A new research note from broker Hannam & Partners has spoke of “a year of major progress” at the Havieron Gold project which was originally discovered by Greatland Gold (LON:GGP), and which it now holds in joint venture with Newcrest Mining (ASX:NCM).
Hannam noted that at one point earlier this year, Greatland’s market capitalisation had exceeded the £1bn mark, a remarkable feat for a junior company that was counted among the microcaps just a few short years ago.
“This share price appreciation has been driven by spectacular exploration success at the Havieron project that outlined a world class asset both in terms of grade and scale, within a truckable distance to the 20mln tonnes per year Telfer mill, hungry for ore,” said Hannam.
“In our view, the market is valuing Greatland Gold shares based on a much larger resource at Havieron than the maiden resource announced in December 2020. Drilling results to date have shown a significant mineralisation footprint, as well as continuity of mineralisation that, in our view, will support a mining operation for several decades suitable for both selective mining in the higher grade sulphides and bulk mining in the lower grade breccia zones.”
The impact of all this is profound.
“Thus,” continues Hannam, “we have derived a valuation based on extending the life of the sub-level cave (SLC) mine outlined in our previous notes and also modelling a bulk-tonnage, block cave mine at Havieron over 25-year life, which is common for similar operations around the world. Adding a block cave to our valuation scenario increases target price to 30.1p.”
This in part is based on an updated DCF which puts a valuation of US$4.28bn on Havieron.
“Our updated risked valuation for Greatland shares based on our DCF model for the Havieron sulphides project is US$1,434mln or GBp30.1 per share, an upgrade from our previous valuation of GBp16.7 per share,” said Hannam.
“In our view, the most significant potential catalysts over the next 12 months are increases in the Havieron JORC resource as well as the pre-feasibility study expected before the end of the year.