geopacific resources (gpr) · 2020. 11. 20. · shaw and partners gpr – equity report current as...
TRANSCRIPT
Shaw and Partners
0.42000 0000 000
GPR – Equity Report current as at –18/05/2020–Pg. 1
Geopacific Resources (GPR) Rating: Buy | Risk: High | Price Target: $1.37
Gold – it’s a Lark. Initiation of Coverage
Andrew Hines | Senior Analyst
+61 3 9268 1178 [email protected]
Event We initiate coverage on Geopacific Resources (GPR) with a Buy recommendation and A$1.37ps price target. Geopacific Resources is developing the Woodlark Gold Project on Woodlark Island in Papua New Guinea. The project is fully permitted and early construction has commenced.
Highlights Woodlark is a standard and simple open cut mining operation and carbon-in-
leach (CIL) processing plant which will produce ~100koz of gold per annum over a 13 year mine life. On our forecasts the project has a 2 year payback, an IRR of 52% and an NPV @10% of A$341m. Cash flow will be front end loaded due to higher grade and lower strip ratios in the early years of production.
Woodlark Island is flat, access is relatively straightforward via sea or air (there is an existing airstrip), and the landowners are supportive, so Geopacific does not face the usual problems associated with operating in PNG.
Once in production (expected in 2022), at today’s share price Geopacific will be trading on a PE multiple of just 1.3x and an EV/EBITDA multiple of 0.2x. Geopacific is one of the cheapest gold companies listed on the ASX with an EV/resource of A$15/oz compared to a sector average A$226/oz.
The A$ gold price recently hit an all-time high of A$2,720/oz and we expect the US$ gold price to continue rising and peak at around US$2,000/oz in late 2022. At spot gold our NPV of the project increases to A$545m (A$1.57ps on a fully diluted basis).
Woodlark has a resource of 47Mt at 1.04g/t for 1.57Moz gold and reserve of
28.9Mt @ 1.12g/t for 1.04Moz gold. There is significant exploration upside on
the island and we expect to see ongoing resource upgrades. It would not surprise
us to see the resource base increased to over 5Moz over time.
GPR raised A$40m in late 2019 to fund early construction, which includes site clearing, road works, relocation of housing and construction of a new wharf facility. The project will require around $200m capex to first production.
GPR released a Definitive Feasibility Study (DFS) in October 2018 which outlined a 13 year project with an NPV @ 8% of A$197m and IRR of 29% based on an A$ gold price of A$1,650/oz. Since the release of the DFS, early construction has commenced and the gold price has materially increased. The project is now even more attractive.
Costs are very low due to the low strip ratio (3.9x life of mine, and less than 3x in
the early years). All-in sustaining costs are estimated at A$1,033/oz (life of mine)
and A$866/oz in the first five years.
Recommendation We initiate coverage on Geopacific Resources (GPR) with a Buy recommendation and A$1.37ps price target. We have set our price target at a fully diluted valuation post an assumed A$60m equity raise at a share price of A$0.35ps.
Catalysts for the stock to reach our price target include;
Resolution of financing options.
Delivery of the Woodlark project through the course of 2020/21.
Resource upgrades following further exploration on Woodlark Island.
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 2
Geopacific Resources Ltd. is developing the Woodlark Gold Project on Woodlark Island in PNG. First production is expected in 2022 and the operation will produce approximately 100koz of gold per annum over a 13 year mine life.
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 3
Table of Contents
Geopacific Resources key financials 4
Executive Summary 5
Geopacific Resources in charts 6
Geopacific is attractively place in an attractive sector 8
Gold price 10
Geopacific Resource and Woodlark Gold Project overview 12
Woodlark Definitive Feasibility Study 13
Resources and exploration upside 14
Construction activity and progress to date 16
Woodlark financials 18
Geopacific P&L 19
Financing – balance sheet and cash flow 20
Valuation and price target 21
Key risks 22
Appendix: Key personnel 23
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 4
Geopacific Resources Key financials
Profit & Loss FY19 FY20f FY21f FY22f FY23f Company Information
Revenue 0.0 0.0 0.0 269.8 283.1 Financial Year End Date 31-Dec
Expenses -7.2 -5.0 -5.1 -96.3 -102.9 Share Price 0.42
Underlying EBITDA -7.2 -5.0 -5.1 173.5 180.2 Market Capitalisation 73
Depreciation & Amort -0.3 0.0 0.0 -17.8 -21.4 Valuation 1.37
Underlying EBIT -7.4 -5.0 -5.1 155.6 158.8 Recommendation Buy
Net Interest 0.1 -1.6 -4.0 -6.1 -1.2
Profit Before Tax -7.3 -6.6 -9.1 149.5 157.5 Per Share Data (c) FY19 FY20f FY21f FY22f FY23f
Tax 0.0 0.0 0.0 -37.4 -39.4 Shares (m) 175 346 346 346 346
NPAT (Underlying) -7.3 -6.6 -9.1 112.1 118.1 Normalised EPS -0.7 -2.5 -2.6 32.4 34.1
Exceptional items 0.0 0.0 0.0 0.0 0.0 Dividends 0.0 0.0 0.0 0.5 1.0
NPAT (reported) -7.3 -6.6 -9.1 112.1 118.1 Dividend Yield (%) 0.0% 0.0% 0.0% 1.2% 2.4%
Book Value 0.40 0.36 0.33 0.66 0.99
Balance Sheet FY19 FY20f FY21f FY22f FY23f P/E (x) -64.6 -16.5 -15.9 1.3 1.2
Cash 37.5 75.1 4.2 108.6 200.9 EV/EBITDA (x) -5.0 -7.2 -7.0 0.2 0.2
Net Receivables 0.7 0.7 0.0 22.2 23.3
Other 1.4 1.4 1.0 19.5 20.4 Valuation (fully diluted) A$m A$ps
Current Assets 39.6 77.2 5.2 150.3 244.6 Woodlark Island 341 0.99
Property, Plant & Equipment 1.9 48.8 105.7 89.2 69.2 Net debt 98 0.28
Other 39.1 87.9 146.9 150.2 153.6 Exploration upside 50 0.14
Non Current Assets 41.0 136.7 252.6 239.5 222.8 Corporate costs -15 -0.04
Total Assets 80.5 213.9 257.8 389.8 467.3 Total Valuation 474 1.37
Trade Creditors 7.0 7.0 0.0 12.5 13.4
Borrow ings 0.0 0.0 0.0 0.0 0.0 Assumptions FY19 FY20f FY21f FY22f FY23f
Other 0.1 0.1 0.1 0.1 0.1 Prices
Current Liabilities 7.1 7.1 0.1 12.6 13.5 A$/US$ 0.70 0.64 0.72 0.74 0.74
Borrow ings 0.0 80.0 140.0 110.0 70.0 Gold (US$/oz) 1425 1669 1847 1951 1946
Other 2.9 2.9 2.9 40.3 42.3
Non Current Liabilities 2.9 82.9 142.9 150.3 112.3 Operating Metrics FY19 FY20f FY21f FY22f FY23f
Net Assets 70.5 123.9 114.7 226.9 341.5 Ore processed (ktpa) 0 2000 2400
Average grade (g/t) 1.72 1.55
Shareholder Capital 149.0 209.0 209.0 209.0 209.0 Gold produced (koz) 102 108
Retained earnings -83.3 -90.0 -99.1 13.1 127.7 AISC (US$/oz) 681 690
Minorities/others 4.8 4.8 4.8 4.8 4.8 AISC (A$/oz) 920 933
Total Equity 70.5 123.9 114.7 226.9 341.5
Average price (A$/oz) 2637 2630
Cash Flow FY19 FY20f FY21f FY22f FY23f Average cost (A$/oz) 824 841
Receipts 0.0 0.0 0.0 269.8 283.1 Average margin (AS$/oz) 1813 1789
Payments -4.2 -5.0 -5.1 -96.3 -102.9
Other Operating Cash Flow 0.0 -1.6 -10.0 -34.3 -39.7 Financial metrics (%) FY19 FY20f FY21f FY22f FY23f
Operating Cash Flow -4.2 -6.6 -15.1 139.2 140.4 EBITDA margin 0.0% 0.0% 0.0% 64.3% 63.6%
Capex -1.1 -93.8 -113.9 -2.7 -2.7 EBIT margin 0.0% 0.0% 0.0% 57.7% 56.1%
Other Investing Cash Flow -1.8 -2.0 -2.0 -2.0 -2.0 ROIC 0.0% 0.0% 0.0% 47.7% 52.8%
Investing Cash Flow -2.9 -95.8 -115.9 -4.7 -4.7 Return on Assets -12.0% -4.5% -3.9% 34.6% 27.6%
Net Equity raised 42.0 60.0 0.0 0.0 0.0 Return on Equity -14.0% -6.8% -7.6% 65.6% 41.6%
Dividends Paid 0.0 0.0 0.0 0.0 -3.5
Net Borrow ings 0.0 80.0 60.0 -30.0 -40.0 Balance sheet metrics FY19 FY20f FY21f FY22f FY23f
Other -0.1 0.0 0.0 0.0 0.0 Net Debt (m) -38 5 136 1 -131
Financing Cash flow 41.9 140.0 60.0 -30.0 -43.5 ND / ND+E n/a 3.2% 48.3% 0.9% n/a
Total Cash Change 34.8 37.6 -71.0 104.5 92.3
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 5
Executive Summary We initiate coverage on Geopacific Resources (GPR) with a Buy recommendation and A$1.37ps price target. Geopacific Resources is developing the Woodlark Gold Project on Woodlark Island in Papua New Guinea.
Core drivers & catalysts
Woodlark is a standard and simple open cut mining operation and carbon-in-leach (CIL) processing plant which will produce ~100koz of gold per annum over a 13 year mine life. On our forecasts the project has a 2 year payback, an IRR of 52% and an NPV @10% of A$341m. Cash flow will be front end loaded due to higher grade and lower strip ratios in the early years of production.
Once in production (expected in 2022), at today’s share price Geopacific will be trading on a PE multiple of just 1.3x and an EV/EBITDA multiple of 0.2x. Geopacific is one of the cheapest gold companies listed on the ASX with an EV/resource of A$15/oz compared to a sector average A$226/oz.
The A$ gold price recently hit an all-time high of A$2,720/oz and we expect the US$ gold price to continue rising and peak at around US$2,000/oz in late 2022. At spot gold our NPV of the project increases to A$545m (A$1.57ps on a fully diluted basis).
Woodlark has a resource of 47Mt at 1.04g/t for 1.57Moz gold and reserve of 28.9Mt @ 1.12g/t for 1.04Moz gold. There is significant exploration upside on the island and we expect to see ongoing resource upgrades. It would not surprise us to see the resource base increased to over 5Moz over time.
Costs are very low due to the low strip ratio (3.9x life of mine, and less than 3x in the early years). All-in sustaining costs are estimated at A$1,033/oz (life of mine) and A$866/oz in the first five years.
Key risks
The gold price is volatile and driven as much by geopolitical events as fundamental supply and demand. As such, the price of gold is relatively difficult to forecast and the actual price may differ substantially from our forecasts.
The Woodlark Gold Project is not yet producing and there is a risk that Geopacific is unable to bring the operation in to production. The project may cost more than expected to build, and may not operate as expected.
Geopacific Resources is operating in PNG. Woodlark Island is flat, access is relatively straightforward via sea or air (there is an existing airstrip), and the landowners are supportive, so Geopacific does not face the usual problems associated with operating in PNG.
Figure 1: Free cash flow (A$m) Figure 2: Valuation sensitivity to gold price
Source: Company data & Shaw and Partners analysis Source: Company data & Shaw and Partners analysis
-150
-100
-50
0
50
100
150
200
20
18
20
19
20
20
f
20
21
f
20
22
f
20
23
f
20
24
f
20
25
f
20
26
f
20
27
f
20
28
f
20
29
f
0.00
0.50
1.00
1.50
2.00
2.50
A$1600/oz A$1800/oz Shaw A$2000/oz A$2200/oz A$2400/oz A$2600/oz spot
Current share price
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 6
Geopacific Resources in Charts
Figure 3: Production (kt) – first production in 2022 Figure 4: Revenue (A$m) – >$200mpa revenue once in production
Source: Company data & Shaw and Partners analysis Source: Company data & Shaw and Partners analysis
Figure 5: EBITDA (A$m) – strong profits from 2023 Figure 6: EBIT (A$m) – similar profile to EBITDA
Source: Company data & Shaw and Partners analysis Source: Company data & Shaw and Partners analysis
Figure 7: NPAT (A$m) – ~A$50m NPAT from 2023 Figure 8: Operating cash flow (A$m) – growth in line with EBITDA
Source: Company data & Shaw and Partners analysis Source: Company data & Shaw and Partners analysis
0
20
40
60
80
100
120
2018
2019
2020
f
2021
f
2022
f
2023
f
2024
f
2025
f
2026
f
2027
f
2028
f
2029
f
2030
f
2031
f 0
50
100
150
200
250
300
20
18
20
19
20
20
f
20
21
f
20
22
f
20
23
f
20
24
f
20
25
f
20
26
f
20
27
f
20
28
f
20
29
f
-50
0
50
100
150
200
20
18
20
19
20
20
f
20
21
f
20
22
f
20
23
f
20
24
f
20
25
f
20
26
f
20
27
f
20
28
f
20
29
f
-100
-50
0
50
100
150
200
20
18
20
19
20
20
f
20
21
f
20
22
f
20
23
f
20
24
f
20
25
f
20
26
f
20
27
f
20
28
f
20
29
f
-20
0
20
40
60
80
100
120
140
2018
2019
2020
f
2021
f
2022
f
2023
f
2024
f
2025
f
2026
f
2027
f
2028
f
2029
f
-40
-20
0
20
40
60
80
100
120
140
160
2018
2019
20
20
f
20
21
f
20
22
f
20
23
f
20
24
f
20
25
f
20
26
f
20
27
f
20
28
f
20
29
f
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 7
Figure 9: Capex (A$m) – expansion capex in 2021 and 2022 Figure 10: Free cash flow (A$m) – funding challenge in 2021
Source: Company data & Shaw and Partners analysis Source: Company data & Shaw and Partners analysis
Figure 11: Pricing, costs and margin (US$/t ore processed) Figure 12: Returns (%)
Source: Company data & Shaw and Partners analysis Source: Company data & Shaw and Partners analysis
Figure 13: Net debt and gearing (A$m, %) Figure 14: Dividends and yield (A$cps, %) – no dividend policy has
been made, but we assume a payout increasing to 50%
Source: Company data & Shaw and Partners analysis Source: Company data & Shaw and Partners analysis
0
20
40
60
80
100
120
20
18
20
19
20
20
f
20
21
f
20
22
f
20
23
f
20
24
f
20
25
f
20
26
f
20
27
f
20
28
f
20
29
f
-150
-100
-50
0
50
100
150
200
20
18
20
19
20
20
f
20
21
f
20
22
f
20
23
f
20
24
f
20
25
f
20
26
f
20
27
f
20
28
f
20
29
f
0
500
1,000
1,500
2,000
2,500
3,000
2021
f
2022
f
2023
f
2024
f
2025
f
2026
f
2027
f
2028
f
2029
f
Revenue / ozExpense / ozEBITDA / oz
-200%
-150%
-100%
-50%
0%
50%
100%
2018
2019
2020
f
2021
f
2022
f
2023
f
2024
f
2025
f
2026
f
2027
f
2028
f
2029
f
RoE (%)RoA (%)
RoIC (%)
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
-500
-400
-300
-200
-100
0
100
200
2018
2019
2020
f
2021
f
2022
f
2023
f
2024
f
2025
f
2026
f
2027
f
Net Debt (A$m)
ND/ND+E (%)
0%
5%
10%
15%
20%
25%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2018
2019
2020
f
2021
f
2022
f
2023
f
2024
f
2025
f
2026
f
2027
f
2028
f
2029
f
Special dividend
2H Dividend
1H Dividend
Yield (%)
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 8
Geopacific is attractively placed in an attractive gold sector The current market turmoil is creating value opportunities across all sectors, and the gold
sector is no different. The US$ gold price has been surprisingly directionless during the
turmoil – initially down to the deflationary fears of the oil price shock, but now finding
support due to the inflationary implications of mass monetary and fiscal stimulus once the
COVID-19 lock downs are over.
The ASX gold index disconnected from the AUD gold price in Mar/Apr 2020 as every asset
class has sold off. The move into US$ pushed the A$ gold price up 20%, but the A$ gold
equities down 20%. As markets stabilise the gap is narrowing and we expect that to
continue.
Figure 15: ASX Gold Index v’s USD and AUD gold price – indexed to 1 Oct 201
Source: Factset
The following table summarises the key metrics for a selection of Australian listed gold
companies. In our view, Geopacific screens very attractively compared to its ASX peers.
Geopacific resources is one of the cheapest gold companies on the ASX on an EV/resource
basis, production costs are below average and the reserve mine life of 13 years is likely to
be significantly increased.
Figure 16: Selected Australian listed gold companies
Source: Company reports & presentations, Shaw and Partners analysis Shaw and Partners covers Newcrest (Buy, $27.65, PT $30), Evolution (Buy, $5.54, PT $3.70) and Northern Star (Buy, $13.13, PT $14.80).
60
70
80
90
100
110
120
130
10/01/19 11/01/19 12/01/19 01/01/20 02/01/20 03/01/20 04/01/20 05/01/20
ASX Gold Index
USD Gold
AUD Gold
Company Code Production Reserve Resource AISC Enterprise EV/oz EV/oz EV/oz Mine Life Hedging
koz Moz Moz A$/oz Value Prod Reserve Resource Reserve
Newcrest NCM 2150 51.2 105 1,397 24,680 11.5 482.0 234.2 24 658koz @A$1,875/oz
Northern Star NST 980 8.34 22.8 1,284 10,149 10.4 1216.9 445.1 9 544koz @A$2,020/oz
Evolution EVN 725 6.6 15.2 965 9,976 13.8 1511.5 656.3 9 350koz @A$1,860/oz
Saracen SAR 550 7 15 1,042 5,307 9.6 758.1 353.8 13 539koz @ A$1,997/oz
Regis RRL 355 4 8.2 1,160 2,346 6.6 586.6 286.2 11 429koz @ A$1,617/oz
Oceana OGC 370 5.6 12.2 1,100 1,952 5.3 348.6 160.0 15 119koz @ A$2,050/oz
St Barbara SBM 385 6.4 12.2 1,375 1,985 5.2 310.2 162.7 17 244koz @ A$1,900/oz
Resolute RSG 460 7.4 17.8 1,604 1,329 2.9 179.6 74.7 16 240koz @ A$2,700/oz
Gold Road GOR 265 3.7 6.6 1,150 1,338 5.0 361.7 202.8 14 112koz @ A$1,844/oz
Silver Lake SLR 235 1.07 6.05 1,325 1,552 6.6 1450.2 256.5 5 155koz @ A$1,900/oz
Perseus PRU 280 3.5 5.9 1,525 1,213 4.3 346.6 205.6 13 276koz @A$2,200/oz
Westgold WGX 300 2.65 9.4 1,200 884 2.9 333.4 94.0 9 230koz @A$2,010/oz
Ramelius RMS 215 0.84 4.1 1,275 1,034 4.8 1230.9 252.2 4 263koz @A$2,102/oz
West Africa WAF 250 1.7 3.1 847 863 3.5 507.7 278.4 7 unhedged
Red 5 RED 103 1.725 4.3 1425 460 4.5 266.7 107.0 17 81koz @A$2,095/oz
Pantoro PNR 45 0.2 2.6 1,300 133 2.9 663.2 51.0 4 unhedged
Geopacific GPR 0 1.04 1.57 1,033 24 n/a 23.0 15.3 13 unhedged
Average 451 7 15 1236 3837 6.2 622 226 12
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 9
Figure 17: Selected Australian listed gold companies – mine life (yrs) v’s EV/resource (A$/oz)
Source: Company reports & presentations, Shaw and Partners analysis
Figure 18: Selected Australian listed gold companies – All in sustaining cost (A$/oz) v’s EV/resource (A$/oz)
Source: Company reports & presentations, Shaw and Partners analysis
Geopacific
0
5
10
15
20
25
30
0 100 200 300 400 500 600 700
Min
e L
ife
EV/resource (A$/oz)
NewcrestNorthern StarEvolutionSaracenRegisOceanaSt BarbaraResoluteGold RoadSilver LakePerseusRameliusWest AfricaRed 5PantoroGeopacificWestgold
Long mine life and good valuation
Ok mine life, but relatively expensive
Relatively cheapbut mine life issue
Geopacific
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
0 100 200 300 400 500 600 700
AIS
C (
A$
/oz)
EV/resource (A$/oz)
NewcrestNorthern StarEvolutionSaracenRegisOceanaSt BarbaraResoluteGold RoadSilver LakePerseusRameliusWest AfricaRed 5PantoroGeopacificWestgold
Relatively expensive and higher cost
Relatively expensive but low cost
Relatively cheap but high cost
Relatively cheap and low cost
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 10
Gold price
Even before the COVID-19 epidemic, gold was performing well and had its best year in
2019 since 2010 (up 18.4% in US dollar terms). Gold prices hit record highs in most major
currencies except the US dollar and the Swiss franc.
The increase in 2019 was driven by central bank buying and flows into gold-backed
exchange traded funds (ETFs).
We expect the gold price to continue to strengthen and trade in a range of between
US$1,700-2,000/oz over the next three years before gradually moderating back to our
long term real price assumption of US$1,268/oz.
Figure 19: Gold price (nominal US$/oz) Figure 20: Gold price (real 2020 US$/oz)
Source: Factset, Shaw and Partners forecasts Source: Factset, Shaw and Partners forecasts
Figure 21: Gold price assumptions
Source: Factset, Shaw and Partners forecasts
There are seven major drivers of the US$ gold price, and most are currently strong
tailwinds;
1. Wealth protection – gold is seen as a safe haven during periods of economic
uncertainty. The current recession driven by the COVID-19 epidemic has seen
gold rally back to levels last seen in 2011/12.
2. Inflation expectations – gold is a hedge against high inflation. The gold price
generally increases during periods of negative real interest rates. As economic
activity resumes post the COVID-19 lockdowns, the combination monetary
stimulus from central banks and fiscal stimulus from government is likely to see
negative real interests persist.
3. Central bank buying – the recent trend has been for central banks to increase
their gold reserves to diversify away from paper reserves.
4. Movements in the US$ - the price of gold is usually inversely related to the value
of the US$. This was the reason the gold price initially fell at the start of the
COVID-19 epidemic. In the early stages the world shifting into US dollars, and all
other asset classes were sold off, including gold.
0
500
1000
1500
2000
2500
Mar
-90
Ma
r-9
1M
ar-
92
Mar
-93
Mar
-94
Mar
-95
Ma
r-9
6M
ar-9
7M
ar-9
8M
ar-9
9M
ar-
00
Mar
-01
Mar
-02
Mar
-03
Ma
r-0
4M
ar-0
5M
ar-0
6M
ar-0
7M
ar-
08
Mar
-09
Mar
-10
Mar
-11
Ma
r-1
2M
ar-1
3M
ar-1
4M
ar-1
5M
ar-
16
Ma
r-1
7M
ar-1
8M
ar-1
9M
ar-
20
Ma
r-2
1f
Mar
-22f
Mar
-23f
Ma
r-2
4f
Ma
r-2
5f 0
500
1000
1500
2000
2500
Mar
-90
Mar
-91
Mar
-92
Mar
-93
Mar
-94
Mar
-95
Mar
-96
Mar
-97
Mar
-98
Mar
-99
Mar
-00
Mar
-01
Mar
-02
Mar
-03
Mar
-04
Mar
-05
Mar
-06
Mar
-07
Mar
-08
Mar
-09
Mar
-10
Mar
-11
Mar
-12
Mar
-13
Mar
-14
Mar
-15
Mar
-16
Mar
-17
Mar
-18
Mar
-19
Mar
-20
Mar
-21
fM
ar-2
2f
Ma
r-2
3f
Mar
-24
fM
ar-2
5f
Gold Price forecast 2019 2020f 2021f 2022f 2023f 2024f 2025f Longterm
Gold price (US$/oz) 1,425 1,669 1,847 1,951 1,946 1,581 1,412 1,263
Gold price (A$/oz) 2,050 2,607 2,565 2,637 2,630 2,108 1,882 1,684
AUD/USD 0.70 0.64 0.72 0.74 0.74 0.75 0.75 0.75
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 11
5. Investment demand – apart from primary demand for jewellery and industrial
purposes, the other primary demand driver for gold is exchange traded funds.
According to the World Gold Council, ETFs represent around 25% of total gold
demand. ETF’s have been strong net buyers of gold in recent years.
6. Supply constraints – supply of primary gold has been relatively stable in the past
four years with new production offsetting declining production from existing
mines. There have been relatively few new major discoveries in the past decade
and so mine supply constraint is likely to be a positive influence on the gold
price.
7. Jewellery demand – has been declining for the past few years due to the
increase in the gold price. Jewellery demand is likely to remain under pressure
due to the rising price of gold. Demand from central banks and ETFs has been
offsetting jewellery demand weakness since 2013 and that is likely to continue.
Overall, we anticipate supply and demand to reasonably balanced in the next two to three
years with the primary drivers of the gold price being the positive influences of movement
in real interest rates and the investment demand for wealth protection.
Figure 22: Global demand for gold (tonnes) Figure 23: Global gold supply (tonnes)
Source: World Gold Council Source: World Gold Council
Figure 24: Top 10 global ETFs have been adding to gold holdings in the past year
Source: World Gold Council
0
1,000
2,000
3,000
4,000
5,000
6,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Jewelry Technology Investment Central banks
0
1,000
2,000
3,000
4,000
5,000
6,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Mine production Recycled gold
Fund Country
Holdings
as of end-
Mar
Year-on-
year %
change
1 SPDR Gold Shares United States 966.7 ▲ 23
2 iShares Gold Trust United States 390.9 ▲ 30
3 Xetra-Gold Germany 209.0 ▲ 9
4 iShares Physical Gold ETC United Kingdom 195.2 ▲ 84
5 Invesco Physical Gold ETC United Kingdom 184.7 ▲ 49
6 WisdomTree Physical Gold United Kingdom 145.5 ▼ -11
7 Gold Bullion Securities Ltd United Kingdom 82.7 ▲ 5
8 ZKB Gold ETF Switzerland 72.1 ▲ 14
9 Xtrackers Physical Gold ETC EUR Germany 67.4 ▲ 15
10 Xtrackers Physical Gold Euro Hedged ETC Germany 57.8 ▲ 35
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 12
Geopacific Resource and Woodlark Gold Project overview Geopacific Resources (GPR) is developing the Woodlark Gold Project (“Woodlark”) on
Woodlark Island in the Milne Bay Province of Papua New Guinea (PNG).
PNG is host to numerous large gold operations both on the mainland and on nearby
islands. Woodlark has a resource of 1.6Moz and a reserve of 1.04Moz which makes it
relatively small compared to larger nearby projects, but the island is lightly explored and
we expect to see significant resource upgrades over time.
Woodlark Island is flat, access is relatively straightforward via sea or air (there is an
existing airstrip), and the landowners are supportive, so Geopacific does not face the usual
problems associated with operating in PNG.
GPR released a Definitive Feasibility Study (DFS) in October 2018 which outlined a 13 year
project with an NPV @ 8% of A$197m and IRR of 29% based on an A$ gold price of
A$1,650/oz.
The DFS is now 18 months old and the gold price environment has significantly improved.
On our forecasts the project has a 2 year payback, an IRR of 52% and an NPV @10% of
A$341m. Cash flow will be front end loaded due to higher grade and lower strip ratios in
the early years of production.
GPR raised A$40m in late 2019 to fund early construction, which includes site clearing,
road works, relocation of housing and construction of a new wharf facility.
The project will require around $200m capex to first production, and we expect GPR to
raise around $140m from debt markets and a further $60m from equity markets.
Figure 25: Woodlark Gold Project location
Source: Geopacific Resources 2019 Annual Report
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 13
Woodlark Definitive Feasibility Study (DFS)
In our analysis of the Woodlark Gold Project economics we draw heavily from the DFS
which was released in November 2018, but updated for the current gold price
environment. The key operating and financial parameters from the DFS are outlined in the
table below.
The key features of the DFS include;
A resource of 47Mt at 1.04g/t for 1.57Moz gold and reserve of 28.9Mt @ 1.12g/t
for 1.04Moz gold.
Standard and simple open cut mining and processing to produce ~100koz per
annum of gold.
Despite the low grade, costs are very low due to the low strip ratio (3.9x life of
mine, and less than 3x in the early years). All-in sustaining costs are estimated at
A$1,033/oz (life of mine) and A$866/oz in the first five years.
Payback of 2.2 years (at A$1,650/oz gold), IRR of 29% and NPV @ 8% of A$197m.
On our forecasts the project has a 2 year payback, an IRR of 52% and an NPV
@10% of A$341m.
Figure 26: Woodlark DFS – summary of key data
Source: Geopacific DFS November 2018
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 14
Woodlark resources and exploration upside
Geopacific has a total of 580km2 of exploration licences and a 60km
2 Mining Lease on
Woodlark Island. The current reserve incorporates three deposits at Kulumadau,
Woodlark King and Busai.
Figure 27: Woodlark main deposit locations
Source: Geopacific Jan 2020ASX release
Figure 28: Woodlark Resources
Source: Geopacific 2019 Annual Report
Figure 29: Woodlark Reserves
Source: Geopacific 2019 Annual Report
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 15
Exploration upside is expected to come from three areas;
1. The Kulumadau deposit is open at depth below the planned pit in all directions,
2. Areas near Kulumadau have been ‘quarantined’ from drilling due to the location
of the village, and
3. Additional discoveries on trend with existing deposits are possible.
Figure 30: Kulumadau resource remains open in all directions
Source: Geopacific 2019 Annual Report
Figure 31: Additional drilling target areas near Kulumadau West
Source: Geopacific Annual Report 2019
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 16
Figure 32: Exploration targets along trend with existing deposits
Source: Geopacific Annual Report 2019
Construction activity and progress to date
Geopacific has already commenced early construction activity including site clearing, road
works, relocation of housing and construction of a new wharf facility.
There is an existing village at Kulumadau which will need to be relocated. Geopacific
reports that the vast majority of villagers are very happy to relocate into new housing. The
villagers historically moved to the village site to work in the original underground mine.
The village location is not culturally significant.
Figure 33: Existing house at Kulumadau village Figure 34 A new house under construction
Source: Geopacific Annual Report 2019 Source: Geopacific Annual Report 2019
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 17
The new wharf facility will be on the south side of Kwaipan bay. There is an existing wharf
on the north of the bay, but the new facility will allow freight movements away from
existing facilities and habitations.
Figure 35: Infrastructure site plan
Source: Geopacific DFS Nov 2018
GPR is estimating a total capital cost of A$198.5m including a $13.8m contingency and
A$11.1m working capital build. The estimate has a degree of uncertainty of +/- 15%.
The main capital item is a A$65m processing plant. This will be a conventional Carbon in
Leach (CIL) plant and is being designed and constructed by GR Engineering in a turnkey
contract. The plant design was independently reviewed by Mintrex Pty Ltd.
Figure 36: DFS capital cost estimate
Source: Geopacific DFS Nov 2018
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 18
Woodlark financials
As noted above, we have drawn on the DFS for financial model of Woodlark but have
updated the numbers for the current gold price environment. On our forecasts the project
has a 2 year payback, an IRR of 52% and an NPV @10% of A$341m.
The key assumptions in our model include;
Capital costs of A$195m to complete the mine and processing facilities.
First production in 2022.
Processing plant with capacity of 2,400tpa.
Grade profile as per the DFS (>1.5g/t in early years).
C1 and AISC costs as per the DFS. Mining cost of US$281/oz, processing at
US$324/oz and overheads/other at US$110/oz.
Production of ~100koz of gold per annum.
On our base case forecasts, we model Woodlark generating around ~A$180mpa of EBITDA
when at full production. This increases to ~A$200mpa of EBITDA at spot commodity
prices.
Figure 37: Woodlark P&L (A$m) – Shaw forecasts
Source: Shaw and Partners analysis
Figure 38: Woodlark P&L (A$m) – Spot commodity prices
Source: Shaw and Partners analysis
Woodlark (A$m) 2020f 2021f 2022f 2023f 2024f 2025f 2026f 2027f 2028f 2029f 2030f 2031f 2032f
Ore processed (kt) 2,000 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400
Grade of mi l l feed (g/t) 1.72 1.55 1.54 1.49 1.34 1.14 1.18 1.32 1.05 0.70 0.50
Gold produced (koz) 102 108 103 103 94 77 83 91 70 47 34
Revenue 270 283 218 195 181 152 167 187 147 101 74
Expenses 91 98 93 94 87 73 80 89 70 48 35
EBITDA 179 186 125 101 94 79 87 97 77 53 39
D&A 18 21 21 21 21 21 21 21 21 21 21
EBIT 161 164 104 79 73 58 66 76 55 32 18
Net Operating Assets 128 242 227 208 190 172 153 135 116 98 79 61 42
Capex 94 114 3 3 3 3 3 3 3 3 3 3 3
EBITDA Margin (%) 0% 0% 66% 66% 57% 52% 52% 52% 52% 52% 52% 52% 52%
EBIT / Assets (%) 0% 0% 71% 79% 55% 46% 47% 43% 56% 78% 70% 52% 42%
Gold (US$/oz) 1,669 1,847 1,951 1,946 1,581 1,412 1,444 1,476 1,509 1,543 1,578 1,614 1,650
AUD/USD 0.64 0.72 0.74 0.74 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75
Revenue (A$/oz) 2,637 2,630 2,108 1,882 1,925 1,968 2,012 2,058 2,104 2,151 2,200
Expenses (A$/oz) 890 907 899 910 928 947 966 986 1,006 1,026 1,046
EBITDA (A$/oz) 1,747 1,723 1,209 972 996 1,021 1,046 1,072 1,098 1,126 1,153
D&A (A$/oz) 174 199 204 204 224 273 255 233 303 449 629
EBIT (A$/oz) 1,572 1,524 1,005 768 772 748 791 839 795 676 524
Woodlark (A$m) 2020f 2021f 2022f 2023f 2024f 2025f 2026f 2027f 2028f 2029f 2030f 2031f 2032f
Revenue 288 310 304 311 290 244 267 298 234 162 118
Expenses 103 111 109 111 103 86 94 105 82 57 41
EBITDA 185 199 196 201 187 157 172 193 152 105 77
D&A 20 24 24 24 24 24 24 24 24 24 24
EBIT 164 175 171 176 162 133 148 169 128 80 52
Net Operating Assets 127 253 236 215 193 172 151 129 108 87 66 44 23
Capex 92 126 3 3 3 3 3 3 3 3 3 3 3
EBITDA Margin (%) 0% 0% 64% 64% 64% 64% 64% 65% 65% 65% 65% 65% 65%
EBIT / Assets (%) 0% 0% 70% 81% 89% 102% 108% 103% 137% 194% 195% 182% 228%
Gold (US$/oz) 1,750 1,789 1,830 1,871 1,913 1,956 2,000 2,045 2,091 2,138 2,186 2,235 2,286
AUD/USD 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 19
Geopacific P&L Woodlark will be Geopacific’s only producing asset, and so the Group P&L will look very
similar to the asset P&L – just additional corporate overheads and financing costs.
Once in production, the main driver of profitability will be movements in the gold price. In
figure 41 we show our forecast of NPAT to percentage movements in the gold price away
from our base case forecast. Every 10% move in prices is worth around A$8m to NPAT in
2023.
Figure 39: Geopacific Resources P&L (A$m)
Source: Company reports, Shaw and Partners analysis
Figure 40: NPAT (A$m) Figure 41: Geopacific NPAT sensitivity to gold price (A$m)
Source: Company reports, Shaw and Partners analysis Source: Company reports, Shaw and Partners analysis
Figure 42: Base case gold price assumptions
Source: Factset, Shaw and Partners forecasts
Profit & Loss (A$m) 2019 2020f 2021f 2022f 2023f 2024f 2025f 2026f 2027f 2028f 2029f 2030f 2031f
Ore processed (kt) 0 0 0 2,000 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400
Gold produced (koz) 0 0 0 102 108 103 103 94 77 83 91 70 47
Revenue 0 0 0 270 283 218 195 181 152 167 187 147 101
Operating costs 0 0 -91 -98 -93 -94 -87 -73 -80 -89 -70 -48
Admin & other expenses -7 -5 -5 -5 -5 -5 -6 -6 -6 -6 -6 -6 -6
Total costs -7 -5 -5 -96 -103 -98 -100 -93 -79 -86 -95 -76 -55
EBITDA -7 -5 -5 173 180 120 95 88 73 81 91 70 47
Depreciation & Amortisation 0 0 0 -18 -21 -21 -21 -21 -21 -21 -21 -21 -21
EBIT -7 -5 -5 156 159 98 74 67 52 60 70 49 25
Net Finance Expense 0 -2 -4 -6 -1 4 7 8 10 11 13 14 15
Profit before tax -7 -7 -9 150 158 102 80 75 62 71 83 63 41
Income tax (expense)/benefi t 0 0 0 -37 -39 -25 -20 -19 -16 -18 -21 -16 -10
Reported NPAT -7 -7 -9 112 118 76 60 57 47 53 62 48 30
-20
0
20
40
60
80
100
120
140
2018
2019
2020
f
2021
f
2022
f
2023
f
2024
f
2025
f
2026
f
2027
f
2028
f
2029
f
-50
0
50
100
150
200
2018 2019 2020f 2021f 2022f 2023f 2024f 2025f
+30%
+20%
+10%
basecase
-10%
-20%
-30%
Gold Price forecast 2019 2020f 2021f 2022f 2023f 2024f 2025f Longterm
Gold price (US$/oz) 1,425 1,669 1,847 1,951 1,946 1,581 1,412 1,263
Gold price (A$/oz) 2,050 2,607 2,565 2,637 2,630 2,108 1,882 1,684
AUD/USD 0.70 0.64 0.72 0.74 0.74 0.75 0.75 0.75
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 20
Financing - balance sheet and cash flow Geopacific currently only has a market capitalisation of A$66m, and so taking on a
AS$200m capital project is a significant funding challenge.
GPR raised A$40m of equity capital in late 2019 to allow early construction works to
commence, and we anticipate an additional equity raise of A$60m in 3Q20 along with a
$140m debt financing package.
At peak funding, Geopacific will have a gearing level of 54% which appears manageable
given the strong free cash flow expected post start-up. Our base case forecast has the
company back in a net cash position by the end of 2023.
Figure 43: Geopacific Cash flow (A$m)
Source: Company reports, Shaw and Partners analysis
Figure 44: Geopacific Balance Sheet (A$m)
Source: Company reports, Shaw and Partners analysis
CASH FLOW (AS$m) 2019 2020f 2021f 2022f 2023f 2024f 2025f 2026f 2027f 2028f 2029f 2030f 2031f
Operating activities
Receipts from customers 0 0 0 270 283 218 195 181 152 167 187 147 101
Payments to suppl iers and employees -4 -5 -5 -96 -103 -98 -100 -93 -79 -86 -95 -76 -55
Income taxes paid 0 0 0 0 -37 -39 -25 -20 -19 -16 -18 -21 -16
Working capita l movement 0 0 -6 -28 -1 9 4 1 2 -1 -2 3 4
Net cash flow from operating activities -4 -7 -15 139 140 93 80 78 67 75 84 67 50
Investing activities
Payments for PPE -1 -94 -114 -3 -3 -3 -3 -3 -3 -3 -3 -3 -3
Net cash flow from investing activities -3 -96 -116 -5 -5 -5 -5 -5 -5 -5 -5 -5 -3
Free cash flow -6 -100 -129 136 138 90 77 75 64 73 82 65 47
Financing activities
Net proceeds from issue of shares 42 60 0 0 0 0 0 0 0 0 0 0 0
Proceeds from borrowings 0 80 60 0 0 0 0 0 0 0 0 0 0
Repayments of borrowings 0 0 0 -30 -40 -40 -30 0 0 0 0 0 0
Dividends paid 0 0 0 0 -3 -5 -7 -14 -24 -28 -28 -28 -24
Other 0 0 0 0 0 0 0 0 0 0 0 0 0
Net cash flow from financing activities 42 140 60 -30 -43 -45 -37 -14 -24 -28 -28 -28 -24
Net increase/(decrease) in cash 35 38 -71 104 92 43 38 59 38 43 52 35 23
BALANCE SHEET (A$m) 2019 2020f 2021f 2022f 2023f 2024f 2025f 2026f 2027f 2028f 2029f 2030f 2031f
Cash and cash equiva lents 38 75 4 109 201 244 282 341 379 422 474 509 532
Trade and other receivables 1 1 0 22 23 18 16 15 13 14 15 12 8
Other 1 1 1 20 20 16 14 13 11 12 14 11 8
Total current assets 40 77 5 150 245 278 313 369 403 448 503 532 548
Property, plant and equipment 2 49 106 89 69 49 30 10 -10 -30 -50 -69 -89
Exploration and evaluation expenditure 8 10 12 14 16 18 20 22 24 26 28 30 30
Total non-current assets 41 137 253 239 223 206 190 173 157 140 124 108 89
TOTAL ASSETS 81 214 258 390 467 484 502 543 560 589 627 640 637
Trade and other payables 7 7 0 12 13 13 13 12 10 11 12 10 7
Total current liabilities 7 7 0 13 14 13 13 12 10 11 12 10 7
Deferred tax 0 0 0 37 39 25 20 19 16 18 21 16 10
Borrowings 0 80 140 110 70 30 0 0 0 0 0 0 0
Total non-current liabilities 3 83 143 150 112 58 23 22 18 21 24 19 13
TOTAL LIABILITIES 10 90 143 163 126 71 36 34 29 32 36 28 20
NET ASSETS 70 124 115 227 342 413 466 509 532 557 591 611 617
Net debt -38 5 136 1 -131 -214 -282 -341 -379 -422 -474 -509 -532
Gearing (ND/ND+E %) 0% 4% 54% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 21
Valuation and Price Target Our preferred valuation technique is a discounted cash flow (DCF) valuation with post-tax
operational cash flows discounted at Geopacific’s weighted average cost of capital of 10%.
Our undiluted DCF valuation is $2.37ps and Geopacific is currently trading at a 84%
discount to this valuation.
In our base case forecast we assume that Geopacific will raise A$60m of equity at a share
price of A$0.35ps. In figure 46 we show a forward DCF valuation of Geopacific post the
dilutive equity raising. The valuation drops to A$1.37ps due to the dilution, but this is
highly dependent on the price the additional equity is issued at.
Figure 45: DCF valuation - undiluted Figure 46: DCF valuation - diluted for A$60m equity raising
Source: Company reports, Shaw and Partners analysis Source: Company reports, Shaw and Partners analysis
As noted earlier, the spot A$ gold price is substantially ahead of our forecast and in the
tables below we show the GPR valuation at spot prices on both an undiluted and fully
diluted basis. At spot prices, our GPR DCF valuation increases to A$3.94ps, or A$2.16ps on
a fully diluted basis.
Figure 47: DCF valuation – spot prices undiluted Figure 48: DCF valuation – spot prices diluted for A$60m equity
raising
Source: Company reports, Shaw and Partners analysis Source: Company reports, Shaw and Partners analysis
The main valuation sensitivity is to the gold price. In figure 45, we outline the Geopacific
DCF valuation at a range of A$ gold prices. Every A$200/oz move in the gold price impacts
our DCF valuation by A$0.25ps.
Figure 45: Geopacific DCF Valuation sensitivity to metal prices (A$ps v’s A$/oz gold price)
Source: Company reports, Shaw and Partners analysis
Geopacific Valuation A$m A$ps
Woodlark Is land 341 1.96
Net debt 38 0.21
Exploration ups ide 50 0.29
Corporate costs -15 -0.09
Total Valuation 414 2.37
Geopacific Valuation - diluted A$m A$ps
Woodlark Is land 341 0.99
Net debt 98 0.28
Exploration ups ide 50 0.14
Corporate costs -15 -0.04
Total Valuation 474 1.37
Geopacific Valuation A$m A$ps
Woodlark Is land 615 3.52
Net debt 38 0.21
Exploration ups ide 50 0.29
Corporate costs -15 -0.09
Total Valuation 687 3.94
Geopacific Valuation - diluted A$m A$ps
Woodlark Is land 615 1.78
Net debt 98 0.28
Exploration ups ide 50 0.14
Corporate costs -15 -0.04
Total Valuation 747 2.16
0.00
0.50
1.00
1.50
2.00
2.50
A$1600/oz A$1800/oz Shaw A$2000/oz A$2200/oz A$2400/oz A$2600/oz spot
Current share price
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 22
Key risks As a small mining company with exposure to a single commodity and single asset we
consider an investment in Geopacific Resources to be high risk. The key risks include;
The gold price is volatile and driven as much by geopolitical events as fundamental supply and demand. As such, the price of gold is relatively difficult to forecast and the actual price may differ substantially from our forecasts.
The Woodlark Gold Project is not yet producing and there is a risk that Geopacific is unable to bring the operation in to production. The project may cost more than expected to build, and may not operate as expected.
Geopacific Resources is operating in PNG. PNG can be a difficult country in which to operate given the mountainous terrain, poor infrastructure and diverse landowner groups. However, Woodlark does not suffer from these issues. The island is flat, access is relatively straightforward via sea or air (there is an existing airstrip), and the landowners are supportive.
Geopacific is facing a significant financing challenge to develop the A$200m Woodlark project. There is a risk that capital markets are not willing to fund the project.
Forecasting future operating costs has considerable uncertainty. Our forecasts may prove to be too optimistic. If Geopacific Resources’s costs are higher than we expect then our cash flow forecasts will be too high.
Smaller companies carry more significant ‘key personnel’ risk than larger organisations. If senior management depart the company then it could delay projects or exacerbate operational risks.
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 23
Appendix: Key Personnel
Board of Directors
Ian Clyne | Non-Executive Chairman
Mr Clyne has over 35 years’ experience in international banking having worked in senior
executive positions in ten countries in Asia, Oceania, Australia and Europe. He has
specialised in emerging markets and has held roles of President, Director, Managing
Director and Chief Executive Officer with universal banking operations that have extensive
branch networks and large employee bases.
Mr Clyne has successfully re-engineered banks in Indonesia, Italy, Poland and Papua New
Guinea.MrClyne held the role of Managing Director and Group CEO of Bank South Pacific
(BSP), based in Port Moresby (2008 –2013). He undertook a major transformation
program changing BSP from a typical emerging economy banking institution into an
innovative, technology driven, modern bank. Under his leadership, the bank grew from
having 400,000 accounts to over 1million in Papua New Guinea and 1.5 million across the
Pacific, including Fiji and the Solomon Islands, with a market capitalisation of $1.7 billion
at the end of his term.
Ron Heeks | Managing Director
With 30 years’ mining industry experience, Mr Heeks was a founder of Exploration and
Mining Consultants and has had previous experience with Western Mining Corporation,
Newcrest, Newmont (US) and RSG Consulting.
Mr Heeks has held senior roles in both mine management and exploration and is a former
General Manager –Technical for Straits Asia Indonesian Operations and Chief Technical
Officer for Adamus Resources Southern Ashanti Gold Operation. He has lived and worked
in various countries around the world gaining extensive experience in South-East Asia and
Indonesia in particular. Mr Heeks was appointed Managing Director of the Company on 28
March 2013 after the takeover of Worldwide Mining Projects Ltd.
Colin Gilligan | Non-Executive Director
Mr Gilligan is a mining engineer with over 25 years’ experience in the resources sector, in
Australia, South Africa, North America and Asia. He has held technical, executive and
director roles with a number of companies throughout his career including Mitsui, Thiess,
Anglo, Coalspur Mines and Resource Generation. During his career Mr Gilligan has
provided leadership to a number of operations, EPC contracts, mining contracts and
development projects across a range of commodities. He has also successfully contributed
to raising development funding in various forms.
Ian Murray | Non-Executive Director
Mr Murray is a Chartered Accountant with over 25 years’ of mining experience in senior
leadership positions, including the position of Managing Director of Gold Road Resources
Limited (Gold Road) and DRDGold Ltd. He has also held executive positions with
international Big 4 accounting firms.
Mr Murray brings a wealth of financial, corporate, project development and operational
experience to the Board. Most recently he held the role of Managing Director of Gold
Road and was instrumental in taking the Guyere Project from an exploration play through
to a fully funded 8.2mtpa gold operation that is set to produce 300koz per annum in joint
venture with Gold Fields Ltd.
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 24
Executive Team
Ron Heeks | Managing Director
See bio above.
Matthew Smith | Chief Financial Officer / Company Secretary
Mr Smith has over 15 years’ experience in the resource industry across a broad range of
commodities including precious metals, industrials and bulk commodities. Mr Smith has
worked for a range of companies operating in the Asia Pacific region and most recently
held the role of Chief Financial Officer at ASX listed Kingsrose Mining Limited, with gold
operations in Indonesia. Mr Smith is a Chartered Accountant with relevant industry
experience on an array of financing transactions across debt and equity markets. Mr
Smith also brings specialist knowledge in the areas of international taxation, corporate
structuring, accounting and corporate governance. Mr Smith has previously held the role
of Company Secretary at Straits Resources Limited and is currently a Non-Executive
Director of Kula Gold Limited.
Glen Zamudio | General Manager Projects
Mr Zamudio has a strong record of operating and developing businesses in challenging
jurisdictions. Mr Zamudio has 5 years of process and engineering experience from
feasibility through to commissioning, 10 years of merchant banking experience initially as
a quantitative analyst and then in the investment banking division. From 2002, on arrival
in Australia he owned and managed private businesses for 4 years and then joined
Mawson West Limited for 8 years and held positions of Chief Financial Officer and
Company Secretary, Executive General Manager Operations and Group Executive
Commercial. Mr Zamudio holds a degree in Chemical Engineering, a Masters of Business
Administration, is a Chartered Financial Analyst and is a member of Australian Institute of
Company Directors (GAICD).
James Kerr | General Manager Geology - Consultant
Mr Kerr has over 25 years’ experience in the global mining industry, managing exploration
and mine development projects throughout Australia, Sub Sahara and Asia Pacific. His
experience also covers remote locations in the Melanesian Region including Vanuatu, The
Solomon Islands and various Islands across Indonesia. He brings specialist knowledge of
epithermal and porphyry gold system exploration, resource definition and project
development, as well as extensive global corporate management experience across a
broad range of commodities.
Mr Kerr’s experience exploring and developing porphyry and epithermal gold deposits in
the Asia-Pacific region in senior management roles for Barrick Gold Corporation, Hillgrove
Resources, Oropa, Tethyan Copper Company and Mincor Resources provides synergies to
Geopacific’s development plans on Woodlark Island. Mr Kerr holds degrees in Geology and
Mineral Economics and is a Member of the AusIMM, SEG and a Fellow of the Geological
Society of London.
Ashley Price | Manager, Community, Environment and Water
Mr Price has extensive international experience in the fields of water and environmental
management, particularly in the mining and oil and gas sectors. He has spent time with
both regulatory agencies and international consultancies, working on a wide variety of
projects across a range of environments in Australia, Mongolia, China, Kazakhstan, Liberia
and PNG. As a consultant, Mr Price has designed and managed numerous multi-
disciplinary studies for resource developments and related infrastructure projects such as
railways, roads and ports.
Mr Price holds a Science degree with majors in Environmental Science and Energy Studies,
a Masters degree in Hydrogeology and Water Management and an MBA.
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 25
Rating Classification
Buy Expected to outperform the overall market
Hold Expected to perform in line with the overall market
Sell Expected to underperform the overall market
Not Rated Shaw has issued a factual note on the company but does not have a recommendation
Risk Rating
High Higher risk than the overall market – investors should be aware this stock may be speculative
Medium Risk broadly in line with the overall market
Low Lower risk than the overall market
RISK STATEMENT: Where a company is designated as ‘High’ risk, this means that the analyst has determined that the risk profile for this company is
significantly higher than for the market as a whole, and so may not suit all investors. Clients should make an assessment as to whether this stock
and its potential price volatility is compatible with their financial objectives. Clients should discuss this stock with their Shaw adviser before making
any investment decision.
Shaw and Partners GPR – Equity Report current as at –18/05/2020–Pg. 26
Disclaimer
Shaw and Partners Limited ABN 24 003 221 583 (“Shaw”) is a Participant of ASX Limited, Chi-X Australia Pty Limited and the holder of Australian Financial Services Licence number 236048. ANALYST CERTIFICATION: The Research Analyst who prepared this report hereby certifies that the views expressed in this document accurately reflect the analyst's personal views about the Company and its financial products. Neither Shaw nor its Research Analysts received any direct financial or non-financial benefits from the company for the production of this document. However, Shaw Research Analysts may receive assistance from the company in preparing their research which can include attending site visits and/or meetings hosted by the company. In some instances, the costs of such site visits or meetings may be met in part or in whole by the company if Shaw considers it is reasonable given the specific circumstances relating to the site visit or meeting. As at the date of this report, the Research Analyst does not hold, either directly or through a controlled entity, securities in the Company that is the subject of this report. Shaw restricts Research Analysts from trading in securities outside of the ASX/S&P100 for which they write research. Other Shaw employees may hold interests in the company. DISCLAIMER: This report is published by Shaw to its clients by way of general, as opposed to personal, advice. This means it has been prepared for multiple distribution without consideration of your investment objectives, financial situation and needs (“Personal Circumstances”). Accordingly, the advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not the advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of your Shaw client adviser. This report is provided to you on the condition that it not be copied, either in whole or in part, distributed to or disclosed to any other person. If you are not the intended recipient, you should destroy the report and advise Shaw that you have done so. This report is published by Shaw in good faith based on the facts known to it at the time of its preparation and does not purport to contain all relevant information with respect to the financial products to which it relates. The research report is current as at the date of publication until it is replaced, updated or withdrawn. Although the report is based on information obtained from sources believed to be reliable, Shaw does not make any representation or warranty that it is accurate, complete or up to date and Shaw accepts no obligation to correct or update the information or opinions in it. If you rely on this report, you do so at your own risk. Any projections are indicative estimates only and may not be realised in the future. Such projections are contingent on matters outside the control of Shaw (including but not limited to market volatility, economic conditions and company-specific fundamentals) and therefore may not be realised in the future. Past performance is not a reliable indicator of future performance. Except to the extent that liability under any law cannot be excluded, Shaw disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence. DISCLOSURE: Shaw will charge commission in relation to client transactions in financial products and Shaw client advisers will receive a share of that commission. Shaw, its authorised representatives, its associates and their respective officers and employees may have earned previously or may in the future earn fees and commission from dealing in the Company's financial products. RESEARCH TEAM: For analyst qualifications and experience, refer to our website at http://www.shawandpartners.com.au/about/our-
people/research
RESEARCH POLICY: For an overview of our Research policy, refer to our website at https://www.shawandpartners.com.au/media/1267/
researchpolicy.pdf
If you no longer wish to receive Shaw research, please contact your Financial Adviser to unsubscribe.