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The GGP share price is down 45% in 2021. Should I buy?

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Nadia Yaqub
·3-min read
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Diggers and trucks in a coal mine
Diggers and trucks in a coal mine

CORRECTION: Two previous mentions of ‘the miner’ have been amended to ‘the exploration company’

The Greatland Gold (LSE: GGP) share price has fallen significantly since the beginning of the year. I’ve been bullish on the stock before and I’d still buy the shares in my portfolio. Here’s why.

Havieron

The real gem for GGP is its Havieron deposit. The company has announced consistent drilling success from this site. I reckon Havieron could be transformational for GGP.

In fact, in its recent interim results, the company stated that it’s carrying out further drilling at Havieron and is working toward commercial production at the site.

I think its worth noting that mining for gold is an expensive job. So GGP has joint-ventured with Newcrest for the Havieron deposit. To me, this makes sense to partner with a company that already has the resources.

Newcrest has even provided GGP with a $50m loan to fund the exploration of Havieron. I reckon GGP now has the adequate funds in place to commercialise this deposit.

Juri

Juri is GGP’s other joint-venture with Newcrest. This follows on from the success of Havieron. Juri consists of the exploration company’s Paterson Range East and Black Hills licences, which are to the north of Havieron.

The company has announced its initial 2021 work programme for the Juri join venture. This will include drilling several target areas in early April. GGP has identified the Paterson Range East and Black Hills licences as having similar potential to Havieron.

I guess time will tell if this is true as there’s no guarantee of drilling success. But if there’s gold, the Juri joint venture could also be transformational for the company and thereby the GGP share price.

Other licenses

I think it’s worth highlighting that GGP has other licenses that aren’t part of Havieron and Juri. These licenses are 100% owned by the exploration company, which include Scallywag, Rudall, and Canning.

Earlier this year, the GGP share price fell after the company’s initial drilling at Scallywag proved unsuccessful. I have mentioned this before, but not every hole dug will lead to gold. I think the main thing is that GGP is using the results from this initial drilling to source other target areas.

In fact, GGP has filed an application to explore a new region south-east of Havieron. This is the Canning license. It has not been approved yet, but I reckon it’s building upon the exploration momentum seen at Havieron.

If gold is found at the 100%-owned licenses, this would mean that all potential revenue and profits would go to GGP. The company now has the adequate resources to ramp up drilling at these other license regions.

Why has the GGP share price fallen?

2020 was a stellar year for the GGP share price. The success at Havieron along with increased appetite for gold during the pandemic pushed the stock to new levels. I think there has been some profit-taking and the drilling success news momentum has somewhat diminished.

GGP shares are highly speculative as the company is pre-revenue and loss-making. This stock is not for the faint-hearted and I’d only put in what I could afford to lose.

But I reckon there’s a lot going for GGP. The firm is well funded and is ramping up drilling, especially at its 100%-owned licenses. I think as a long-term investor, I’d buy the shares in my portfolio.

The post The GGP share price is down 45% in 2021. Should I buy? appeared first on The Motley Fool UK.

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Nadia Yaqub 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.

Motley Fool UK 2021