Member Info for sicilian_kan

Hi Paddy, thanks for the challenge!

My thinking is as follows.

1. Why take measurements from a 2D map to get your volume? We have the exact high grade intersections in the drill results that cross through that high grade zone. See Figure 2. If you use these you will get a more accurate figure.

2. I calculate a much higher average grade in the high grade zone than you do (your table has 2-7 g/t gold equivalent). I make the average grade as being 8.22g/t. This is calculated from the high grade intersections in figure 2 as follows:

a. There are 19 intersections that cross this high grade zone.
b. The total metres that cross the high grade zone, highlighted in figure 2 is 737.2.
c. The total gram metres that coss the high grade zone, highlighted in figure 2 is 6061.4.
d. The average grade in that high grade zone (gram metres divided by metres) is therefore 8.22 g/t

3. On the other hand I get a much smaller area than you.

4. Widths. The average width of the 19 intersections is just 38.8m and those are not true widths. Some of the holes you can see from Figure 2 are sheering down through the plunging zone. I'm really not good at calculating true widths and would value input, but for sheer convenience, lets call the 38.8m, 20m based on a true width. I cannot see how you use a much wider figure (than either my 20m or 38.8m) using a 2D diagram when the drill intersections do not support this figure.

5. Lengths. You have used a 2D plan which also includes the fault area that has nothing of note in it. I would use, for the moment, the figure given by GGP in their 11 March 20 RNS, of 450m "the continuity of high-grade mineralisation, which now extends over a strike length of 450m". I think the figure from the horse's mouth to be much more likely to be accurate of the current position than measuring in a straight line on a 2D plan.

6. Depths. You have used 700m, yet GGP states "in excess of 600m in vertical extent". Also the 600m hasn't been proven all the way around as you see from the figure.

So in short, I would use (on the basis of what is currently known, and giving the benefit of the doubt on the depth):

20 x 450 x 600 = 7.83 million m3 [you had 29.4 million m3]
x 2.8 [I agree your specific gravity]
x 8.2 g/t
/ 31.1035 [to convert to troy oz]

= 5.78m oz of high grade gold.

As ever, would be grateful for views on my figures. These are my amateurish calculations and if I have made a mistake somewhere or if my assumptions are wrong, I would be grateful to be corrected.

Best wishes, s_k

Sorry, it posted for some reason before I finished...do await the full message.

Hi Paddy, thanks for the challenge!

My thinking is as follows.

1. Why take measurements from a 2D map to get your volume?

Exactly Lenz. Mining the high grade areas first appears to be on Newcrest's minds as well. Note the inclusion for the first time in the last Havieron RNS of the potential for high-grade selective mining:

11 March 20 "Results to date support potential for both high-grade selective and bulk mining methods, which are currently being evaluated.

By way of contrast, just look at the 19 high grade holes intersecting the massive plunging high grade zone.

If you take the 19 drill holes marked on the GGP / Newcrest diagram that makes the high grade shape, you will see that:

The average grade in the high grade zone is 8.2 g/t gold equivalent, with an average intersection (not true width) of 38.8m wide, extending up to 600m in depth, open at both ends and at depth.

This is where the value in Havieron really is and what will be of most interest to Newcrest.

As I say, that this will be a mine is clear.

ValleyComando, there is a difference between:

a) the average grades in the intersections (which of course is much higher); and

b) the grades over the whole volume, some of which is intersections and some of this is blank. Just look at the drill holes and you will see that is the case.

I've calculated b).

a) can be calculated too.

Calculating b) is not de-ramping.

What is ramping is to apply a) over the whole volume identified.

Hi CJ01, yes they would be. One only needs to look at the high grade zones identified to see that this is a slam dunk for being a mine.

The purpose of my post was not to calculate the mineable area, rather to give a g/t figure that can be applied to overall volume to give an overall number of oz at Havieron. Not all oz will be mineable, of course.

Hi Jerry, yes, I did include the copper as au equivalent.

The 1.12 g/t remain, Minor tweak to the application of this to calculate overall ounces in the conclusion:

2. Then volume (a cube would be Length x Width x Depth) x specific gravity x 1.12g.t / 31.1035 (to convert grams to ounces) will give you the total ounces currently identified at Havieron. The shape will not though be a pure cube.

There were some interesting volume discussions yesterday. I've been doing some calculations to estimate the average grade - then one can guestimate the amount of gold found. This is of course very rough and ready, but below are my methods, results and conclusions. I would be interested to know any considered views on my calculations or to have any errors pointed out etc.:

A. Methods

1. If we are looking at calculating the average grade in an overall gold bearing zone (an area or volume containing gold), we must look at the grades in all of the gold bearing zone, not just the best intersections within it.

2. My general approach was therefore to take every hole drilled at Havieron by GGP and Newcrest (1-49), and to identify the gold bearing zone (from the top of the first intersection to the bottom of the last intersection). I ignored abandoned holes, partial holes etc. I only included those with full results out, which was the significant majority of them.

3. As a matter of general principle, gram metres are calculated by the width multiplied by grade, e.g. 100m x 2g/t = 200 gram metres. If you divide the gram metres by the width of the intersections, you are then left with the grade.

4. The logical next step was to apply 3. above to Havieron by totalling up all the gram meters identified in all the drill holes before dividing them by the total length of the gold bearing zones in the drill holes. As noted, this has the same effect as 3. above. It leaves me with the overall grade, but now the overall grade in all the holes, in their gold bearing zones.

B. Results

1. The total gram meters in all the holes was 16,550.57

2. The total metres of the gold bearing zones for all the holes (from the top of the first intersection to the bottom of the last intersection, per hole) was 14,795.40

3. The average grade in the gold bearing zones taken from all the holes drilled to date, was therefore *1.12g/t*

Conclusions

1. One can use this 1.12 g/t figure over the overall volume to do a best guestimate of the total number of ounces so far identified. Note I am not trying to calculate the g/t of the high grade zone and have done that else where.

2. Then volume (a cube would be Length x Width x Depth) x specific gravity x 1.12g.t will give you the total ounces currently identified at Havieron. The shape will not though be a pure cube.

Food for thought and would be interested in your views.

I'm interested in hearing people's views on the same. I'm not here to post my views on this. I could have done but chose not to, leaving the question open ended.

lebugue, it is a question for discussion and a perfectly valid one. If GGP was stacked with institutional investors having major holdings, I'm sure you would be swinging from the rafters telling everyone the merits of that. The absence of institutional investors and the reasons for the same also merits discussion, quid pro quo.

Keen in Newcrest / Havieron, or keen in buying GGP??

bigbench, I did say most days, not on all days.

It is remarkably easy to buy and sell GGP in volume. Single buys and sells of £100k can easily go through most days, at the click of a button and without the trade even needing to be worked. This, after all, is one of the attractions of GGP, the stock is extremely liquid.

Anyone wanting to buy in volume £1m+ could do so with ease and could do so without moving the share price much.

GGP have also done placings in the past.

Why then is there not a single institutional investor holding a significant shareholding (3%+) in GGP.

For discussion...

Hi Olderandwiser,

Good to hear from you as ever. Taking your points in reverse order:

3. I agree that to progress as quickly as possible is important. I think the current 8 rigs suffice and best to lock down those who are there as much as possible with as few outsiders as possible entering the camp.

2. My position is that the start of this week is not a time to be a buyer, or to increase one's holding. I'm quite happy holding the position I bought at 3.05p last week. But I do see a significant possibility of the share price being under pressure this week and better buying opportunities will likely arise than the current share price. Whether it gets to 2.25p I very much doubt, but I am ready to double my shareholding if it gets there. It is not a target price based on valuation, it is not even a target price at all, fo me, unlike 3.18p which was hit, rather 2.25p is a "this is too good to be true price" that must be bought. If it happens, even if only a 5% chance, I will be topping up.

1. My exposure here is based upon a 24 month hold (hopefully much less time of course). Given the drilling to date, I cannot see less than the 5.5m oz that Numis are targeting, in due course, based upon what has already been found, with infill drilling of course to prove this out.

At $100/oz and fully diluted, that comes to 3.18p. Any buys beneath that price have in my view, over a 24 month hold, very little downside risk with large upside possibilities. That is my investment style, at the moment. I am less concerned about the scale of the return, rather that I have exposure to a potentially very, very good return, with very little downside risk.

Yes, at $200/oz, it would double. Yes, with 11m oz, it would double again. But these are possibilities (price) or probabilities (total volume) not nailed on certainties.

There also needs to be consideration as to what Newcrest will actually pay. It will not be $200/oz over every ounce discovered. People (not you of course) are being very unrealistic here. Not all will be commercial. Not all will be in the reserve area. Newcrest will do a long hard calculation as to which bits can be dug out, over what timescale, which should be targeted first, and at what cost. A vast amount of the resource will not be dug out within a 10 year timescale and beyond that one can pretty much ignore those ounces when valuing the company.

These are my thoughts - would be interested in yours.

1) Paddy, thanks again for the images. I think your theory may well end up being proven. It is, from my perspective, the main probable upside here that could dramatically increase valuations. It could take my conservative 3.18p current valuation to 6-7p. No doubt those with higher valuations would make proportionate increase to theirs.

2) The stock market is expected to crash on Monday. At the moment it is expected to open between -6% and -7% (down) from Friday's close. All stocks will be affected. I can see sub 3p again here in the coming week as being a distinct possibility.

3) Whilst operations are not affected at Havieron, there remains a risk of operations being shut down due to the coronavirus. All it would take is for someone to come in (or to have come in) and to contaminate the camp and it would be shut down. Whilst not probable it is possible and the risk of the same must in the short term be factored in.

I'm not saying this will happen, but what share price would we see here if they shut down exploration to self isolate.

If the position can be covered to 0p, it is not in reality leveraged and it is just a tax efficient way of investing at the equivalent of 2.5m shares.

Re numbers, there are all sorts of holders here. Some will find 2.5m shares a lot. Some will find 2.5m shares not very much. Depends on one's finances really.

I bought 3m at 3.05p yesterday, under my 3.18p target price. If it falls to 2.25p, I will double my holding. I do not expect it to, but prefer in the current market to have some firepower just in case any unbelievable opportunities arise unexpectedly.

The thing about this price is that I see significant upside opportunity with limited downside opportunity. 5.5m oz (Numis expectation for this year as of the previous note - will revise upwards if they do) at $100/oz, gives a fully diluted valuation of 3.18p. I can only see it going below this figure if the gold price goes under $1,300 which I do not expect.

So in summary, I think there is a 70% chance of a 50-200% return in 2 years, and only a 5-15% chance of making a loss over 2 years. The remainder is break even. In today's markets they are very good odds.

There remains the speculative upside from Scallywag etc which I do not factor in.