The Greatland Gold (LSE:GGP) share price was the star performer on Monday (10 February). Having risen steadily throughout the day, by early afternoon, the company’s stock was 10% higher.
And it looks as though President Trump can claim some of the credit.
That’s because gold prices hit a record high during the morning. The precious metal was pushed higher on news that America’s Commander in Chief wants to impose a 25% tariff on steel and aluminium imports into the US.
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However, at this stage, it’s unclear whether Trump intends to tax exports of gold from Australia to America. That would be a major blow to the company, albeit one that might not last for long. We’ve seen how Canada and Mexico have managed to negotiate temporary reprieves from threatened tariffs.
But some experts believe gold could climb to $3,000 an ounce. During times of crisis, it’s seen by some investors as a ‘safe haven’. Since the start of the year, it’s risen 10%.
A new era
But Greatland Gold only started production on 4 December 2024.
That was the day on which it secured 100% ownership of the Telfer and Havieron mining projects in Australia. The latter’s still in its development stage. However, Telfer was acquired as a going concern.
Since assuming full control of these mines, the company’s share price has risen 24%, from 7.5p to 9.34p. But this masks a particularly volatile period for the stock. On 20 December 2024, its shares were changing hands for 5.75p.
This level of volatility isn’t unusual for these types of stocks. I reckon mining is the most difficult industry in which to operate. There are numerous financial, operational, technical, and environmental risks to which companies in the sector are exposed. And this is often reflected in the topsy-turvy nature of their share prices.
A history lesson
Long-standing shareholders in Greatland Gold will be delighted that the company’s now starting to produce.
Next year will see its tenth anniversary as a listed company. And its journey is a good illustration of the major problem faced by early-stage mining stocks. Namely, the need to keep raising money.
It floated, in July 2006, with 100,550,000 shares in issue. Today, following numerous fund-raising rounds, it has 13,079,294,602 shares in circulation. A 5% holding at IPO would now be equivalent to 0.038%, assuming no further cash was invested.
However, with access to a $470m debt facility, the company should now be able to fund the commercialisation of Havieron — its so-called ‘flagship gold-copper project’ — without having to ask shareholders for more money. And cash flows from Telfer should also help.
Great potential?
Havieron is estimated to contain 8.4Moz (million ounces) of gold equivalent. At a current price of $2,981 (£2,404), this has a retail value of over £20bn. Of course, this doesn’t take into account the cost of getting the metals to the surface.
Endeavour Mining Corporation, the African gold producer, has an all-in sustaining cost of $1,140 (£919) an ounce. This isn’t a like-for-like comparison but it gives some idea of the likely costs involved.
Assuming all goes to plan, the pain of the various rights issues should be a thing of the past. Now, with a market cap of £1.2bn, Greatland Gold could be an excellent growth stock for investors to consider.
