The Greatland Gold (LSE:GGP) share price has been one of this year’s best performers. Since the start of 2025, it’s risen over 160%. This has helped push the group’s market cap (as of 13 June) to £2.18bn.
I’m certain much of this rally reflects the increase in the price of gold. During times of economic uncertainty, investors tend to buy the precious metal as it’s generally perceived to be a reliable store of value and a hedge against inflation.
Over the past 12 months, its price has risen 45%. At $3,391 an ounce, it’s currently not far off its 52-week high.
A huge opportunity
But most of the group’s gold lies deep beneath the earth’s surface and, at the moment, it has no way of selling it.
That’s because Greatland Gold’s biggest asset — the Havieron mine in Western Australia — isn’t yet producing.
Present estimates suggest that it contains 7m ounces of gold and 275,000 tonnes of copper. This makes it the second-largest undeveloped gold project in Australia.
At present prices, these metals have a retail value of over $25bn (£18.45bn).
Undoubtedly, there’s huge potential. However, revenue is not expected to be earned until 2028.
Here and now
In contrast to this, the group’s smaller Telfer project is up and running. In 2025, forecast production is 196-210 thousand ounces of gold and a small quantity of copper.
For comparison, Endeavour Mining’s expected to extract five to six times more from its mines in West Africa in 2025. And yet the FTSE 100 gold producer has a market cap of £5.64bn — ‘only’ 159% more than Greatland Gold’s stock market valuation.
This makes me think that investors are running ahead of themselves.
Lots of uncertainty
When Havieron’s producing at full capacity, I’m sure the group will be profitable and generating large amounts of cash. But we’re not there yet. And the group faces many challenges before the project becomes commercially viable.
In 2028, the gold price may be much lower than it is today. It’s only been regularly above $2,000 since early 2024. I wonder whether the present surge could be an unsustainable bubble. Any softening in demand could have a big impact on Greatland Gold’s share price.
Interestingly, the group has acquired put options to offer downside price protection for a significant proportion of output from Telfer — through until December 2026 – at an average price of A$$4,071 (US$2,634). That’s around 22% lower than today’s spot price.
Developing mines is also expensive. Although the group has a letter of support from a banking syndicate to provide a debt facility large enough to commercialise Havieron, it’s not legally binding.
The company itself cautions that “the timing of commencement of Havieron gold production remains subject to completion of the Feasibility Study, final investment decision and receipt of required approvals and permits within expected timeframes”.
But the group has ambitious plans to grow further. It’s already talking about expanding operations at Havieron and developing other projects in Australia. To help improve liquidity, it’s seeking a dual listing of its shares in the country.
I reckon if everything goes to plan over the next three years, Greatland Gold will be a very different company to what it is today. But taking a stake now would be too risky for me.
