REG - Greatland Gold PLC - Update on Havieron Consideration

Greatland GoldAnnouncement

14/07/2022 12:15

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RNS Number : 5093S  Greatland Gold PLC  14 July 2022

14 July 2022
 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
MARKET ABUSE REGULATIONS.  ON PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE
PUBLIC DOMAIN.

Greatland Gold plc
("Greatland" or "the Company")

Successful renegotiation of contingent consideration due under original 2016
Havieron acquisition

 

Vendor has agreed to a two-year restriction on dealing with the Greatland
shares to be issued, reflecting their support for Greatland and conviction in
the Havieron project

Reduction of 4.5% in the number of Greatland shares to be issued

a saving of over 6.5 million shares

 

Greatland shares to be issued by 29 July 2022

 

Greatland Gold plc (AIM:GGP) is pleased to announce it has successfully
renegotiated its obligations with respect to the contingent consideration due
under the original 2016 acquisition of the Havieron project.

The requirement to pay the contingent consideration, in the form of Greatland
shares, remains from the highly value accretive acquisition by Greatland of
Havieron.

The consideration for this 2016 transaction comprised an initial payment of
AUD25,000 in cash and 65,490,000 new ordinary shares and (originally) a
further 145,530,000 new ordinary shares conditional upon Greatland's ownership
interest in Havieron reducing to 25% (or less) or upon a decision to mine at
Havieron (whichever occurs earlier). This latter tranche of shares (modified
as described below) will be issued to the vendor's nominee, a private
Australian investment vehicle, Five Diggers Pty Ltd.

In return for removing the conditionality on the contingent element of the
consideration, the following modifications have been agreed:

 

§ a two-year restriction on dealing with the Greatland shares to be issued to
Five Diggers Pty Ltd, comprising:

-  12-month lock in, which prohibits any disposals of the shares in this
period, subject to carve outs (such as recommend takeovers), plus

-  a subsequent 12-month orderly market arrangement, requiring that, during
this period, the shares may only be traded in consultation with the Company's
broker and through the Company's broker (subject to customary carve outs); and

§ a reduction in the number of shares being issued by 4.5%, being a reduction
of over 6.5 million shares, to a total of 138,981,150 new ordinary shares
(with a value of approximately £14.1 million in aggregate at 10.15p per
ordinary share, based on the closing price on 13 July 2022, and representing
approximately 3.3% of Greatland's enlarged issued share capital).

 

 

Shaun Day, Managing Director of Greatland Gold plc, commented: "This is an
excellent outcome, simultaneously removing the uncertainty of this
long-standing share issue, reducing shareholder dilution by decreasing the
number of shares being issued and introduces a two-year restriction on dealing
with the shares.

"The acceptance of these terms demonstrates the confidence Five Diggers has in
Greatland, together with their conviction in the Havieron project, reflecting
the tremendous evolution in its understanding and potential.

"Resolution of this share issue is timely given the current process under the
JVA to determine the option exercise price for the 5% interest and with a
Feasibility Study expected to be released in the December 2022 quarter.

"Resolving transition issues such as this share issue has been a priority and
I'm very pleased  with the outcome which improves and brings to final
resolution this long outstanding contractual obligation."

 

Peter Davis, from Five Diggers commented: "We have been thoroughly impressed
with the rapid progress and growth of Havieron since acquisition by Greatland
and we are pleased to become a shareholder in Greatland. Our intent is to be a
long-term shareholder in Greatland and participate in its value creation as
the full potential of Havieron and its exploration holdings are revealed."

 

Amended acquisition terms

The purchase consideration was previously payable by Greatland in two
tranches:

§ Tranche 1: Paid in 2017 at completion of the acquisition, being the issue
of 65,490,000 Greatland fully paid ordinary shares and AUD25,000 in cash; plus

§ Tranche 2:  An additional 145,530,000 Greatland fully paid ordinary shares
which was payable conditional on Greatland's ownership interest in Havieron
reducing to 25% (or less) or a decision to mine at Havieron (whichever occurs
earlier).

The revised arrangement signed with Pacific Trends Resources Pty Ltd and Five
Diggers Pty Ltd announced today resolves and amends the Tranche 2
consideration, by reducing the Greatland shares to be issued to 138,981,150
fully paid ordinary shares, introduces a two-year trading restriction not
previously contemplated in the transaction and removes the contingent triggers
for the share issuance. The 138,981,150 Greatland shares will now be issued by
29 July 2022.

The Greatland shares will be issued to the vendor's nominee, Five Diggers Pty
Ltd, which is a private Australian investment vehicle and which has signed a
lock-in and orderly market agreement with the Company.

Admission of shares and total voting rights

The new ordinary shares will be issued by no later than 29 July 2022 and
application for these shares to be admitted to trading on AIM will be made as
soon as practicable thereafter.

Following Admission, the total issued share capital of the Company will
consist of 4,209,528,321 ordinary shares.  As each ordinary share carries the
right to one vote, the total number of voting rights in the Company will be
4,209,528,321.  This number may be used by shareholders as the denominator
for the calculations by which they will determine if they are required to
notify their interest in, or a change to their interest in, the Company under
the FCA's Disclosure and Transparency Rules.

Background to the Havieron acquisition agreement

The Havieron exploration licence (E45/4701) was originally acquired by
Greatland in 2016 from Pacific Trends Resources Pty Ltd, as referenced in the
announcement of 26 September 2016.

The original area of E45/4701 included both:

§ the area which is now the subject of the Havieron mining lease (M45/1287)
and on which the Havieron Project is located; and

§ the remaining area of E45/4701 on which the Company's 100% owned Scallywag
Project is located.

Background to the Havieron Project

The Havieron Project is located on mining lease 45/1287 which is held by the
Joint Venture between Greatland and Newcrest Mining Limited ("Newcrest"),
Australia's largest gold producer.  Greatland holds a 30% interest in the
Havieron Project through the Joint Venture (Newcrest 70%).

The Havieron Project is currently in development.  Newcrest assumed
management of the Joint Venture in March 2019 and has since been undertaking
the ore body definition and technical studies required to support regulatory
approvals and investment decisions for a staged development plan.  The
Havieron Project, which contains a world class ore body, provides Greatland
with a strategic position in the Paterson Province of Western Australia, one
of the leading frontiers for the discovery of tier-one gold-copper
deposits.

The Stage 1 Pre-Feasibility Study (PFS) on only the South-East Crescent of the
Havieron deposit was released on 12 October 2021. The PFS outcome was
positive, showing that a fraction of the initial resource supported the total
capital of the project, justifying a fast start approach to early cashflow
generation and reinvesting back into Havieron development and
infrastructure. This supports the Company's belief that the profile of
Havieron makes it a globally unique opportunity for bringing a low risk, low
capex tier-one gold-copper mine into production.

In December 2021, Newcrest issued a notice to the Company to begin the process
under the Joint Venture Agreement (JVA) to agree or determine the exercise
price for its option to acquire an additional 5% interest in the Joint Venture
from Greatland, as determined under the JVA principles.

Proceeds from the exercise will first be used to repay the outstanding balance
under the existing Newcrest loan facility. If the option referred to above
is exercised, Newcrest will be entitled to an overall joint venture interest
of 75% (Greatland 25%).

In addition, on 3 March 2022 Greatland announced an independent Havieron
Mineral Resource update. This increased the Mineral Resource, including Ore
Reserves, to 5.5 million oz Au and 218kt Cu or 6.5M oz AuEq, an increase of
2.1 million oz AuEq since the last Mineral Resource update. Probable Ore
Reserves now stand at 2.4 million oz Au and 109kt Cu or 2.9M oz AuEq compared
to the 1.7 million oz AuEq in the Initial Ore Reserve estimation. In addition
to the Mineral Resources within the Havieron Breccia complex, growth drilling
has now defined an initial Mineral Resource within the separate Eastern
Breccia complex. This is the first Mineral Resource in a mineralised
system outside the Havieron Breccia system and remains open at depth and to
the south. This Eastern Breccia Mineral Resource does not capture the recent
high-grade intercepts to its south, which is of similar grade to
the South-East Crescent Zone. The updated Mineral Resource incorporated an
additional ten months of consistently impressive drilling results since the
February 2021 drilling cut off used for the last Mineral Resource update.

The Company's 30% interest in the Havieron Project had a book value of
approximately £22.8 million as at 31 December 2021 (unaudited), which is
largely made up of capitalised costs.  The loss attributable to Greatland's
interest in Havieron for the financial year ended 30 June 2021 and the 6
months to 31 December 2021 was approximately £0.2 million and £0.9 million
mainly relating to foreign exchange losses as a result of the US denominated
project loan and new greenfield exploration costs testing geological targets
outside the known Havieron system including Zipa which, in accordance with the
Company's accounting policy, is expensed.

Background to the Scallywag Project

The Scallywag licence is 100% owned by Greatland, which formed part of the
Company's original acquisition of the Havieron licence, sits adjacent to the
Havieron mining lease, containing a further 20km of strike of Yeneena Group
metasediments located directly to the north-west of Havieron. Based on
geological interpretation of a combination of gravity, magnetic and airborne
EM datasets, Greatland has identified multiple targets on this project area.

Under the Company's accounting policy for exploration and evaluation
expenditure, the Company does not capitalise the exploration and evaluation
costs until commercial viability of extracting the mineral resource are
demonstrable (at which point, the Group considers it probable that economic
benefits will be realised). Based on this accounting treatment, the Scallywag
Project had nil book value as at 31 December 2021 (unaudited). The expenditure
attributed to Greatland's interest in the Scallywag Project for the financial
year ended 30 June 2021 and the 6 months to 31 December 2021 was approximately
£1.0 million and £0.9 million respectively, with all project costs expensed.

Competent Persons' Statements for JORC 2012 Mineral Resources and Ore Reserves

The information in this document that relates to the Mineral Resources and Ore
Reserves for Havieron is extracted from the RNS announcement titled "Updated
Mineral Resource substantially increases Havieron Resource and Reserve"
released on 3 March 2022, and available on Greatland's website. The Company
confirms that it is not aware of any new information or data that materially
affects the Mineral Resources and Ore Reserves for Havieron in the original
RNS announcement.

Forward Looking Statements

This document includes forward looking statements and forward looking
information within the meaning of securities laws of applicable jurisdictions.
Forward looking statements can generally be identified by the use of words
such as "may", "will", "expect", "intend", "plan", "estimate", "anticipate",
"believe", "continue", "objectives", "targets", "outlook" and "guidance", or
other similar words and may include, without limitation, statements regarding
estimated reserves and resources, certain plans, strategies, aspirations and
objectives of management, anticipated production, study or construction dates,
expected costs, cash flow or production outputs and anticipated productive
lives of projects and mines. These forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause actual
results, performance and achievements or industry results to differ materially
from any future results, performance or achievements, or industry results,
expressed or implied by these forward-looking statements. Relevant factors may
include, but are not limited to, changes in commodity prices, foreign exchange
fluctuations and general economic conditions, increased costs and demand for
production inputs, the speculative nature of exploration and project
development, including the risks of obtaining necessary licences and permits
and diminishing quantities or grades of reserves, political and social risks,
changes to the regulatory framework within which Greatland operates or may in
the future operate, environmental conditions including extreme weather
conditions, recruitment and retention of personnel, industrial relations
issues and litigation.

 

Forward looking statements are based on assumptions as to the financial,
market, regulatory and other relevant environments that will exist and affect
Greatland's business and operations in the future. Greatland does not give any
assurance that the assumptions will prove to be correct. There may be other
factors that could cause actual results or events not to be as anticipated,
and many events are beyond the reasonable control of Greatland. Readers are
cautioned not to place undue reliance on forward looking statements,
particularly in the current economic climate with the significant volatility,
uncertainty and disruption caused by the COVID-19 pandemic. Forward looking
statements in this document speak only at the date of issue. Greatland does
not undertake any obligation to update or revise any of the forward looking
statements or to advise of any change in assumptions on which any such
statement is based.

 

Enquiries:

 

 Greatland Gold PLC                                                        +44 (0)20 3709 4900

 Shaun Day                                                                 info@greatlandgold.com (mailto:info@greatlandgold.com)

                                                                           www.greatlandgold.com (https://greatlandgold.com/)

 SPARK Advisory Partners Limited (Nominated Adviser)                       +44 (0)20 3368 3550

 Andrew Emmott/James Keeshan

 Berenberg (Joint Corporate Broker and Financial Adviser)                  +44 (0)20 3207 7800

 Matthew Armitt/Jennifer Lee/Detlir Elezi

 Canaccord Genuity (Joint Corporate Broker and Financial Adviser)          +44 (0)20 7523 8000

 James Asensio/Patrick Dolaghan

 Hannam & Partners (Joint Corporate Broker and Financial Adviser)          +44 (0)20 7907 8500

 Andrew Chubb/Matt Hasson/Jay Ashfield

 SI Capital Limited (Joint Broker)                                         +44 (0)14 8341 3500

 Nick Emerson/Sam Lomanto

 Luther Pendragon (Media and Investor Relations)                           +44 (0)20 7618 9100

 Harry Chathli/Alexis Gore

 

 

Notes for Editors:

 

Greatland Gold plc (AIM:GGP) is a mining development and exploration company
with a focus on precious and base metals. The Company's flagship asset is the
world-class Havieron gold-copper deposit in the Paterson region of Western
Australia, discovered by Greatland and presently under development in Joint
Venture with Newcrest Mining Ltd.

 

Newcrest holds a joint venture interest of 70% (30%
Greatland). Newcrest may also acquire an additional 5% joint venture
interest and, if exercised, Newcrest will be entitled to an overall joint
venture interest of 75% (Greatland 25%).

 

Havieron is located approximately 45km east of Newcrest's Telfer gold mine
and, subject to positive decision to mine, will leverage the existing
infrastructure and processing plant to significantly reduce the project's
capital expenditure and carbon impact for a low-cost pathway to development.

 

An extensive growth drilling programme is presently underway at Havieron with
a focus to continue to expand our understanding of this world class ore body.
Construction of the box cut and decline to develop the Havieron deposit
commenced in February 2021.

 

Greatland has a proven track record of discovery and exploration success. It
is pursuing the next generation of tier-one mineral deposits by applying
advanced exploration techniques in under-explored regions. The Company is
focused on safe, low-risk jurisdictions and is strategically positioned in the
highly prospective Paterson region. Greatland has a total six projects across
Australia with a focus on becoming a multi-commodity mining company of
significant scale.

 

 

 

 

 

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