“We’re about two years into a three year construction programme,” says Greatland Gold PLC (AIM:GGP, OTC:GRLGF)’s chief executive Shaun Day.
The decline that’s currently being sunk into the ground at Havieron in Western Australia has reached a depth of over 1,700 metres, and over 300,000 metres of exploration and development drilling has now been completed.
“In each of the last three quarterly operations updates we’ve been able to demonstrate record advances,” Day continues.
“Most of the surface infrastructure is in place, and we expect to be in the top of the orebody before the end of the June 2024 half.”
Of course, while all that work was going on, there’ was also a change in the ownership of the part of Havieron that Greatland no longer owns, after the world’s largest gold miner Newmont took over Australia’s largest, Newcrest.
Day reckons that that titular change in partners won’t affect ongoing work at Havieron, though.
“We’re really just exchanging a major as a partner for a super-major,” he says. Relations with Newcrest have been good to date, and he expects them to remain so.
“The Havieron ore is still intended to go through Newcrest-Newmont’s Telfer mill.”
And in a way, Newmont’s acquisition of Newcrest also represents another tick in the box for Havieron. No transaction of such scale takes place unless all the assets involved are world class. Haveiron has long been recognized as being in this category, with its incredibly long intercepts, high grades and ever-expanding resource.
But to have the world’s largest gold miner come in and put its own seal of approval on the asset has done the project’s credibility no harm at all.
After all, for a long time Havieron flew well under the radar of most investors in the Australian mining scene, albeit that it’s one of the world’s most sophisticated.
That lack of recognition, in part, stems from Greatland’s own history as a London-listed exploration junior - back in the days before it discovered Havieron. Havieron changed everything of course, and turned Greatland, at one point, into a billion dollar company.
Some of that speculative enthusiasm has since worn off, though, as certain types of investors have cycled out and new ones have come in. And so, at the current market capitalisation of just under £350mln, could it be that Greatland is once again offering significant value?
Day doesn’t have much doubt about it, and accordingly he’s endeavoring to get the story in front of as many people as possible. The most significant aspect of that endeavour is a new listing in Australia, due in the September 2023 quarter.
Such a listing can have come as no surprise to anyone, and has no doubt been on the company’s to-do list for a long time. First, though, it had to bring in a partner, start development, and cutt deals on other exploration ground in the neighbourhood.
Now, though, the time for an Australian listing is at last arriving, and it could be that when it comes it heralds the start of another uplift in the share price.
It’s not just that the company’s shares will be available for the first time to the world’s fourth largest pool of investment capital, though that’s nice. Some of the institutional investors in Australia are mandated only to invest in Australian-listed companies, so even if they end up trading the shares in London, Greatland nonetheless needs to have that Aussie listing to attract their interest.
There’s more to it than that, though.
For one thing, a lot of the long-term planning for Havieron was done at US$1,400 gold, and we’re a long way ahead of that now.
For another, the Australian mining market has remained significantly buoyant over the past 18 months to two years - in sharp contrast to the bearish sentiment that’s prevailed in the UK. Investors in Australia, it seems, are just more in the mood to come into the market and buy.
What better time, then, to present them with the opportunity to invest on their local market in a local asset that’s set to become one of the biggest gold mines to be put into production anywhere in the world for a number of years?
The interest is likely to be significant, and the shares will no doubt gain new momentum. It might not be an overnight extravaganza, though.
In mining, there’s a development model that analysts sometimes use called the Lassonde Curve.
According to this model, investor interest rises when a company makes a discovery, increases still further when additional resources are added and economic models are generated, but then recedes during the period in which any actual project is constructed.
It could reasonably be argued that Greatland, at about a year out from production, might just be rising from the second low in the Lassonde Curve that comes after all the major news about upside has been delivered, but before the cash starts rolling in.
If that’s true, then the combination of the new Australian listing, the positive newsflow as Havieron continues to be de-risked month on month, and the strong gold price, should start to build momentum for the climb up the final curve towards the valuation of a full-on producer.
Keep in mind, though, that Havieron isn’t the only asset in the Greatland portfolio. Some peripheral assets have recently been joint-ventured out, but there remains a portfolio of exploration ground on the Paterson Range, which also hosts Havieron, on which Day sees huge upside.
Here, the partner is Rio Tinto (ASX:RIO), another name to be reckoned with in the mining sector. And Day is quite clear that there are enough cash resources inside Greatland both to continue with development at Havieron and to undertake significant exploration work on the wider Paterson portfolio.
Because one thing Greatland can now say with absolute justification is that it’s perhaps the leading exploration specialist focussed on the Paterson. And given that the Paterson is yielding some of the most interesting gold and copper-gold discoveries anywhere in the world at the moment, that’s a useful claim to be able to make.
Even so, Day is not taking his eye off the main prize.
On achieving first cashflow from Havieron, he says “we will prioritise growth and debt reduction.”
But he also adds: “I’ve always been a dividend kind of a guy.”
Greatland’s direction of travel is pretty clear. It ought to be enjoyable watching it get where it wants to go.