After an extensive drilling campaign AIM-listed exploration firm Greatland Gold (LSE:GGP) is within a whisker of being able to announce its initial resources estimate. The company expects to be able to publish the estimate just before Christmas or shortly after. The slight delay was caused by a backlog in Australian laboratories where frantic exploration activity has created bottlenecks.
Greatland Gold has had an exceptionally successful year at its Havieron gold-copper deposit in the Paterson region in Western Australia where test drilling has been showing progressively better and better results and has lead to the discovery of additional areas that could be mined in the future.
Since Havieron was bought in 2016 as an early stage exploration project the company has completed more than 100,000 meters of drilling. In November GGP signed a joint venture deal with Australia’s biggest gold miner Newcrest Mining (ASX:NCM) according to which Newcrest will manage the development of Havieron. Newcrest already owns a 40% stake in Havieron but plans to increase this to 70% over the coming years.
For the moment drilling at Havieron will stop because of punishingly high temperatures during the Australian summer but a work camp that is being built there to accommodate 230 staff will be ready to resume in March and April.
Larger than expected mineralisation
The company’s chief executive Gervaise Heddle said that exploration to-date established a larger than expected mineralisation which is still open to the east, the west and into the depth that could show more deposits in future drillings. The $50 million loan agreement with Newcrest signed alongside the JV deal builds on a $65 million farm-in agreement the two firms signed last year and means that Greatland Gold will enter the financially riskiest period in project exploration fully financially covered.
The financing will allow the explorer to complete the drilling programme and see it through to a pre-feasibility study and potentially a full feasibility study.
Newcrest plans to start developing one decline at the project in early 2021, with commercial gold production likely to start within two to three years. The Australian gold miner recently said it plans to speed up its exploration and development timetable at the site now that it has received a mining lease. The next step is to work out what type of underground mining would work best for the deposit, a decision that will be taken after further drilling.
Greatland Gold share price action
Shares dipped 2.5% to 32.18 this morning, partly in reaction to a build up of expectations in the few sessions preceding the company’s AGM. To keep this in perspective, this is up from 2.06 at the beginning of this year. Despite the sharp increase there should still be positive wind left for this share, particularly as it has been taken up by several ETFs recently.