With the gold price on a charge and concerns of a slowing global growth continuing to hit the headlines, it’s no surprise more investors than ever are flocking to the precious metal.
One way of potentially profiting from this interest, other than buying a fund that tracks the spot price, is to buy shares in a miner. Today, I’m looking at one example from way down the market spectrum.
Greatland Gold (LSE: GGP) is unlikely the be familiar to the majority of retail investors. That said, a 52% rise in the share price since this time last year suggests the £60m-cap is beginning to hit an increasing number of market participants’ radars.
Greatland has six projects in its portfolio, four in Western Australia and two in Tasmania. This part of the world is clearly far more politically stable compared to where some miners operate (e.g. Africa), making the company more attractive to prospective owners.
In its most recent update, Greatland revealed it had located additional gold nuggets at its 100%-owned Panorama project. These were found roughly 1km south-west from a find almost two months earlier.
According to CEO Gervaise Heddle, this discovery “is evidence of the growing scale of Panorama” and increases management’s confidence in its viability. In addition to this, he reflected that the company’s recent fundraise would enable further exploration of projects such as this in the hope of finding and developing tier one assets (low cost, large and long-life). If it succeeds, Greatland’s share price could easily multi-bag, in my opinion.
Naturally, buying shares in a junior miner is probably about as risky as investing gets. As such, I’d caution anyone considering an investment in Greatland to consider whether they can maintain their composure when things get volatile before making a purchase.
Gold isn’t the only metal to rally in price lately. Nickel — used in stainless steel — has been trading almost 50% higher than at the beginning of the year as supplies of the metal hit multi-year lows. One of the few ways of gaining exposure to this surge in popularity in the small-cap arena is AIM-listed miner (and Glencore-backed) Horizonte Minerals (LSE: HZM).
Horizonte owns two world-class assets in Brazil, the Araguaia ferro-nickel project and the Vermelho nickel-cobalt project. The former is due to begin construction next year. The latter was purchased from mining giant Vale back in late 2017 with the view to profiting from the likely huge demand from the electric vehicle battery market.
On Thursday, it was announced the company had signed a royalty agreement with highly-regarded Orion Mine Finance to provide funding to advance Araguaia. Horizonte will now be handed $25m in cash to support the mine’s construction in exchange for a 2.25% royalty of the first 426,o00 tonnes of nickel produced and sold. Importantly, this agreement hasn’t diluted the value for existing shareholders, hence the 40% jump in Horizonte’s shares by the close of play on Thursday. At one point, they were up 100%.
Clearly, there’s still a long way to go and the high-risk nature of investing at this level must be repeated. That said, I remain very positive on Horizonte and will likely retain my shares until the mines are fully operational or — more probable — the firm receives a bid from a major player.