Could this penny stock be about to explode?

Jabran Khan delves deeper into this penny stock and wonders whether recent activity and news could mean a massive upturn in fortunes and its share price.

| More on:

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.

The Greatland Gold (LSE:GGP) share price journey has been a roller-coaster ride in the past 18 months or so. With some recent positive news, could this penny stock be on the cusp of exploding and should I add shares to my portfolio?

Gold miner

Greatland is a gold miner that is still very much in its infancy in its journey. I say this as it is still in its exploration phase. Essentially, this means that mining has not actually begun just yet. GGP is undertaking a drilling process to determine whether or not its chosen sites and projects would be viable.

As I write, shares are trading for 19p per share. Penny stocks are those which trade for less than 100p per share. In 2020, it experienced a 1,700% share price increase. Shares rose from 2p per share to 36p between January and December 2020. The primary reason for its share price halving to current levels is due to the volatility of gold prices. Gold has fallen in price recently, negatively affecting share prices of gold miners.

Promise ahead

Greatland has revealed that drilling on its prominent sites is revealing positive results. Its flagship project at Haverion (a joint venture with Newcrest) is showing signs that there could be over 4m ounces of gold. Based on current prices, that equates to approximately £5.6bn in gold. I believe GGP will make the decision to mine at the Haverion site soon. This could result in a sharp share price rise in my opinion.

Other Greatland projects are also showing promise too. The Juri venture (another joint venture with Newcrest) was recently reported to have found gold mineralisation in the area. This site could be commercially viable for GGP. This is also the case at its other project at Scallywag where GGP has commenced drilling too. Scallywag is a 100% Greatland owned project, however.

Penny stocks carry huge risks

I believe the Greatland Gold share price could explode if these projects bear fruit. As a savvy investor, I would be naive to ignore the risks.

Firstly, Greatland is in a position financially where it is relying on established gold miner Newcrest at its most prominent projects. It may find itself unable to finance projects which could mean running out of money and shareholders being left high and dry.

Furthermore, if Greatland decides not to mine at its most promising sites despite the recent good news, this could be catastrophic for investors. I do not believe this will happen, however. A lot of its share price increase in 2020 was based on progress at its Haverion site and expected success there.

Greatland Gold excites me as a penny stock with huge potential upside in my opinion. I would be willing to risk some of my money to invest in a small amount of shares. I understand there will be some volatility but based on Greatland’s current share price, I would be willing to take a chance and add shares to my portfolio.

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 considered so you should consider taking independent financial advice.

Jabran Khan 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.

More on Investing Articles

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

With a spare £500 I’d buy these UK shares

A financial services giant, a FTSE 250 distributor, a FTSE 100 tech stock, and a gold miner are on the…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Should I buy this defensive FTSE 100 stock for growth and returns?

This Fool takes a closer look at a FTSE 100 stock to see if it could boost his holdings via…

Read more »

Young female analyst working at her desk in the office
Investing Articles

I robbed Mr Market of this cheap FTSE stock!

This FTSE 250 stock has crashed by almost 30% in six months. But I recently bought into this battered business…

Read more »

Mature people enjoying time together during road trip
Investing Articles

3 reasons I’m backing NIO shares to soar!

NIO shares have bounced up and down this year. But where will the share price go next? My bet is…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Up 300%, is the Hurricane Energy share price an opportunity too good to miss?

This Fool looks at why the Hurricane Energy share price has soared in the past 12 months. Should he buy…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

The BT share price crashes 20% in a month. Buy now?

The BT share price has crashed by almost a fifth since coming close to £2 on 12 July. After this…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

How I’d invest £1,000 in growth shares today to target £5,000 in a decade

Our writer reckons he could do well by choosing the right growth shares today and holding them in his portfolio…

Read more »

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

How passive income from stocks can speed up early retirement

By investing patiently over the years, buying quality shares has given me enough passive income to retire 10 or even…

Read more »