TIDMGGP
RNS Number : 8437G
Greatland Gold PLC
30 November 2020
30 November 2020
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
Greatland Gold plc
("Greatland" or "the Company")
Greatland Signs Two Joint Venture Agreements and Secures Funding
for Havieron
Newcrest and Greatland sign new landmark agreements to
facilitate the acceleration of early works and expanded exploration
activities at Havieron
In addition, Newcrest and Greatland sign a second farm-in and
joint venture agreement (the "Juri Joint Venture") for Greatland's
Black Hills and Paterson Range East licences
Greatland Gold plc (AIM:GGP), the precious and base metals
exploration and development company, is pleased to announce that
the Company, and its wholly-owned subsidiary Greatland Pty Ltd,
have signed a series of new agreements, including a fully formed
Joint Venture Agreement for the Havieron project (the Havieron
Joint Venture Agreement), a new Joint Venture Agreement for the
Black Hills and Paterson Range East licences (the Juri Joint
Venture and Farm-in Agreement) and a Loan Agreement for Havieron
(the Havieron Loan Agreement), with Newcrest Operations Limited
("Newcrest"), a wholly owned subsidiary of Newcrest Mining Limited
(ASX:NCM).
Background
-- In March 2019, Greatland signed a four-stage Farm-in
Agreement with Newcrest, to explore and develop Greatland's
Havieron gold-copper deposit in the Paterson region of Western
Australia.
-- Excellent drilling results to date from Newcrest's ongoing
exploration campaign have highlighted the world-class potential of
the Havieron gold-copper deposit, and the parties see real
potential to further expand the deposit, with the extent of the
Havieron system still to be defined.
-- In addition, the Havieron project is progressing faster than
was anticipated at the time the Farm-in Agreement was entered into,
with early works expected to commence in late 2020 or early 2021,
subject to receipt of required approvals.
Summary of Agreements
-- Building on recent success at Havieron: Newcrest and
Greatland have entered into a series of new agreements in relation
to Havieron, most notably, the Havieron Joint Venture Agreement and
the Havieron Loan Agreement. These new agreements are expected to
deliver the following primary benefits to Greatland :
o The agreements provide a formal framework for the arrangements
between the two parties beyond the existing Farm-in Agreement, and
facilitate the expansion of exploration activities at Havieron and
the acceleration of early works, including the construction of a
box-cut and decline.
o The Havieron Loan Agreement secures funding for Greatland
(approximately US$50m), which, together with Newcrest's existing
sole funding commitments under the Farm-in Agreement, is expected
to fund Greatland's share of joint venture costs (based on current
forecasts) up to the completion of Feasibility Study.
-- Havieron Joint Venture Agreement ("Havieron Joint Venture" or
"Havieron JV"): A fully-termed Joint Venture Agreement between
Newcrest and Greatland to govern the joint venture ownership and
operations of the Havieron project .
o In order to support the planned acceleration of the
construction of a box-cut and decline and a faster rate and scope
of planned spending on exploration activities, the parties have
agreed to fund these activities in proportion to their post-Farm-in
period interests (70% Newcrest; 30% Greatland).
o In order to incorporate ongoing growth drilling activities,
the parties have agreed a structure that allows Newcrest to deliver
the Pre-Feasibility Study in Stage 4.
o Consequently, Newcrest has now met the Stage 3 expenditure
requirements and is entitled to earn an additional 20% interest in
the Havieron Joint Venture for an overall 60% interest (40%
Greatland).
o Newcrest's total farm-in commitment remains to incur
expenditure of US$65m and deliver a Pre-Feasibility Study to earn
70%.
-- Havieron Loan Agreement: Provides for a loan facility of
US$50m from Newcrest to Greatland, at an interest rate of LIBOR +
8%, which is expected (based on current forecasts) to fund
Greatland's share of joint venture costs, including Early Works and
Growth Drilling, up to the completion of the Feasibility Study.
-- New exploration joint venture ("Juri Joint Venture" or "Juri
JV"): In addition to the Havieron-related agreements, Newcrest and
Greatland have entered into a farm-in and joint venture agreement
to accelerate exploration at Greatland's Black Hills and Paterson
Range East licences:
o Newcrest immediately receives a 25% interest in both licences
and has the right to earn up to a 75% interest in the licences by
spending up to A$20m as part of a two-stage Farm-in over five
years, including an A$3m minimum commitment for Stage 1.
o Greatland has previously identified a number of high-priority
targets across the two licences, many of which display similar
geophysical characteristics to the Havieron gold-copper
deposit.
o Greatland retains 100% ownership of both the Scallywag and
Rudall licences which do not form part of the Juri Joint
Venture.
Key Upcoming Milestones
-- Initial Mineral Resource on Track: Initial Inferred Mineral
Resource Estimate for Havieron expected to be delivered in December
2020.
-- Early Works Commencement: New camp at Havieron, with
accommodation for up to 230 people, is nearly completed, and
construction of box cut and decline is expected to commence late
2020 or early 2021, subject to receipt of required approvals.
-- Pre-Feasibility Study: A Pre-Feasibility Study for Havieron,
including an Indicated Mineral Resource Estimate, is expected to be
delivered by late 2021.
-- Juri JV Exploration Activities: Drilling of high-priority
targets, including Parlay and Goliath, is expected to commence in
early 2021.
Gervaise Heddle, Chief Executive Officer of Greatland Gold,
commented : "These new agreements with Newcrest represent a
landmark moment for Greatland Gold, both in structuring the next
stage in Havieron's development and progressing our exploration
efforts across the Paterson region.
"The Havieron Joint Venture Agreement formalises our
relationship with Newcrest beyond the existing farm-in, and with
this agreement in place, we expect to progress rapidly towards the
potential establishment of mining operations over the next two to
three years. Importantly, the new Havieron Loan Agreement with
Newcrest secures for us our share of the necessary monies to
accelerate activities at the Havieron project. Indeed, based on
current forecasts, we now expect to be funded for our share of
expenditure, including the costs associated with the construction
of the decline and an expanded exploration programme at Havieron,
up to the completion of the Feasibility Study. With all this in
place, Newcrest and Greatland can now accelerate our efforts and
work together towards realising the world-class potential of this
exciting project.
"The Juri Joint Venture with Newcrest for the Paterson Range
East and Black Hills licences represents an affirmation of our
belief in the potential of these areas and one that we expect will
maximise the long-term strategic value of these licences. By early
2021, we expect to be moving forward with multiple exploration
campaigns in the Paterson as we advance exploration at the Havieron
Joint Venture, the Juri Joint Venture and across Greatland's
100%-owned licences.
"The transformation of Greatland over the past few years has
been remarkable and we are now in the strongest position we have
ever been to capitalise upon our recent success. We remain
committed to building shareholder value and, with these key
agreements now in place, we look forward to continuing this
exciting journey."
Havieron Joint Venture, Loan Agreement and Deed of Cross
Security
Background
In March 2019, Greatland signed a Farm-in Agreement with
Newcrest, to explore and develop Greatland's Havieron gold-copper
deposit in the Paterson region of Western Australia. Newcrest has
the right to earn up to a 70% interest in the joint venture which
includes Mining Lease 45/1287, a 12 block area that covers the
Havieron deposit, by completing a series of exploration and
development milestones in a four-stage Farm-in. Newcrest may
acquire an additional 5% interest at the end of the Farm-in Period
at fair market value.
As previously announced on 1 April 2020, Newcrest has satisfied
the Stage 1 Commitment and Stage 2 Commitment and has earned a 40%
interest in the Havieron Joint Venture (40% Newcrest, 60%
Greatland). Subsequently, in accordance with the terms of the
Havieron Joint Venture announced today, Newcrest has now met the
Stage 3 expenditure requirements and is entitled to earn an
additional 20% interest in the Havieron Joint Venture (60%
Newcrest, 40% Greatland).
Havieron Joint Venture Agreement
-- The Havieron Joint Venture Agreement will govern the joint
venture ownership and operations of the Havieron project in the
area covered by Mining Lease 45/1287 which includes the Havieron
gold-copper deposit (the "JV Area") . The current intention of both
parties is, that, subject to a successful exploration programme, a
positive Feasibility Study outcome and Decision to Mine, the ore
from the proposed Havieron Joint Venture will be toll processed at
Newcrest's Telfer Gold Mine ("Telfer"), which sits approximately
45km to the west of Havieron.
-- In order to support the planned acceleration of the
construction of a box-cut and decline and a faster rate and scope
of planned spending on exploration activities, Greatland has agreed
to fund 30% of Early Works and Growth Drilling Expenditure prior to
completion of the farm-in :
o "Early Works Expenditure": all capital and operating
expenditure incurred during the Farm-in Period for activities such
as the construction of a box-cut and decline and associated early
works including camp, access roads, bore fields, offices and
related surface infrastructure, but does not include any
expenditure incurred for modifications to the Telfer Gold Mine
processing facility or for the construction of any haul road (which
are subject to a Decision to Mine). The commencement of the
construction of the box-cut and decline is subject to receipt of
required approvals.
o "Growth Drilling Expenditure": all exploration expenditure in
connection with growth drilling on that part of the JV Area being
outside of the area of the Initial Inferred Mineral Resource which
is expected to be delivered in December 2020.
o Greatland's obligation to contribute to Early Works
Expenditure and Growth Drilling Expenditure, in aggregate and prior
to the completion of the Pre-Feasibility Study, will be capped at
the amount of the Facility A Commitment (US$20m) or such greater
amount as provided by Newcrest.
-- In order to incorporate ongoing growth drilling activities,
the parties have agreed a structure that allows Newcrest to deliver
the Pre-Feasibility Study in Stage 4 (Pre-Feasibility Study
originally to be delivered in Stage 3):
o If Newcrest incurs an additional US$25 million by way of
Farm-in Expenditure (other than Early Work and Growth Drilling
Expenditure) in relation to the Havieron Joint Venture within a
period of 24 months from the date following satisfaction of the
Stage 2 Commitment, Newcrest will be entitled to earn an additional
20% interest (cumulative interests 60% Newcrest; 40% Greatland).
Newcrest has met this expenditure requirement for the Stage 3
interest.
o If Newcrest then incurs an additional US$20 million by way of
Farm-in Expenditure (other than Early Work and Growth Drilling
Expenditure) in relation to the Havieron Joint Venture and also
delivers a Pre-Feasibility Study within a period of 24 months,
Newcrest will have the right to earn an additional 10% interest (
cumulative interests 70% Newcrest; 30% Greatland). The
Pre-Feasibility Study must be supported by an Indicated Mineral
Resource.
o Newcrest retains its option to acquire an additional 5%
interest at fair market value ( cumulative interests 75% Newcrest;
25% Greatland). Fair market value will be determined by negotiation
between the parties, or, if the parties are unable to agree, then
by an independent valuer .
-- Newcrest has now met the Stage 3 expenditure requirements and
is entitled to earn an additional 20% interest in the Havieron
Joint Venture for an overall 60% interest (40% Greatland).
-- The Joint Venture Management Committee will be comprised of a
maximum of five representatives . As at Establishment Date, N
ewcrest shall be entitled to appoint three representatives and
Greatland shall be entitled to appoint two representatives to the
Management Committee.
-- Following the delivery of a Feasibility Study, the Management
Committee will meet to consider a Decision to Mine. A unanimous
vote by the Management Committee is required to approve a Decision
to Mine. If a Decision to Mine is not approved by a unanimous vote,
then the party who voted in favour shall have an option to purchase
the non-approving party's interest at fair market value.
-- As part of the joint venture, Newcrest and Greatland have
entered into standard cross security arrangements which in the case
of Greatland will also secure repayment of the Havieron Loan.
Havieron Loan Agreement
-- In order to support the expanded scope and pace of activities
at Havieron, Newcrest has agreed to provide funding of up to US$50m
to Greatland via two US Dollar loan facilities, Facility A and
Facility B, at an interest rate of LIBOR+8%. The Loan Agreement is
expected (based on current forecasts) to fund Greatland's share of
joint venture costs, including Early Works and Growth Drilling, up
to the completion of the Feasibility Study.
o "Facility A": a loan of up to US$20m, or a greater amount if
provided by Newcrest, for Greatland's 30% share of Early Works and
Growth Drilling prior to the completion of the Pre-Feasibility
Study. Greatland's obligation to contribute to Early Works
Expenditure and Growth Drilling Expenditure, in aggregate, will be
capped at the amount of the Facility A Commitment.
o "Facility B": a loan of up to US$30m for Greatland's share of
joint venture expenditure, post the completion of the
Pre-Feasibility Study, but prior to the completion of the
Feasibility Study.
o Scheduled quarterly repayments of the loan(s) will occur once
production commences at Havieron with repayments comprising 80% of
quarterly "Net Proceeds" (revenue from sale of Greatland's share of
JV product less statutory royalties, royalties payable under the JV
ILUA, all charges paid by Greatland under the Tolling Agreement
with Newcrest, and Greatland's share of Joint Venture operating
expenditure for that quarter).
o Greatland may prepay all or part of the total outstanding loan
balance(s) without premium or penalty at any time.
o If Newcrest exercises its option to acquire the Additional
Farm-In Interest , then the purchase price payable by Newcrest to
acquire the Additional Farm-in Interest will be set-off against (by
way of prepayment of) the total outstanding loan balance(s) at that
time.
Juri Joint Venture
Background & Overview
Greatland's Paterson project , excluding the Havieron Joint
Venture (M45/1287), comprises three granted exploration licences
and one licence application: Scallywag (E45/4701, granted, formerly
"Havieron"), Paterson Range East (E45/4928, granted), Black Hills
(E45/4512, granted) and Rudall (E45/5533, application). All four
licences are located in the Paterson region of north Western
Australia. Over the past few years, Greatland has identified a
number of high-priority targets across these licences, many of
which display similar geophysical characteristics to the Havieron
gold-copper deposit.
As of today's announcement, the Paterson Range East licences and
Black Hills are part of the Juri Joint Venture. The Black Hills
licence was acquired by Greatland in November 2017 for
approximately A$225,000 in cash and shares. The Paterson Range East
licence application was granted to Greatland in September 2018 for
minimal upfront cost. Greatland retains 100% ownership of both the
Scallywag and Rudall licences which do not form part of the Juri
Joint Venture. Newcrest retains a right of first refusal over the
Scallywag licence under the Havieron Joint Venture Agreement.
Juri Farm-in & Joint Venture Agreement
-- Newcrest has the right, but not the obligation, to earn up to
a 75% interest in the Paterson Range East (E45/4928) and Black
Hills (E45/4512) licences (the "Juri Joint Venture"), an area of
approximately 249 square kilometres, by spending up to A$20m as
part of a two-stage Farm-in over five years.
o Initial Participating Interest: Newcrest immediately receives
a 25% interest in the Paterson Joint Venture in consideration for
entering into the Stage 1 Commitment.
o Stage 1 Commitment (the "Minimum Commitment"): Newcrest must
satisfy the Stage 1 Commitment by incurring and/or funding A$3m in
expenditure within 24 months to earn an additional 26% interest
(cumulative 51% interest) in the Paterson Joint Venture (if A$3m in
expenditure has not been incurred, the balance must be paid to
Greatland).
o Stage 2 Commitment: if Newcrest incurs and/or funds an
additional A$17 million in expenditure in relation to the Paterson
Joint Venture within a period of 36 months from the date following
satisfaction of the Stage 1 Commitment, Newcrest will have the
right, but not the obligation, to acquire an additional 24%
interest in the Paterson Joint Venture (cumulative 75%
interest).
-- Greatland will be the Manager of the Juri Joint Venture until
the end of calendar 2021 (the "Initial Period"). Newcrest will have
the right, but not the obligation, to be appointed as Manager at
the end of that Initial Period. Following technical review by both
parties, Greatland and Newcrest have agreed an exploration
programme for the Juri Joint Venture during the Initial Period.
-- The 2021 exploration programme for the Juri JV is expected to
include the following activities:
o Drill testing of the Parlay target, a discrete magnetic
anomaly with coincident gravity response in the south-west of the
Black Hills licence.
o Drill testing of several high-priority targets across the
Paterson Range East licence, including Goliath, Outamind and Los
Diablos.
o Further geophysical work to identify and prioritise other
targets including Black Hills and Prefect.
-- As part of the joint venture, Newcrest and Greatland have
entered into standard cross security arrangements .
Overview of Greatland's Paterson Project and the Havieron Joint
Venture
Greatland's Paterson project is comprised of the Havieron Joint
Venture (Mining Lease 45/1287) , three granted exploration licences
(Scallywag, Paterson Range East and Black Hills) and one licence
application (Rudall), collectively covering more than 450 square
kilometres in the Paterson region of northern Western Australia.
The Paterson region is considered to be prospective for Telfer and
Havieron style gold-copper deposits.
The Paterson region is currently one of the most active
exploration areas in Australia. Recent discoveries by Greatland
(Havieron) and Rio Tinto (Winu) demonstrate the potential of the
region and highlight the lack of historical exploration,
particularly over the extensive areas under cover. As well as
hosting several large gold and copper deposits such as Telfer and
Nifty, more recent exploration has outlined several other deposits
including Magnum (Au), Calibre (Au), O'Callaghans (W, Cu) and
Maroochydore (Cu). The region is remote, however, infrastructure is
good with several operating mines, roads, formed tracks and rail
networks nearby which branch out from the regional industrial hub
of Port Hedland 500km to the west.
In March 2019, Greatland signed a Farm-in Agreement with
Newcrest Operations Limited, a wholly-owned subsidiary of Newcrest
Mining Limited (ASX:NCM), to explore and develop Greatland's
Havieron gold-copper deposit in the Paterson region of Western
Australia. Newcrest has the right to earn up to a 70% interest in
Mining Lease 45/1287 by spending US$65 million and completing a
Pre-Feasibility Study. Newcrest may acquire an additional 5%
interest at the end of the Farm-in period at fair market value. The
Farm-in Agreement includes tolling principles reflecting the
intention of the parties that, subject to a successful exploration
programme and Feasibility Study, the resulting joint venture ore
will be processed at Telfer, located 45km west of Havieron.
As of today's announcement, the Paterson Range East licences and
Black Hills are part of the Juri Joint Venture. Greatland retains
100% ownership of both the Scallywag and Rudall licences which do
not form part of the Juri Joint Venture. Newcrest retains a right
of first refusal over the Scallywag licence under the Havieron
Joint Venture Agreement.
A map of the Havieron Joint Venture and Greatland's Paterson
licences can be found on the Greatland Gold website at:
https://greatlandgold.com/paterson/
Enquiries:
Greatland Gold PLC
Gervaise Heddle/Callum Baxter
Tel: +44 (0)20 3709 4900
Email: info@greatlandgold.com
www.greatlandgold.com
SPARK Advisory Partners Limited (Nominated Adviser)
Andrew Emmott/James Keeshan
Tel: +44 (0)20 3368 3550
Berenberg (Joint Corporate Broker and Financial Adviser)
Matthew Armitt/Jennifer Wyllie/Detlir Elezi
Tel: +44 (0)20 3207 7800
Hannam & Partners (Joint Corporate Broker and Financial
Adviser)
Andrew Chubb/Matt Hasson/Jay Ashfield
Tel: +44 (0)20 7907 8500
SI Capital Limited (Joint Broker)
Nick Emerson/Alan Gunn
Tel: +44 (0)14 8341 3500
Luther Pendragon (Media and Investor Relations)
Harry Chathli/Alexis Gore/Joe Quinlan
Tel: +44 (0)20 7618 9100
Notes for Editors:
Greatland Gold plc is a London Stock Exchange AIM-listed
(AIM:GGP) natural resource exploration and development company with
a current focus on precious and base metals. The Company has six
main projects; four situated in Western Australia and two in
Tasmania.
In March 2019, Greatland signed a Farm-in Agreement with
Newcrest Operations Limited, a wholly-owned subsidiary of Newcrest
Mining Limited (ASX:NCM), to explore and develop Greatland's
Havieron gold-copper deposit in the Paterson region of Western
Australia. Newcrest has the right to earn up to a 70% interest in
Mining Lease 45/1287 by spending US$65 million and completing a
Pre-Feasibility Study. Newcrest may acquire an additional 5%
interest at the end of the Farm-in period at fair market value. The
Farm-in Agreement includes tolling principles reflecting the
intention of the parties that, subject to a successful exploration
programme and Feasibility Study, the resulting joint venture ore
will be processed at Telfer, located 45km west of Havieron.
Greatland is seeking to identify large mineral deposits in areas
that have not been subject to extensive exploration previously. It
is widely recognised that the next generation of large deposits
will come from such under-explored areas and Greatland is applying
advanced exploration techniques to investigate a number of
carefully selected targets within its focused licence
portfolio.
The Company is also actively investigating a range of new
opportunities in precious and strategic metals and will update the
market on new opportunities as and when appropriate.
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