Tailings Dams

[Bamps21]

There are performance bonds for rehabilitation works on each mining tenement.
A UPB an unconditional performance bond
https://www.dmp.wa.gov.au/Minerals/Unco ... -5703.aspx

Also there is a levy a MRF 1% of the rehabilitation costs mainly used to fund abandoned mines
https://www.dmp.wa.gov.au/Documents/Env ... _Years.pdf

https://www.integratesustainability.com ... australia/

[Shinybits]

Yep but it has also been verbally stated by a DMIRS officer (admittedly that’s hardly official) that the rehab funds reserved for circumstances in which a mine owner could not afford to meet their commitments would be very much swayed toward mines closer to population centres, ie with bigger potential environmental and health risks and given that Telfer is about as far as you can get from anywhere they would probably not attract the sort of funds that would be the case near, for instance, Kalgoorlie at the superpit.

Either way I’d be skeptical that there would be $600M plus in Telfer’s potential allocation from the kitty, or even close to it.

The week before last, Newmont’s ‘closure team’ (for want of a better term) was at Telfer for a few days. Whilst it is tempting to read doom and gloom in to this visit, for Newmont to offer full disclosure to any potential new owner, they are required to be up front regarding future costs, in any potential circumstances. If that was all covered by prior contributions to a state government fund they wouldn’t be so fastidious in assessing their potential costings for mine closure.

No matter how much we want to sugar coat it, Telfer is closer to the end of its life than the beginning, Haveiron is not yet even determined to be viable in the bigger picture so I’m not so sure the combined asset is quite as rosy as we’d all like to think.

Having said that, many lesser performing mines divested from larger entities have met with great success under new ownership, and on the whole I think Telfer could be in that category. It’s not cheap in either maintenance or AISC but has sound infrastructure and the impending drop in iron ore prices due to China’s property market issues , and the current stagnation in lithium could see greater access to expertise within the industry. At current gold prices and projected short to medium term copper prices anyone would be mad not to keep Telfer running full steam ahead, and if Haveiron can contribute to that, then all the better.

All my humble opinion, happy to be swayed by better information.

[Rotherby]

Shinybits:
Yes good analysis.
I think all money paid by levy to WA state fund is only for mines and tenement that have become orphans with the previous owners unknown due to no history.
In bankruptcy responsibility and goes back more that the last owner, or all would fall on the State as subsidiaries would be put into liquidation /bankruptcy, or sold to dead end businesses etc. to avoid responsibility, even by the biggest miners.

[SoundOfSilence]

“To close Telfer, the closure and rehab costs would unlikely to get you change out of $600M I’d think,”

Thanks for your input.
Just a question. Are you talking AUD or USD?

SoS

[Bamps21]

I never suggested there would be funds available from that bond. The levy is to support the government when companies walk away from their commitments.
However the bonds could be a hurdle for NEM to dispose of all the Telfer tenements, which there will be a bond on each one. They will want to dispose of all of them not just the ones with the mine and plant on.
The rehabilitation costs are more likely to be as a whole lot not for bits.
The rehabilitation costs has been an on going exercise over many years .
The revision to the closure plan takes in the Havieron material coming to Telfer and the tailings for paste fill going the other way, there will be a cost already carried.

That quote about whether Havieron is viable yet is a bit naive, it already has a mine plan, a PFS, an MMRE, and 2 more MRE revisions. The Decline is nearly at the ore.
The ore grades are 10x higher than Telfers, it’s 3mt per year will give the same gold and copper than 30mt of Telfers.
What people fail to realise is the current Havieron mine plan doesn’t allow for the cover to be dropped mainly because of the aquifer. If this continues over the mine life the rehabilitation costs at Havieron will be far less than the costs at Telfer. Mitigating the Telfer costs.
Shaun in London said they’re not an issue over the life of the mine.

[Shinybits]

“To close Telfer, the closure and rehab costs would unlikely to get you change out of $600M I’d think,”

Thanks for your input.
Just a question. Are you talking AUD or USD?

SoS

Ah yes, sorry mate that’s $AUD, and according to far more knowledgeable folks than myself, that’s pretty conservative.

[Shinybits]

IThat quote about whether Havieron is viable yet is a bit naive, it already has a mine plan, a PFS, an MMRE, and 2 more MRE revisions. The Decline is nearly at the ore.
The ore grades are 10x higher than Telfers, it’s 3mt per year will give the same gold and copper than 30mt of Telfers

Fair enough, but 10x may be somewhat optimistic. Greatland’s assessment was always more optimistic than Newcrest’s, even though no doubt determined from same drilling results, but at 2.6g/t (eg from Stockhead article https://stockhead.com.au/resources/grou ... craps/?amp )
At 160,000oz per year for 9 years… even in Telfer’s twilight years it is just shy of 400,000oz per year (notwithstanding forced temporary closures with tailings dam).

The previous superintendent of planning was tasked with assessing the feasibility of processing Haveiron dirt at Telfer, and was adamant this figures didn’t stack up. She felt her view was not aligned to the view she was required to prescribe to, and has since moved on. Not able to say more. Subsequently (not suggesting any relation) any progress at Haveiron has come to a grinding halt. No matter how rose coloured one’s glasses may be, nothing is happening there currently.

Telfer is currently averaging around 0.5g/t to 0.6g/t depending on underground mix which is variable given there are 2 apron feeders from underground on CV7 (train 1) and 4 from the west dome surface pit, and the mix is easily changed to suit current grade available to maximize recovery.

Is Telfer only offered for sale with Haveiron? I have no idea, but without Telfer to process the dirt I’d imagine Haveiron is not viable given the cost of building a plant, a power station, a gas line, a camp and an airport (change from $2B AUD, anyone?). Surely Hav is only viable with access to Telfer, I’d think they are mutually in requirement of each other.

I’m being careful to only comment what is publically available information, but I believe the two are only viable in concert with each other, but potential suitors are not exactly falling over each other to get their hands on this combined asset. I’d think Greatlands is surely in the box seat? The right of first refusal must be a big disincentive to alternative parties?

All IMHO

[Bamps21]

I quoted Sandeep Biswas that’s what he said.
0.5g/t is higher than what has been recorded in Newcrests accounts more like 0.3g/t.

Shaun has told us he would rather put a modern processing plant at Havieron than commit to a long mine life of transportation . It would be more efficient plus running off renewables.

[Bottle Rocket - Liam]

No matter how much we want to sugar coat it, Telfer is closer to the end of its life than the beginning, Haveiron is not yet even determined to be viable in the bigger picture so I’m not so sure the combined asset is quite as rosy as we’d all like to think.

The PFS was enough to go mining, infact so strong were the indicators that this is a good place to go getting the gold out the ground NCM built a decline to go get it before the PFS was even published.

How do you conclude it is not viable? I would be interested to sit down and talk about it some time.

[Shinybits]

I’m not suggesting it’s not viable, I’m merely pointing out that ALL things considered it’s not quite as rosy as some folks seem to believe, and we need to look beneath the surface (no pun intended) and look at all the reasons that would make it a good proposition.

If Haveiron was still worth the costs of building its own plant (mill(s), flotation, CIL, CCD, tails, copper press, scats handling, camp, airport, admin, power station, gas pipeline from Karratha, etc) then it must have more gold than publicly stated, which is a good thing, because 160kOz for 9 years wouldn’t cut it.

Trust me I have skin in the game and I’d love to see a new owner of the combined asset and run it at a good income for at least a decade, and with what’s publicly available I can’t see why not, but purely in my uninformed humble opinion I don’t see either Haveiron nor Telfer being viable in the medium term without the other. Purely opinion, happy to be wrong.

[Shinybits]

It would be more efficient plus running off renewables.

Telfer has 3x 40Mw GTs and need all 3 in summer…

2x SAGs @ 15Mw each
2x Ball mills @ 13Mw each

Then there’s cyclone feed pumps, stacker feed belts, underground vent fans, process water pumps, raw water pumps, tails pumps, tails booster pumps, all running off HV, and countless items from 415V.

To run that off renewables in daylight, let alone 24 hours a day, 365 days a year, is politely described as a fantasy in my humble opinion. Yep, there’s a truckload of sun from April to December. During the day. Wind??? A bit of a breeze on occasion, but 3 weeks a month (conservatively) it couldn’t blow a sailor off your sister.

We need to look at these fantasies through a lens of reality. It cost just shy of $2B AUD to set up Telfer 20 years ago. Think about that and the reality of building an entire new plant and infrastructure in the Great Sandy Desert, with the nearest large town several hundred kms away, and the nearest bitumen road even 200kms away. Do your own research in to these fantasies.

[Maximus’s dad]

Hi Shinybits, why would a new gas pipeline be needed all the way from the coast.
Surely they would only have to extend from Telfer. My understanding is Newmont do not own the pipeline?

[Bamps21]

Of course the 2 need each other that’s why the Decline was started so quickly. Without Havieron NCM would have closed Telfer years ago, they’ve spent millions trying to get it going with weak ore.
At the Town Hall in London Shaun Day said outright that the economics of transporting ore to Telfer for 10-20 years was not viable and he was of a mind that a new efficient plant at Havieron would be viable . I questioned him then about the amount of room available for what you described and he said point blank that was not an issue.
When you say we’re looking through rose coloured specs , I’d say I’m being quite pragmatic and know of the issues involved.
I’d also say that it sounds like you don’t want Havieron to be successful which quite obviously it’s going to be.

[DipSard]

Hi Shinybits - you seem very close to the ground as such at Telfer indeed, some interesting insights and information

At the end of the day the PFS was published with a -/+ 25% accuracy specified with certain expectations signposted for the forthcoming albeit delayed DFS. GGP were able to get funding agreed using this early PFS contingent on DFS being published - and we've also seen NCM start a production ready decline which is now near the top of the ore body amongst other infrastructure without a DFS in place, so the confidence was certainly high.

Now, is the PFS outdated? Yes - but we've also seen MRE updates since too that grow the resource and who knows yet how the updated understanding of the ore body has brought adaptions to the mining plan and DFS until we see them in black & white. In the past Sandeep Biswas talked about mining on more than one front at Havieron, alongside what GGP shareholders have had intimated by Shaun with future bulk or selective mining optionality of late.

For now the preeminent business case studied has been Hav ore processed at Telfer. As for NCM, the focus of the business case was fixated on continuation of Telfer by using the Hav ore and of late Shaun's also intimated that perhaps a smaller more agile organisation can make Telfer sweat more i.e I assume extend the life by tapping into more ore if the numbers work, make efficiencies etc. than a corporate such as Newmont might not deem worthwhile or within their business models - plenty of prior examples as you say yourself in the Industry.

Hard to argue against the case that Newmont are more likely to sell both assets by combining them (certainly seems the intent looking at their presentation of both) and GGP are no doubt strong contenders and disruptors for any counter bids with their Right of Last Refusal on Havieron.

Also, no doubt during negotiation with Newmont, GGP are securing the funds to purchase Hav and Telfer outright which wil entail very thorough DD being performed by Wyloo and the current banking syndicate of HSBC, ING and ANZ and no doubt any other banks added to the syndicate. Are the likes of these types of institutions going to bankroll a bad project... i doubt it - so we'll see how things work out and what the DFS ends up concluding too in time.

From correspondence I've had with Newmont IR during which they were of course non-specific - they expected that the sales of Telfer/Hav are likely to complete before the N.Amercian assets pegged for divestment. They also stated that they intend to honour the existing JV terms when asked about intentions on continuing decline after LCA dealt with, Shaun's expectations at latest TH was they would continue the decline given the cost of doing so being minimal to such a large corporation.

We'll see how things play out in the coming months of course - all part of the fun of this kind of investment

[hizer]

I am sure Newmont would like to sell Telfer and 70% of Haviron linked together but it would be down to Greatland whether this happens or not.
Greatlands ROFR is only linked to Newmonts 70% share of Havieron and not Telfer, if they go ahead with its sale.
There may already be some sort of early agreement with GGP and Newmont for Telfer, as it will probably be in Greatland interests for it to process the Havieron ore, but, if GGP wanted they could leave Telfer with Newmont, and its decommissioning costs, as nobody else would want it.
I do not think this will happen but it gives GGP greater leverage to strike a good deal for themselves.
As regards the finance, I personally would like to see Wyloo involved as Greatlands JV partner, even if it was on a 50/50 basis, trucking and processing the ore at Telfer (if it is viable), in the hope of future finds in the area for the mill.
GGP have a very capable board of directors with financial options, who will know Telfer well, and I am sure they will make the correct decision for shareholders.

[Shinybits]

Hi Shinybits, why would a new gas pipeline be needed all the way from the coast.
Surely they would only have to extend from Telfer. My understanding is Newmont do not own the pipeline?

I could be wrong here but I’m pretty sure Telfer own the pipeline. It doesn’t service anywhere else in the vicinity so Newcrest would have paid for the whole thing in the first place. Prior to the current plant the old power station was diesel, and that plant still operates as a back up when required.

The sensible thing would be to take an offshoot from this pipeline and extend it to Haveiron if this was required one day, surely something could be negotiated on that front if Telfer and Hav were to end up with different owners?

[Shinybits]

I’d also say that it sounds like you don’t want Havieron to be successful which quite obviously it’s going to be.

To suggest I don’t want Haveiron and/or Telfer to be an ongoing success is laughable and very much not the case, and all because I don’t conform to your frenzied optimism?

My apologies for that, if that’s a requirement I’m quite happy to keep my thoughts to myself, I’m not here to upset the apple cart.

[Maximus’s dad]

Hi Shinybits, I don’t think Newmont do own the gas pipeline and I think it also it serves Nifty.

[Shinybits]

Ah ok, hopefully there’s enough capacity in it for another avenue if needed. You’d think so, surely.

[Rotherby]

The pipeline must be under a contract with the gas supplier, and may be owned by them with a supply and maintenance agreement. If no telfer then it would be available to extend (alternative being abandon in ground, reinstate above ground equipment as required, I assume at least to Nifty), these costs would not be that great.

Thinking through what happens if we say we don't want Telfer plant, we are then in a position of building our own right sized plant. Buying or renting the parts of Telfer we want, they are of no use to anyone without ore but close enough to use as a base (no point in inventing and building new wheels). These parts seem to be the village power plant, and airfield, etc.

So the price for Telfer/Havieron package complete is the costs to GGP of the alternative to it with no processing plant in the longer term, against the costs with Telfer as is with its on-costs.

The on-costs are the decommissioning and reinstatement of the parts we do not want, namely a mill that is too big and therefore even if you run part of it , it is more expensive than a purpose made mill.
The reinstatement of the mine area.
This will be in the $A 100's million and ongoing, say $500.m
I thing anyone taking on Telfer needs a substantial amount as contingency on the open ended reinstatement costs
perhaps double...

Anyone buying Havieron alone would have the cost of a new plant at Havieron, I have seen figures of $300.m
Cost of buying the infrastructure we want, (should be cheap as we take on the reinstatement at end of life) $100m
Cost of delay while plant is built (may be mitigated by short term use of Telfer)
Saving by not trucking ore to Telfer (these may offset each other)
And the cost of the 70% in the region of $800m

So we have a guesstimate of the price someone may offer for Havieron alone @ $a1200m (£650m)
That would put the package @ $A 1200m- $A 1000m= $A200m (£125m)

Lots of variables, guesses, etc but of anywhere near correct that would be good.

As always just my ramblings and thoughts, very happy to be corrected, to have items priced, added or removed to get a better handle on where this MAY go. It is not likely to be right at the end of the day but it is nice to see the possibilities, I hope without rose tinted glasses.