Hi CB, I've always advocated us holding onto our 25% for the future as I can see our 25% share of the profits being probably more per year than our current market cap but I fear that Newcrest may not want a junior partner when they eventually come to develop Havieron.
That brings us to how do they fairly value Havieron after MRE if they do want to pounce at that point - IDK is the answer to that but I'm sure that if it does happen it would be a "friendly" offer and as such it would need to be a decent one if GH and the BOD were going to recommend it to the shareholders.
Alternatively Newcrest could carry on through stages 3 & 4 and then we would have a much clearer view of the actual size and scope of Havieron. I guess it all depends on the initial offer than NCM come up with - if they come up with and offer that is subsequently rejected then it might place some strains on the relationship.
One thing for sure is it's going to be an interesting 6 months one way or the other.
OK so let’s try work out what Havieron may be worth to Newcrest Let’s use the Numis conservative estimate of 5.5 Moz and assume Newcrest own 100% We know Newcrest is treating head grade at Telfer now of 0.7 g/t and breaking even or making a small profit and their AISC is roughly $1,200. Let’s say NCM are going to produce 500,000 oz per year from Havieron for the next 11 years and the average grade is “only” 2.5 g/t. So, they would only need to process 0.28 times the amount of ore to produce the same amount of gold they get from 0.7 g/t so let’s be conservative again and say the AISC would halve to $600.
Now let’s build in a $500 Million Capex cost for the mine and road development and add another $50 per ounce to the AISC to cover transport costs. (I’ve been told $10 an ounce would cover it)
OK so (500,000 x 11 x $650) + $500,000 = $4,075,000,000
Now work out your profit from the selling price – let’s assume over the next 11 years the average gold price is $1,500 / ounce 500,000 x 11 x $1,500 = $8,250,000,000
So, Newcrest could easily make over $4,000,000,000 on Havieron on these very conservative estimates.
Newcrest produce gold at Cadia for an AISC of $142 @ only 1.19 g/t
Now look at what size deposit do we actually have, what will the actual average grade (including CU) be, what will the AISC be, what will the actual Capex and transport costs be and lastly how high will the gold price be over the next 20 years.
IMO - Newcrest will be making multiples of the $4 Billion
Also - every satellite image that we see of Havieron shows that NCM are carrying on their step-out drilling to the NW - now why would that be, of course they are just putting in 1,200 - 1,500m diamond drill holes in 40 degree heat just for the fun of it.
SK has gone on record as saying that the results from 90% of the holes at Havieron have been exceptional according to the g/m measurements. It's probably a fair point about II's not going above 3% but we don't know how many may have bought up to that point and are holding back for confirmation of stage 3 before breaching the reporting threshold. There could be a multitude of reasons why they haven't invested but it doesn't change what is in the ground - you either believe or you don't - simples.
Hey guys just been having a look at the drilling in the SW corner. I think they are absolutely smashing the ball out of the park down there. I think they are chasing the high-grade breccia that they discovered in HAD042. I put this document together to explain my theory