Greatland Gold (LSE: GGP) shares are in demand right now. In fact, despite the stock market crash, the price has risen from 2p to the current level of 33p in 2020.
Since my last article, it has continued to be among the top 20 most purchased shares on the Hargreaves Lansdown platform. The company is clearly on the radar of many investors and I like the stock too.
But is it too expensive now? Well, I expect 2021 will be an amazing year for Greatland Gold shares and here’s why.
Projects
The company is mining for gold in Australia and has several projects in the region. In fact, it has as many four in Western Australia and two in Tasmania.
The Paterson project, which is one of the six, consists of two joint ventures including Havieron. Greatland Gold signed a farm-in agreement with Newcrest to explore this deposit in March 2019. The Havieron site has been a roaring success and is the miner’s jewel in the crown.
Agreements boost Greatland Gold shares
Following the success of Havieron, in November GGP signed additional agreements with Newcrest to explore the deposit further. I believe this site demonstrates the potential for a large mining operation.
I also think Newcrest knows it’s onto a winner with Havieron. In addition to existing funding commitments, it has offered Greatland a $50m loan. The debt facility will be used for drilling costs up to the completion of a feasibility study. Mining is a costly business but Greatland can rest assured that it has secured funding to accelerate the exploration of Havieron in the short term.
I believe further announcements of drilling success will truly be transformational for Greatland Gold shares.
Continue drilling
While drilling at Havieron has generated fantastic results, the company can’t put all of its eggs in one basket. Within the Paterson project, it also has the Juri joint venture with Newcrest to explore the Black Hills and Paterson Range East sites.
Upon initial exploration of these two sites, Greatland has announced the results look promising. The company has confirmed the regions, especially Paterson Range East, have a similar geophysical signature to Havieron. I expect positive results to come from these deposits in 2021.
Change at the top
The company recently announced that Shaun Day will be replacing current CEO Gervaise Heddle in February 2021. An accountant with 20 years of experience in mining and infrastructure, Day is CFO of AIM-listed Salt Lake Potash.
While Heddle has been instrumental in Greatland Gold’s success, I think the appointment of a new CEO with a wealth of large-scale mining experience is vital, especially when Havieron has the potential for commercial production.
Outlook
So would I buy Greatland Gold shares? Yes. The company is a risky prospect as it’s still loss-making, but I think there’s so much potential that will come to fruition in 2021 and generate stellar share price gains.
Investment bank Berenberg recently upgraded its price target from 22p to the 33p. The shares are already trading at this new level, but I don’t think it reflects Greatland Gold’s full potential. I believe the price could double in 2021 upon further drilling success.
