Greatland Gold chief executive Shaun Day believes the Telfer gold-copper mine his company is acquiring in a $700 million deal with Newmont Corporation is in its best shape in nearly two decades.
Greatland Gold chief executive Shaun Day believes the Telfer gold-copper mine his company is acquiring in a $700 million deal with Newmont Corporation is in its best shape in nearly two decades.
Andrew Forrest-backed Greatland struck a $US475 million ($714 million) deal with Newmont Corporation to buy all of Telfer, and Newmont’s 70 per cent stake in the nearby Havieron project, announced to the London market overnight.
The deal will turn Greatland into a producer at Telfer with a highly prospective nearby development asset in Havieron – a project it discovered in 2018 and farmed out to JV partner Newcrest Mining over the years that followed.
Newmont picked up both projects in its $US16.8 billion ($26.6 billion) acquisition of Newcrest, completed late in 2023, and put Telfer on the market early in 2024.
Newmont has faced challenges at the ageing Telfer asset this year, with work suspended twice due to cracking issues at a tailing facility which has since been remediated.
Speaking to Business News this morning, Mr Day – previously chief financial officer at Northern Star Resources from 2014 to 2018 – said there was more life left in Telfer than its current mine plan ending in 2025 suggested.
“We think the Telfer endowment is so large that we think there’s an opportunity to extend its life well into the future,” Mr Day said.
“If you look at the background of my time with Northern Star [Resources], where we bought a series of assets off global majors with known mine lives of typically less than 12 months – all of those assets are still operating today.
“That’s because they were part of major endowments, and I think there’s the same opportunity here with Telfer.”
The remediation meant Newmont built up a significant ore stockpile.
“That has enabled them to generate 30 million tonnes of ore stockpile at surface,” Mr Day said of the remediation work.
“That is incredible … that’s around 580,000 ounces at surface.
“This is the best time to own Telfer since 2005 – with a high gold price and a stockpile at surface.
“It’s a stunning opportunity.”
Newmont is working to restart processing at Telfer.
Havieron sits around 45km from Telfer, and Greatland has outlined a mineral resource of 7 million ounces and 275,000 tonnes of copper at the orebody which it hopes to mine from 2026.
Mr Day said there were obvious opportunities to process ore from the two projects together, with the company planning to use cashflow from Telfer to deliver Havieron.
“What we’ll be able to do is continue to process the Telfer ore, generate free cash flow, and build our stockpiles of Havieron ore,” he said.
“When we do cut over in say, mid-2027, to processing Havieron ore, we’ll be able to do it at immediate scale.
“That will optimise the recovery, that will optimise the [net present value] and optimise the infrastructure at Telfer.”
Terms of the deal
Greatland will pay $US207.5 million to Newmont on closing, along with an equity payment of $167.5 million worth of shares – leaving the goldmining major with a 20.4 per cent stake in the company.
A cash payment of a further $100 million is contingent on a gold price-linked payment structure, based on gold produced from Havieron.
By Wednesday afternoon, AIM-listed Havieron had raised $US325 million through an oversubscribed placement and a retail offer at 4.8 pence per share - a 30 per cent discount to the company's trading mid-price on September 6 - underwritten for as much as $US100 million by Mr Forrest’s Wyloo Consolidated Investments and Canaccord Genuity.
Wyloo’s stake following the deal is expected to be just shy of 8.5 per cent.
Greatland, which last year hit pause on a proposed ASX listing, will list on the ASX within six months and intends to maintain a dual listing between the two exchanges.
It has a non-binding letter of support for $750 worth of bank facilities from ANZ, HSBC and ING Bank to support Havieron’s development.
Mr Day told Business News the company was buoyed by the quality of the support it had received.
“We feel that what we’ve been able to establish is a platform which has not only a brilliant operating asset and development opportunity but is also supported by a tremendous shareholder registry led by Newmont and Wyloo,” he said.
“We think that affords us additional opportunities into the future.”
Havieron’s board is heavily stacked with Fortescue alumni and executives.
The company is chaired by Fortescue deputy chair Mark Barnaba and counts Fortescue executive director Elizabeth Gaines as a director.
Newmont’s presence on the register was endorsed overnight by its president and chief executive Tom Palmer, who backed the company’s experienced management team to realise full value from the assets.
“I have full confidence that the Greatland team will be outstanding stewards of these assets,” he said.
Mr Barnaba said in a statement that Greatland had been coveting the opportunity to make a deal of this nature for the past three years.
Mr Barnaba and Mr Day each subscribed for $US99,734 worth of shares in today's placement.
Ms Gaines subscribed for $US66,489 worth of shares, with fellow directors Jimmy Wilson and Paul Hallam taking up $US49,867 worth of shares each and Yasmin Broughton taking up $US33,245 worth of shares.
Newmont and Greatland expect the acquisition to be complete in the final quarter of 2024.
