Greatland Gold – Home run
Blowout Telfer results
Greatland Gold (GGP) is one of our favourite gold stocks. It offers a particularly attractive risk/reward profile, even after the share price soared last week. The equity story just got stronger.
The company posted a blowout set of results and guidance from the recently acquired Telfer mine.
Production for Q1 came at 90koz with AISC of cUSD1350/oz better than our expectations on better recoveries (87%).
Importantly they guide for the fiscal year ending June 2025 (equivalent to 7months of effective production) to production of 196-210koz (mid 203 koz) with AISC of USD1320-1415/oz (mid USD1370/oz). The outlook for production is c10% higher than we had assumed, and AISC 10% better.
Next key catalysts include the publication of the initial Telfer ore reserve due imminently and GGP ASX listing in June.
Stock offers more than a double at USD 3000/oz gold…
Assuming USD3000/oz gold and 1x NAV, we think the shares offer 150% upside. And this conservatively assumes very little potential value creation from management from future capex redeployment – something now looking increasingly likely given what they just managed to deliver. Another way of looking at it, at this GGP price, you are getting Telfer for free.
GGP valuation
Source: Asymmetric Research
… And presents fair value upside even in a recession scenario
Were we to see a recession, we think the gold price could drop to cUSD2500/oz (we discussed this in earlier reports). At that price, GGP would be worth c20p on our calculations – meaning the stock offers fundamental upside even in a macro bear case. This is explained by its very low-cost operations at both Telfer and Havieron.
Solid balance sheet and strong cashflow prospect
The company has a strong balance sheet, with USD250m of net cash as at end March, and significant free cashflow generation prospects at USD3000/oz gold means that on our numbers, GGP could effectively fund Havieron through cash generation.
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These are our views only and not investment advice. We own shares in GGP. We have not been paid by the company for this research nor has it seen it prior to publication.