Should I pile into Greatland Gold (GGP) now the share price is just 7.25p?

The Greatland Gold (GGP) share price could take off on the back of “transformational” operational progress, but I’m hesitant.

| 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.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

With the price of gold near its all-time high, Greatland Gold (LSE: GGP) may be worth consideration if the share price near 7.25p proves to offer decent value.

However, there’s a little problem with this one. The Australia-focused gold exploration and development business hasn’t yet scored a full trading year of revenue, never mind earnings.

But that situation may be about to change.

Should you invest £1,000 in Amc Entertainment right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Amc Entertainment made the list?

See the 6 stocks

Is this an opportunity, or what?

On 10 September, the company announced a “transformational” acquisition from Newmont Corporation. The deal means Greatland will buy the Telfer gold-copper mine and the remaining 70% stake of the near-by Havieron gold-copper project, plus other related interests in the Paterson region of Western Australia.

The two firms are aiming to complete the deal by early December, so it’s imminent. But it’s also expensive. The total consideration and loan repayment will be “up to” US$475m. 

But that’s just the start. Greatland has already raised $334m via an institutional placing and retail investor offer “to fund the acquisition and other uses”.  This is the latest in a long line of fundraising events, each one diluting existing shareholders.

Coming down the road, there’s also a promise of loans from a consortium of banks: $75m for working capital, $25m for contingencies, and a whopping $750m to finance the development of the Havieron project.

These are big sums of investment and shareholders have suffered so far in Greatland’s journey. The stock chart tells the story.

Created with Highcharts 11.4.3Greatland Gold Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

I’ve found in the past with these profitless mine-development companies that the optimum time to invest is right on the cusp of first production. There’s often plenty of time to get a decent entry price for a stock when earnings are just about a nailed-on certainty.

Holding back has saved me from several investment disasters over the years.

That way, many things that can go wrong in the development business have often done so — and that almost always seems to happen, with more calls for finance along the way.

Hang on, this one may be different

However, this situation seems a little unusual because the company is buying in at almost-ready production state. But how far from completion is the development part of the assets in the deal? It looks like there’s a long road to travel yet.

Chair Mark Barnaba said the acquisition of Telfer provides a “de-risked” near-term mine plan. On top of that, there are “substantial” ore stockpiles at the surface and attractive mine life extension opportunities.

Crucially, production from Telfer should generate free cash flow to support the development of the Havieron project.

Ownership of the Telfer infrastructure “substantially” reduces the cost of completing Havieron’s development, Banaba said. It also “enhances” the potential value of exploration success in the firm’s “extensive” Paterson exploration portfolio.  

There’s still risk here, so I’ll at least wait until the deal completes next month and possibly a few weeks and months after that before considering a purchase of the shares.

Nevertheless, Banaba reckons the company is well positioned to build a “generational mining complex and create value for shareholders”. So I’m keeping the stock on close watch and aim to follow the news flow.

AI Revolution Awaits: Uncover Top Stock Picks for Massive Potential Gains!

Buckle up because we're about to dive headfirst into the electrifying world of AI.

Imagine this: you make a single savvy investment in some cutting-edge technology, then kick back and watch as it revolutionises entire industries and potentially even lines your pockets.

If the mere thought of riding this AI wave excites you and the prospect of massive potential returns gets your pulse racing, then you’ve got to check out this Motley Fool Share Advisor report – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And here’s the kicker – we’re giving you an exclusive peek at ONE of these top AI stock picks, absolutely free! How’s that for a bit of brilliance?

Get your free AI stock pick

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 assessed. Consider taking independent financial advice.

Kevin Godbold 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

This FTSE AIM stock has £2.3bn in net cash, and a market cap of £2.4bn!

I love this FTSE AIM stock, but it really hasn’t delivered for me yet. The stock trades with crazily low…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

Down 15% in a week! Are these 5 FTSE 100 fallers screaming buys as markets plunge?

Five of Harvey Jones's favourite FTSE 100 stocks all have the same thing in common – they've fallen around 15%…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

2 stocks that have been crushed and now offer a ton of value

Edward Sheldon has been scanning the market for stocks that offer value after the sell-off. Here are two shares he…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

£10,000 invested in Aston Martin shares at Christmas is now worth…

Aston Martin shares have fallen from above £10 in early 2020 to pennies today. Is this the perfect time for…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Investing Articles

Up 5% in the last crazy week! Are these 2 income stocks the ultimate FTSE defensive plays?

Harvey Jones picks out two FTSE 100 dividend income stocks that have actually climbed while stock markets are heading in…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

2 beaten-down UK shares that now look really cheap

Looking for cheap shares to consider for the long term? These two British stocks offer a lot of value right…

Read more »

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

As stocks tank, is this a rare chance for ISA investors to get rich?

Shares have collapsed globally and valuations are becoming, on paper at least, a lot more attractive. Dr James Fox explores…

Read more »

Investing Articles

2 strong FTSE 100 dividend shares to consider as recessionary risks increase

Looking for secure passive income stocks to consider buying as thumping trade tariffs loom? Here are two FTSE 100 dividend…

Read more »