P notes account for tax (see page 2 and page 11 of the reports respectively). It's not true to say that the notes don't account for tax in the NPV. The canaccord note and H&P notes differ for a host of reasons despite having a similar estimated number of gold ounces. A big difference between the two is the annual production. Canaccord estimated the SP based where throughput varied and 25p wasn't the lowest case. That 66p estimate was based purely on the average EV/ounce of Aussie mid tier miners at 12.5m Oz. The difference between the two broker notes (25p vs 66p) on very similar number of ounces shows how you can play with the numbers and make it fit your own point of view. Someone could be really negative about the SP estimate and use canaccord's note and call for 14p on 15m Oz and 5mtpa throughput or use that same note but say 33p on 15m Oz at 12mtpa. Or, you could go even further and use 66p just using 12m oz gold and USD696/oz. Could predict the gold price will be higher and make even higher price targets. Who cares. The PFS is coming out very shortly and will make the brokers notes fall in line closer with one another once the variables become fixed/better known.
Also, the PFS will be based on drilling up to March 2021, not 2020. Not sure if you made a typo or not but the MRE was based on drill results more recent than March 2020. The PFS will use the infill and growth drilling up to Mar 2021 to inform the indicated resource estimate. Lots of drilling between March 2021 and Dec 2021 but not as much as your suggested March 2020-Dec 2021.
Strudel, I'd say common sense can take you further than any geological knowledge can provide. You rightly saw the notion that Havieron wasn't related to the magnetic/gravity anomaly would put into question the strategy of exploration geologists around the region (including newcrest and rio tinto). Common sense would say that the real geologists know that they're doing, so I stick to what they say/do. That being said, some targets might not have a magnetic high but those might be targets for different styles of deposit which would be produced under different conditions and give different responses like magnetic lows. Some targets might also have magnetic lows but then are magnetic highs just below surface such as Tama, A11 and A9 targets in the Juri JV. Either way, they are iteratively reviewing data after each drill programme. You'll notice prefect has been removed as a target. It seems they've refined the exploration targeting somewhere around the first few Juri results. At the same time, they've added a number of targets so I'm confident they are not just drilling blindly and have some data behind their decisions. That being said, you've got to have a little bit of luck!
I look forward to your update Strudel. I meant to comment on your previous post about exploration strategy for magnetic/gravity coincidence targets. I essentially agree with the exploration strategy. Magnetic/gravity coincidences don't always correspond to a mineralised discovery and can purely be a lithological response, but they are targeted because they can indicate precipitation of iron oxides, carbonates and sulfides. They indicate this because magnetite/pyrrhotite presence is indicative of that process. Like I said, it can also be a result of magnetite grains originating from basement rocks, being transported to near surface. Contact points between different types of rock can be magnetised because of this. Some of the drill targets we've come across have been a result of the latter.
I mention of havieron not being related to the magnetic response and I'd strongly disagree. Havieron is related to the response through the way the rock strata has folded, which would have helped in its formation. The pyrrhotite at Hav is likely to have helped as well. I've said before, but the magnetic response can suggest secondary processes that can be an indirect way of finding an ore body. Lower portions of Hav like the eastern breccia would not have shown up in the magnetic response because it's too deep to give a strong response from surface and not because it can't give a magnetic response. The targets around Havieron may not show a magnetic response for a host of reasons. The targets they're looking at might be too deep, they might be looking at zones where they expect magnetite is consumed, etc. In all cases of eastern breccia and targets around Hav, I expect them to have done downhole EM and gravity surveys as well as drill testing. They said they did drill testing of the eastern breccia and I expect a downhole survey of Hav (a large subsurface conductor) showed them how deep the system goes in terms of the depth of the conductive body. That doesn't mean it's mineralised but I would say it's more likely than not becasue the grades have improved at depth. Same applies for the targets around Hav.
Bamps and Paddy,
For reference, there is presence of disseminated and locally massive sulfides at Telfer. Lack of magnetic response due to low presence of magnetite. Only the biotite granites and mafic intrusions gave rise to magnetic highs in some susceptibility logs. There's been some magnetite enrichment, but not much.
There's plenty of sulfides at Telfer though. The reef structures are made of disseminated and locally massive zones of pyrite, which is not going to give a magnetic response. Magnetite and pyrrhotite are your two main contributors to magnetic highs. The Pascalle survey is simply saying that the AEM survey doesn't suggest massive sulfides near surface. The potential for locally massive sulfides and massive sulfides at depth are still possible. Disseminated and breccia sulfides are definitely still a possibility, and some IP surveys would help determine this. Also worth remembering that the responses are likely close to surface due to low cover, and likely that near surface responses are overwhelmingly stronger than any responses deeper below.