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The Greatland Gold (LSE:GGP) share value was the star performer on Monday (10 February). Having risen steadily all through the day, by early afternoon, the corporate’s inventory was 10% greater.
And it seems as if President Trump can declare a number of the credit score.
That’s as a result of gold costs hit a file excessive through the morning. The dear steel was pushed greater on information that America’s Commander in Chief desires to impose a 25% tariff on metal and aluminium imports into the US.
Nonetheless, at this stage, it’s unclear whether or not Trump intends to tax exports of gold from Australia to America. That might be a significant blow to the corporate, albeit one that may not final for lengthy. We’ve seen how Canada and Mexico have managed to barter momentary reprieves from threatened tariffs.
However some specialists imagine gold might climb to $3,000 an oz. Throughout occasions of disaster, it’s seen by some traders as a ‘secure haven’. Because the begin of the yr, it’s risen 10%.
A brand new period
However Greatland Gold solely began manufacturing on 4 December 2024.
That was the day on which it secured 100% possession of the Telfer and Havieron mining initiatives in Australia. The latter’s nonetheless in its growth stage. Nonetheless, Telfer was acquired as a going concern.
Since assuming full management of those mines, the corporate’s share value has risen 24%, from 7.5p to 9.34p. However this masks a very unstable interval for the inventory. On 20 December 2024, its shares had been altering arms for five.75p.
This degree of volatility isn’t uncommon for these kind of shares. I reckon mining is probably the most tough trade through which to function. There are quite a few monetary, operational, technical, and environmental dangers to which firms within the sector are uncovered. And that is typically mirrored within the topsy-turvy nature of their share costs.
A historical past lesson
Lengthy-standing shareholders in Greatland Gold shall be delighted that the corporate’s now beginning to produce.
Subsequent yr will see its tenth anniversary as a listed firm. And its journey is an effective illustration of the main downside confronted by early-stage mining shares. Particularly, the necessity to hold elevating cash.
It floated, in July 2006, with 100,550,000 shares in problem. In the present day, following quite a few fund-raising rounds, it has 13,079,294,602 shares in circulation. A 5% holding at IPO would now be equal to 0.038%, assuming no additional money was invested.
Nonetheless, with entry to a $470m debt facility, the corporate ought to now have the ability to fund the commercialisation of Havieron — its so-called ‘flagship gold-copper challenge’ — with out having to ask shareholders for more cash. And money flows from Telfer must also assist.
Nice potential?
Havieron is estimated to comprise 8.4Moz (million ounces) of gold equal. At a present value of $2,981 (£2,404), this has a retail worth of over £20bn. After all, this doesn’t bear in mind the price of getting the metals to the floor.
Endeavour Mining Company, the African gold producer, has an all-in sustaining value of $1,140 (£919) an oz. This isn’t a like-for-like comparability nevertheless it offers some concept of the seemingly prices concerned.
Assuming all goes to plan, the ache of the assorted rights points must be a factor of the previous. Now, with a market cap of £1.2bn, Greatland Gold might be a superb progress inventory for traders to think about.
