Berenberg also noted today’s announcement that Shaun Day has been appointed as chief executive to replace Gervaise Heddle, who is leaving in March.
The broker said the maiden resource 4.2Moz on a gold equivalent basis (3.4Mlnoz of gold and 160kt of copper) was above its expectations of 3.75Moz and underlines the deposit’s exploration potential.
It also makes it more likely that Newcrest Mining, which is set to earn a 70% interest in the project, ultimately elects to move forward with the development said Berenberg, with a pre-feasibility study now scheduled to be completed by the end of 2021.
Berenberg added that the maiden resource and exploration results suggest a materially larger mineralised system than previously envisaged.
Now, the broker expects a deposit of 12.5Moz to be delineated based on the current drilling (versus 5.5Moz previously).
Based on the average EV/reserve ounce for the Australian mid-tier gold miners at USD696/oz, and assuming a 50% probability weighting, Berenberg said this generates a new price target of 33p/share (from 22p/share).
Shares have risen since the maiden resource to 32.4p and ‘hold’ is the broker’s investment recommendation.
“The next catalysts for the shares should be ongoing exploration results from Havieron, upgrades to the scale and confidence level in the resource, initial exploration results from the company’s other projects where a new joint venture was recently agreed with Newcrest, and the development of the decline at Havieron that should commence imminently.”
Day a ‘perfect candidate’ says Heddle
Talking to Proactive, Gervaise Heddle said it was time for him to step aside as the pass the reins on to someone with greater depth and breadth of experience in the mining industry.
“I’m not a miner by trade. I’ve come from a finance background. And really what the company needs now is someone with much greater experience in the mining industry to take the company on the next leg of this journey.
“Shaun Day has over 20 years of senior leadership roles at large publicly listed mining companies, and I think he’s the perfect candidate for the job.”
“At Northern Star, for five years he was part of the team that built that company from a point similar to where Greatland is now to become one of Australia’s largest gold producers and I think that experience will prove invaluable moving forwards.
“As the company continues to grow and there’s so much to look forward to here next year. We’ve got three different exploration programs in Paterson, Havieron and the Juri joint venture [with Newcest] and then also on our 100% own Scallywag and Rudall licences.
“And next year, subject to the required approvals, we will also be commencing the construction of the box cut decline at Havieron so it really is a great point for investors to be involved and it’s fantastic to have Sean coming in to lead that.”