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 3i Group Plc 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 3i Group Plc 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.

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

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. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

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. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

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.

More on Investing Articles

Fans of Warren Buffett taking his photo
Investing Articles

With value investing back in vogue, I’m taking a leaf out of Warren Buffett’s playbook

With tariffs and trade wars resulting in heightened market volatility, Andrew Mackie takes comfort in Warren Buffett’s words of wisdom.

Read more »

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

Around a 1-year high, is there enough value left in Next’s share price to make it worth me buying?

Next’s share price has risen a lot in eight months, but there could still be a lot of value left…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

OMG DYOR but IMO this ‘cool’ FTSE 100 stock offers bangin’ VFM!

Despite being one of the least trendy 50-somethings around, our writer considers how Gen Z could help push this FTSE…

Read more »

Investing Articles

2 cheap FTSE 100 and FTSE 250 growth stocks to consider as stock markets sink

I think these Footsie and FTSE 250 growth shares could be very shrewd buys to consider in the current climate.…

Read more »

Investing Articles

3 shares I’ve bought in the 2025 stock market sell-off

The stock market has experienced a lot of turbulence in recent weeks. Edward Sheldon has been taking advantage and buying…

Read more »

Investing Articles

Investors considering HSBC shares could aim for £8,453 a year in passive income from just £5 a day!

A relatively small daily investment in HSBC shares over several years can produce an extraordinary level of annual passive income…

Read more »

Investing Articles

The Rolls-Royce share price has fallen! Is this the moment investors have been waiting for?

Even the Rolls-Royce share price can't escape current stock market volatility, falling slightly over the last week. Should investors consider…

Read more »

Modern suburban family houses with car on driveway
Investing Articles

Down 59% from its 12-month highs, is this FTSE 250 stock too cheap to ignore?

Shares in FTSE 250 housebuilder Vistry are almost certainly too cheap to ignore. But are they discounted enough to offset…

Read more »