Hi Kurt,
On Wednesday GGGP Resources reaffirmed its full-year production guidance, maintaining expectations at the higher end of 260,000 to 310,000 ounces of gold. For the March quarter, the company reported preliminary production of 82,723 ounces of gold and 4,128 tonnes of copper, with sales exceeding production at 97,800 ounces of gold and 4,620 tonnes of copper, indicating some inventory drawdown.
The balance sheet remains strong, with cash of A$1.21 billion at the end of March. Operationally, the Telfer mine continues to run smoothly, with no impact from diesel supply disruptions due to secure long-term fuel arrangements, and power generation supported by a stable natural gas supply via the Pilbara pipeline. Despite the solid operational update and maintained guidance, broker sentiment is mixed, with seven buy ratings, one hold, and three sells.
- The stock posted new all-time highs on the news plus of course the announced 2-week ceasefire.
The GGP investment case combines ownership of Australia’s third-largest gold processing plant (Telfer) with exposure to one of the country’s highest-quality undeveloped deposits (Havieron). Historically, Telfer has been a high-cost asset that struggled to generate consistent free cash flow under prior ownership. However, two key factors underpin a material improvement in the outlook:
- Firstly, the sharp uplift in the gold price to near-record levels (~US$5,000/oz).
- Secondly, the planned introduction of higher-grade Havieron ore from 2029, which should drive a meaningful reduction in unit costs and lift margins.
Together, this positions the combined operation to shift from one of the highest-cost producers in Australia to potentially among the lowest-cost. It’s relatively early days for the new GGP which is why it’s not our top pick for gold/copper exposure but it’s in the proverbial mix. At this stage we hold Evolution in our Active Growth Portfolio but note GGP is more sensitive to the gold price → bigger upside in a bull market.
- We like GGP ~$15 believing it can trade up toward $18-20 if gold can retest $US5,000/oz through 2026.
