Investing in firms that operate in the commodity sector can be a real roller-coaster ride, yet Greatland Gold shares (LON: GGP) takes things even further.
The UK-listed company is a small-cap gold explorer working in a range of gold fields in Australia. It focuses on one product, working on a hit-and-miss basis in the Australian outback. On top of that, by having gold as its target, Greatland’s valuation is also a product of global commodity prices, which are known for their volatility.
Short-term traders can utilise charts, and technical analysis to decide whether there is a moment to trade Greatland Gold shares, whereas those with a longer-term view would be more inclined to use fundamental analysis to assess value. Here, we will look at the prospects for both types of investors and reveal the Greatland Gold forecasts for the near and long term.
Recent News
In May 2024, Greatland Gold was granted a new Exploration Licence covering 134km2 as the inaugural tenement in the Mt Egerton Project.
In April, Greatland Gold indicated it might pursue the opportunity to acquire back full ownership of the Havieron project in Pilbara, Western Australia. In its quarterly update, the company stated: “If an opportunity to consolidate ownership of Havieron were to arise, we would be highly focused on delivering an accretive outcome for our existing shareholders with a view to delivering a world-class Australian gold-copper asset.”
Elsewhere in that update, the company said, “Significant progress has been made during the quarter, particularly in terms of improving our understanding and confidence in managing the lower confined aquifer.”
Greatland Gold was granted a new Exploration Licence covering 555km2 at the Ernest Giles Project in April.
Where Will Greatland Gold Share Price Be In 12 Months?
** Analyst target prices above are the values in GBp (pence).
YOUR CAPITAL IS AT RISK
The extraordinary price highs of 2021 cast a shadow over the Greatland Gold price chart, but many analysts see the stock rebounding from the current price levels.
GGP is trading at significantly below its estimated fair value and has forecast annual earnings growth of 133.09%. Many projects Greatland Gold is committed to are exploratory and at the investment stage of their lifecycle. That means the firm is not expected to make a profit before 2025 and makes the ‘cash and equivalents’ number on the balance sheet a key factor.
The firm has £12.66m in cash and cash equivalents to manage operating costs.
The question for investors with a 12-month investment horizon is whether the pipeline of projects will start converting potential into reality and do so before the company needs to raise additional capital once again.
For a sustained bull run to occur, price needs to break the 9.00p price level, which has acted as resistance in recent months. At the same time, a break below 6.70p would signify the long-term bearish trend still has some way to go.
The excitement surrounding Greatland Gold means that although it has a small market capitalisation, two brokers have followed the stock. Both tipped it as a Buy, with the consensus share price target being 16.0p, representing significant potential upside.
Who is Greatland Gold (LSE: GG)?
If your investment process of due diligence involves a site visit of your potential target, then you’ve got your work cut out with Greatland Gold. Although the firm is listed on the London Stock Exchange (LSE) under ticker GGP, its operations are in inhospitable and remote areas across the Australian mainland and Tasmania.
Equally, if you’re looking to get a clear idea of the Greatland Gold stock forecast, you’re also in difficulty due to the extreme nature of the share price moves. When the Greatland Gold share price hit 35.00p in January 2021, investors who had held the stock for only 12 months posted an eye-watering 1638% gain. By early 2023 the stock price had plummeted to below 7p.
Greatland Gold has been operating for some years and was admitted to the LSE in 2006. Due to its relatively small market capitalisation of around £400m, Greatland Gold shares are bought and sold on the AIM market, the natural home for smaller growth companies offering investors greater risk-return.
Long Term Forecast
Optimism relating to the Greatland Gold long-term stock forecast is based on three factors – revenue forecasts, the price of gold, and the possibility a rival might buy the firm.
Looking at the GG fundamentals, there are many reasons to believe the firm is heading in the right direction. Finding large gold deposits can’t be guaranteed, but the firm is putting itself in the best position possible to deliver results.
Much rests on the prospects of the Havieron gold deposit in Western Australia, in which Greatland Gold has a 30% stake. It was discovered in 2018 and has been described as “one of the most exciting long-life gold-copper deposits in development worldwide”.
Greatland Gold’s management has described work so far as just “the tip of the iceberg” and state that the pre-feasibility study of 2022 covered only a fraction of the initially available resource. A more detailed full-feasibility study is due to be released outlining how Greatland Gold can maximise the value of the project. Long-term investors will consider that report as it could represent the tipping point where Greatland Gold shifts from extracting what minerals it can to help with cash flow to developing a more expansive long-term approach.
Greatland also extracts and sells base metals, but these are a by-product of the firm’s primary aim: mining gold. That means the Greatland share price is closely linked to the global gold market, and with the world moving into an inflationary environment, the price of gold is subject to some debate. When rises in international interest rates are factored in, it’s clear that the GG stock price is largely subject to a range of features that are out of the firm’s control.
When the current CEO, Shaun Day, took over from the previous head of the firm, Gervaise Heddle, some investors noted a potential move toward getting Greatland Gold ready to be bought out. Heddle offered a hands-on approach, which helped Greatland develop a proven track record for exploration.
The new CEO has a different skill set, described as being “a seasoned industry executive with over 20 years of experience in leadership positions across established mining and infrastructure, investment banking and international accounting firms. He has extensive experience in capital markets with a track record of leading successful transactions including M&A of publicly listed companies, farm-in agreements and raising capital” (source: Morningstar).
The hard work of finding gold in the ground has gone well, and now could be the time to maximise the returns to shareholders by courting a larger firm with the capital needed to scale up operations at Havieron.
Is Greatland Gold Stock a Good Buy?
The share price history can cloud the fact that Greatland Gold is a well-run exploration operation that makes the best of its human and technological resources. You don’t get lucky as often as Greatland does unless you know what you’re doing.
Price has pulled back to a level that will tempt many to step in, but anyone taking up the opportunity should respect the inherent risk profile of the small-cap mining sector. Extreme price moves can be expected, and any investment should only be of a small size. With historical price gains including +1,000% returns, there is still enough upside potential for investors following that approach.
There’s something appealing about buying into the chance of striking gold. But putting the romance of gold-panning to one side, there are still some solid reasons to buy Greatland Gold shares at current price levels. The firm offers a chance for a well-diversified portfolio to take on a position with a greater risk return.
