Greatland Gold PLC (AIM:GGP, OTC:GRLGF)‘s results show it retains flexibility to finance work at its Havieron project, says Berenberg.
The bank maintained its price target of 24p, compared to the last close of 16.1p, and a ‘buy’ recommendation on the shares.
Analysts said this target is based on the recent pre-feasibility study for the South East Crescent Zone at Havieron and an assumption of a further 10Moz being delineated outside of the PFS reserve, valued in line with the Australian mid-tier gold miners at EV/ounce of USD624/oz. It also assumes that Greatland eventually retains a 30% interest in Havieron.
“As an explorer with no revenues, and costs only associated with G&A and exploration, the main data point from the results is the cash held by the company – GBP6.2m, which is in line with our expectation.
“Greatland retains flexibility to finance work at Havieron, with access to a USD50m loan facility from JV partner Newcrest.”
Outside of Havieron, Berenberg noted that Greatland has over 1,000km2 of exploration holdings in the Paterson region, both wholly owned projects, and the Juri JV with Newcrest.
Under the Juri JV, the company is earning a 75% interest through spending a further A$17mln on exploration over the next three years, having earned a 51% interest through spending an initial A$3mln. Greatland is currently the manager of the JV, but Newcrest has the right to take over management in 2022.
“Greatland should also continue to advance its wholly owned projects in the Paterson region, including Scallywag, Rudall and Canning.
“Deposits such as Havieron often do not occur in isolation as is demonstrated by its proximity to the Telfer mine and so, while the chances of success at any one early-stage geophysical target are low, the odds of finding a further economic deposit are reasonable.”