We know that the Greatland Gold PLC (AIM:GGP, OTC:GRLGF) project at Havieron is big.
And we know that it’s likely to make someone a lot of money in the coming years, even if the gold price has been giving up a bit of ground lately.
But how big, and who?
With the release of the Havieron pre-feasibility study due on Tuesday 12 October, we’ll take one step closer to answering both questions.
One direction of travel has been marked out clearly enough.
Greatland’s partner Newcrest Mining has made no secret of its desire to run an accelerated work programme at Havieron, with a view to getting it up and running and feeding ore into its existing plant at the nearby historic Telfer project.
Telfer will likely feature significantly in the pre-feasibility modelling, as infrastructure and plant are already in place, and the Telfer mine itself, though it has yielded incredible amounts of ore over the years, is now a long way past its best.
How the economics of Havieron dovetail with the economics of Telfer will be the key question the pre-feasibility study will be addressing.
With the answer to that question, the future of the project is likely to be decided.
Newcrest itself has the right to earn 70% of Havieron if it spends US$65mln on the project, and it may also acquire another 5% at the end of the six year farm-in period at whatever is deemed fair market value.
That it will meet those spending commitments isn’t really in doubt.
Newcrest engineers are already in the process of mining down to the top of the orebody, and although that work in itself doesn’t constitute a decision to mine, it doesn’t take a fortune teller to guess what might happen next.
But that’s why the pre-feasibility study matters.
The market will for the first time be given a clear understanding of the potential economics of Havieron.
Greatland is already valued at £860mln in London, and was even higher earlier in the year, when the gold price was stronger.
Will it be worth even more when the pre-feasibility numbers come out, or is the action already priced in? That’s an imponderable that will have to wait for when traders hit the floor on Tuesday.
But whichever way the shares move, the deeper question must be: is Greatland more valuable to Newcrest as a 30% partner or, as seems intuitively to be the case, would it make more sense for Newcrest to buy Havieron or Greatland itself outright?
The time for those sorts of decisions may not quite be upon us yet.
But the pre-feasibility study will certainly give guideposts to the way forward from here.