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?
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.
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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.
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.