Canadian mining investor Sprott has started research coverage of Aussie gold explorer Greatland Gold PLC (AIM:GGP, OTC:GRLGF) with a bullish update.
Key to the story is Havieron in Western Australia, where a 3Mtpa pre-feasibility study envisages 10 years of production at 264,00oz annual gold equivalent including copper.
“Long term, we expect a second conveyor decline to support larger high-grade stoping up to 9Mtpa, followed by block caving in separate areas, with discovery drilling firmly still underway,” said Sprott.
This excludes reserve ounces increasing 50% once infilled, depth extensions to the high-grade Crescent Zone, and ‘cherries’ out of adjacent bulk lower-grade areas, added the note.
Sprott added it expects a potential expanded stoping operation, requiring only A$200mln (£114mln) capex for a second conveyor decline, might lift production to 723,000oz annually, including 600,000oz of gold, and take the estimated net present value from A$993m to A$3.8bn.
"With ample space in the mill, and/or for long-term potential, this could support a long-life Tier 1 operation."
The strategic value to a major (and partner) such as Newcrest is clear, it adds, potentially ‘filling (half) of their mill’ to extend the life of the nearby Telfer mine and leading to greater economies of scale.
Shaun Day Greatland’s chief executive, meanwhile, joined from a very successful time as CFO of Northern Star, where production rose from 100,000 ounces a year to over 800,000oz with similar returns at Sakari Resources, where he was between 2006-2014.
“The opportunity, which is all the more post-Northern Star CEO Bill Beament’s departure in CY21, is to combine the value and dividend streams from Havieron with the ex-Northern Star technical (and C-suite) network to do it again.
“In these markets more than ever, to extract the full value from the opportunity we prefer to back the team over the asset every time.”
Buy with a 17p price target is Sprott’s view with the key drivers ahead the resource, fourth-quarter bankable feasible study and debt funding, ahead of 2024 production.