The Greatland Gold share price is up 1,200%! My call was right, so what would I do now?

Greatland Gold plc (LON: GGP) has been one of the top-performing shares of 2020. But Paul Summers wonders whether now is the time to sell.

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I was bullish on explorer Greatland Gold‘s (LSE: GGP) potential when I first looked at the miner back in August 2019. Since then, the shares have soared from under 2p to a little over 23p, making GGP one of the best-performing UK-listed stocks over the last year. Had one bought back then, one would be sitting on a gain of over 1,200%! 

Today — 14 months later — I’m taking another look. 

Greatland Gold: a lucky punt?

Now, let’s be clear from the outset — there was an awful lot of luck in my call. Investing in any miner, let alone a minnow, is fraught with risk.

First, there’s no guarantee it’ll find what it’s looking for, or be able to extract sufficient quantities of what it does find to make the business profitable. Second, mining can be an expensive business. Many companies go bust before they’ve a chance to make their mark. Third, miners have no control over the prices of the commodities they extract. Fourth, mining shares have a tendency to ‘pop and drop’, catching unwary investors on the price spike.

All that said, Greatland Gold has certainly done all it can to put itself in a great position to continue rewarding investors. Recent news has only served to boost the investment case further.

Good progress

In August, the company announced it has commenced drilling at its delightfully-named Scallywag prospect in the Paterson region of northern Western Australia.

As CEO Gervaise Heddle commented, many of the targets in this region “display similar geophysical characteristics” to Greatland’s stunning Havieron gold-copper discovery “where ongoing drilling under a Farm-in with Newcrest has returned a series of outstanding results.This certainly bodes well. 

Speaking of Havieron, the company has also announced it had secured a mining lease relating to the project. Assuming GGP is able to get it into production, this could eventually become one of the most valuable gold mines in the world.

On top of this progress, Greatland Gold has benefited hugely from the surge in the price of the precious metal since the coronavirus struck. Despite coming off the boil in recent months, the value of gold has still soared around 25% since the beginning of 2020!

Sell or hold?

Regardless of whether the GGP share price would be where it is in the absence of the pandemic, the fact remains that a lot of early holders will be sitting on big profits. What now? 

For me, an optimum strategy for existing owners might be to bank some profit and keep the rest invested.  After all, such an incredible return over such a short period shouldn’t be taken for granted. Greatland Gold remains a company in its infancy and a lot could still go wrong. Notwithstanding, keeping some money invested will allow holders to benefit from any further positive news on drilling. 

Naturally, no one knows where the gold price will go in the short term either. Since there are simply too many factors that could impact sentiment, one potentially great destination for GGP profits, in my opinion, would be VanEck Vectors Junior Gold Miners ETF.

Diversified across 80 small- and mid-cap miners, this fund ensures investors have exposure to the gold price without the risk the comes from owning just one stock. The ongoing charge is a reasonable 0.55%. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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