Greatland Gold has bought the Telfer gold mine from Newmont for up to $714m
Greatland Gold has bought Newmont’s Telfer gold mine with support from billionaire Andrew Forrest, and has ambitions to build a long-term gold and copper mining hub.
Greatland Gold is aiming to develop a “generational Australian gold-copper mining complex” based around its acquisition of the Telfer mine and Havieron deposit in Western Australia, which it has bought from Newmont for up to $714m.
Greatland will also seek to list on the ASX within six months of the deal completing, adding to its London-based AIM listing
Under the deal announced on Wednesday, Newmont will receive $US207.5m in cash, $US167.5m in AIM-listed Greatland shares and a deferred cash component of up to $US100m.
Greatland will raise $US325m in an underwritten placement to fund the deal, with Andrew Forrest’s Wyloo Consolidated Investments tipping in up to $US100m, as well as offering $US9m in new shares to its retail shareholders.
Newmont announced in January it was looking to divest all of its assets it didn’t consider to be Tier 1, with chief executive Tom Palmer saying the program was continuing.
“The transaction announced today represents the first asset sale in the divestiture program announced in February,’’ Mr Palmer said.
“I am pleased that Telfer and Havieron are being sold to Greatland, a company with a highly experienced management team and board of directors.
“Including the Telfer divestiture, we continue to expect to reach at least $US2bn in total proceeds from the sale of our high-quality, non-core assets, enabling us to focus attention on our suite of Tier 1 assets, further reduce debt, and return capital to shareholders.”
Newmont owns all of Telfer and 70 per cent of Havieron, which was discovered by Greatland and is just 45km from Telfer.
Greatland said, as the existing joint venture owner of Havieron, it had unrivalled knowledge of the project, and bringing the two assets together would allow the company to combine and optimise the two projects, “with the objective of creating a generational Australian gold-copper mining complex’’.
Greatland said Havieron had an 8.4 million ounce mineral resource.
“The independently-reviewed base case … estimates a 2.8Mtpa mining operation with average annual production of 258koz gold equivalent at a lowest quartile all-in sustaining cost (AISC) globally of $US818 per ounce with a 20 year total mine life,’’ Greatland said.
“The Greatland base case will be refined and optimisation opportunities will be assessed in a feasibility study targeted to be completed within 12 months from acquisition completion, including potential mining throughput expansion utilising a bulk ore handling solution.’’
Greatland plans also include a 15 month initial Telfer mine plan which forecasts estimated production of 426koz per year at an AISC of $US1454oz from the restart of operations which is expected to occur in late September or October.
Greatland says this has the opportunity to generate “significant near-term cash flow for the company from acquisition completion’’.
“In parallel, a number of additional potential Telfer ore sources have already been drill-tested and will be assessed with a view to extending the current Telfer mine life,’’ Greatland said.
Newmont is expected to own 20.4 per cent of Greatland following the deal.
Up to $US100m of the deal proceeds will be deferred until Havieron starts commercial production and is also subject to a gold price hurdle.
Greatland said it had also executed a non-binding letter of support for $750m in proposed banking facilities for the development of Havieron with ANZ, HSBC and ING Bank attached.
“Combined with working capital from the equity raising and expected cash flow generation from Telfer, the company considers there is a clear and non-dilutive pathway to the Havieron development being fully-funded,’’ Greatland said.
“Greatland considers that there are significant upside opportunities as a result of the acquisition, including potential extension of the current Telfer mine plan, optimisation of Havieron throughput potential and Telfer processing capacity, supplementation of Havieron ore with Telfer ore, and a potential regional ‘hub and spoke’ strategy enabled by Telfer infrastructure.’’
The transaction is expected to close in the fourth quarter of this calendar year.
