The Motley Fool

Greatland Gold shares: should I buy for my 2021 portfolio?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

View of a gold mine from above
Image source: Getty Images.

Greatland Gold (LSE: GGP) is an AIM-listed natural resource exploration and development company. Its shares rose 310% in the past year. It has outperformed the FTSE 100 index by a wide margin. Over the past five years, Greatland Gold shares have risen by an unbelievable 32,600%.

Greatland Gold’s projects

Greatland Gold has four projects in Western Australia, namely, Paterson, Panorama, Ernes Giles, and Bromus. The Paterson project comprises of two joint ventures, the Havieron and Juri, and two 100% owned licences (Scallywag and Rudall), collectively covering more than 450 square kilometres. As per the management, the Paterson region is underexplored with significant potential. The region has witnessed significant recent discoveries, including Rio Tinto’s Winu discovery and Greatland/Newcrest’s discovery in Havieron. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Exploration activities at Havieron are currently operated by Newcrest Mining Limited (ASX: NCM) under a joint venture agreement with Greatland. Greatland had very good results from two drilling programmes in 2018. In March 2019, Newcrest Mining Limited and Greatland signed a $65m four-stage farm-in agreement to develop Greatland’s Havieron gold-copper deposit. In November 2020, Newcrest met the stage 3 expenditure of $45m. They expect to progress to mining operation in the next two to three years.

I believe the partnership with Newcrest Mining is a big positive for Greatland as it has the operation and financial support from a company that has a market capitalisation of about £12bn. Another advantage for the company is that the ore will be processed at Newcrest’s Telfer Gold Mine, which is 45 kilometres to the west of Havieron. The management believes that it’s a win-win situation for both the companies as it lowers upfront capital costs, reduces time to production, and potentially delivers a significantly higher net present value for the project.

Greatland also signed a Juri joint venture with Newcrest in November 2020. It is a farm-in and joint venture agreement with respect to Greatland’s Black Hills and Paterson Range East projects. Drilling of high-priority targets, including Parlay and Goliath, is expected to commence in early 2021.

Greatland Gold’s results

The company has no revenues at the moment. It reported a net loss of £5.1m compared to a net loss of £3.3m for the fiscal year 2019. Net loss per share was (£0.14) for the fiscal year 2020 compared to a net loss per share of (£0.10) for the previous year. It had cash of £6.0m as of 30 June 2020. Cash used in operating activities was £4.6m for the fiscal year 2020. 

Like in any other stock, there are some risks. Greatland Gold has yet to start mining operations and has no revenues. The company’s losses have increased in the fiscal year 2020. There is no assurance that the mineral resources can be extracted economically. The stock has performed well in the past few years and there could be profit booked in the near term, but nothing is certain. Another risk to consider is that commodity prices are highly cyclical and the future profits will depend on the commodity prices. 

The stock is currently in a downward trend since the beginning of this year. I will wait before deciding whether to buy Greatland Gold shares. I believe the stock’s valuation is expensive for a company that is still in the exploration and development stage.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Royston Roche 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.