The post 5% goalposts.20 Aug 2022 10:51
The goal posts aren’t moving any more, they are firmly planted, and our goalkeeper (SD) has a better defined area to play in. The 5% being resolved is a massive event. Not only that, but with a fantastic medium to long term gift for shareholders.
SD can now ‘rock and roll’ on the future plans for our share of HAV and funding for our exploration going forward. Up to now he had some moving goalposts to contend with:
Hav – What funding do we need to get into production? Would it be based on 25% or 30%? how much of the $50m facility would be burnt up in each scenario? How much more do we need or not need. What numbers do we base a cashflow projection on to back up any funding requirements? What collateral are we able to show potential lenders….. All this is now largely crystalised and SD can draw up a credible 5 year plan with the minimum of variables and maximum credibilty. The 5% has been much more of a drag on the abiliy to manage than most realise.
Hav2 – Don’t forget that the 70/30 ownership split is for the whole of the JV tenement, not just what we have discovered to date. If another elephant waves at us from the Northern step out drilling…..Well, Hello there big boy!
Our 100% prospects, we can now compile more accurate forward projections of future cashlow and can button down realistic budgets (including costings) for our exploration efforts. With a better handle on the available cash, our Geo’s can better plan their work and which targets to go for in which order and how. The full HAV FS at year end will help to crystalise this better and will likely free up better cash projections. We should now be able to show when (and how big) we will hit FCF and can plan any short term funding to fill the gap.
Other JV’s – these are still there, of course, and are being funded by the JV partners. No change here on the surface, but don’t forget our team are in control of these. With everything going on in the area, resources are scarce (e.g. available drilling capacity, assay availablility etc.). As managers we will have the ability to manage what resources are used on JV prospects vs our own 100% prospects (keeping within reasonalbe expectations of the JV, of course).
So, aside from the obvious balance sheet benefits the 5% resulotion gives us, our team can now focus on building a really great Greatland Gold. If goalposts had brakes, they have been taken of in a big way.
To SD and his team, much respect. The achievement of keeping the full 30% of HAV seemed to be an unatainable goal, but that one is now firmly in the net. Not only that, but they have managed to do it at no cost. None of the $85m offered to buy back the 5% - none! No opportunity cost over the $60m (difference between the ‘real value’ on up to date drilling vs the $60m derived from 9 month old drilling). It is a result I (and many) really wanted but never expected.
Very Happy Falcon.
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