Could this penny stock be about to explode?

Jabran Khan delves deeper into this penny stock and wonders whether recent activity and news could mean a massive upturn in fortunes and its share price.

| 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.

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.

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?

Gold miner

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.

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.

Promise ahead

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.

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.

Jabran Khan 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

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »

Investing Articles

Investing £5 a day could help me build a second income of £329 a month!

This Fool explains how £5 a day, or one less takeaway coffee, could help her build a monthly second income…

Read more »