The Greatland Gold (LSE: GGP) share price has fallen more than 50% since the beginning of the year. However, over the past 12 months, the stock has returned 28%.
Still, it looks as if shares in the company could continue to trend lower in the near term. But here at The Motley Fool, we’re long-term investors. We aren’t worried about what might happen to a stock in the next few weeks and months. We’re more interested in its potential over the next few years.
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A long-term outlook is especially important with the Greatland Gold share price. Developing gold mines can be a lengthy and costly process.
Finding the resource in the first place is hard enough, but this is just the first stage. Miners then need to prove the gold is worth extracting before even thinking about building a mine.
Most miners fail at this stage. The time and money required to explore a prospect can drain their coffers, and if there’s no immediate funding from a deep-pocketed backer, the project has to be suspended.
Luckily, Greatland doesn’t have this issue. It’s developing its flagship gold asset, Havieron, with Newcrest Mining, one of the world’s largest gold miners.
The joint venture removes many of the risks usually associated with early-stage mining investments. Greatland and its partner have the money and experience required to push the prospect forward.
Despite these advantages, one thing the joint venture can’t do is speed up the process. The completion of a pre-feasibility study at Havieron is due in the second half of 2021. When this is published, the partners can then refine their development plans.
In the meantime, I think the Greatland Gold share price could well drift lower.
Greatland Gold share price outlook
I’d ignore this trend for the time being. Based on the latest drill results, it’s clear Havieron is a world-class mine with colossal potential. When it is producing gold, Greatland’s investors should be able to reap the rewards. However, in the meantime, patience is required.
That said, I should also note that the successful development of the mine shouldn’t be taken for granted. There’s still plenty that could go wrong.
Risks include a potential falling out between Newcrest and Greatland, which could throw the joint venture into doubt. A sudden fall in the gold price may also jeopardise the Greatland Gold share price in the long term.
I don’t own the stock, but if I did, I’d hold the shares for the time being. The shares may continue to slide, but there could be a recovery due when production starts.
I wouldn’t buy the stock today. Instead, I’d rather wait until production begins and the uncertainties of mine development are behind the business.