The Motley Fool

Why I’d consider buying GGP shares

Image source: Getty Images.

I believe the Greatland Gold (LSE: GGP) share price has the potential to generate enormous returns for investors in the medium term. Today, I’m going to explain why I think this is the case. 

GGP share price

This year, shares in the small-cap mining company have been on a tear. The stock has risen tenfold since the beginning of the year. 

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

The GGP share price has benefited from several tailwinds in 2020. These include the rising gold price and progress at the company’s key assets. The firm’s larger market capitalisation has also put it on the radar of larger investors. These investors are often prevented from investing in smaller companies. 

The bigger universe of investors has helped increase awareness of the GGP share price and its prospects. 

Greatland’s prospects are exciting. The company’s primary asset is its Havieron prospect in Australia. This has been described as a “unique” tier-1 gold asset by analysts. 

Drilling and exploration activity at the prospect suggest it could have the potential to produce as much as 4.2m oz of gold and 120,000 tonnes of copper, according to analysts. 

Unfortunately, the company doesn’t own all of this prospect. It struck an agreement with gold mining giant Newcrest, whereby the latter would provide experience and funding in return for a stake in the project.

While this does mean Greatland’s upside is capped, is has helped the business develop. In my opinion, it was a sensible trade-off. Without Newcrest on board, the group may have struggled to move forward with Havieron, and the GGP share price may have suffered. 

Still, despite its reduced stake, analysts believe Greatland’s share of the project could ultimately be worth $709m. On top of this, the gold mining group’s Scallywag prospect, where drilling has just started, could be worth $100m. 

Price potential 

These projections are just forecasts at present. But they give us some idea of how much the GGP share price could ultimately be worth. Together, the numbers suggest the two assets are worth $809m or £622m. 

At the time of writing, the firm’s market capitalisation stands at £651m. This implies the company is fairly valued at current levels. However, these figures don’t give any credit to potential upward revisions in resource estimates.

It’s clear Havieron is a high-quality asset, and it could ultimately produce much more gold than initial projections are suggesting. What’s more, exploratory work at the Scallywag project has only just started. 

As such, I reckon there’s a high chance any better-than-expected drilling results could lead to a big jump in the GGP share price. The stock appears to be fairly valued at current levels, and any other positive news could see it jump substantially as analysts rejig their forecasts.

There’s also the prospect of a complete takeover. Any buyer would have to pay a significant premium over the current share price based on the numbers above, in my opinion. 

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Rupert Hargreaves 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.