Five years ago, most investors, including this author, wouldn’t have touched the GGP (LSE: GGP) share price with a bargepole. Greatland Gold’s shares were changing hands for less than a penny, and the firm didn’t have any tangible business model.
However, as it turns out, ignoring this business five years ago was a big mistake. Since the beginning of 2016, the stock has increased in value by 46,330%. No, that’s not a typo!
According to my calculations, this suggests every £1,000 invested in the GGP share price five years ago is worth nearly half a million pounds today. I think this makes the stock one of the best performing investments on the London market for the past decade.
The big question is, whether or not this can continue. I think it can because the company is only just getting started.
GGP share price progress
I will admit that avoiding this business for the past five years was a grave mistake. Nevertheless, I believe that the company will continue to be a good investment over the next decade.
At the beginning of 2016, GGP was a highly speculative investment. But this has changed over the past 12 months. The company now has a proven resource and deep-pocketed partner. In my opinion, these two qualities have entirely altered the investment case here. Tangible assets and the potential for serious profitability now back up the GGP share price.
What’s more, five years ago, it wasn’t easy to project if the business would ever earn an income. Now we know it is aiming to do so within the next three years.
Only this week, the company’s partner at its flagship Havieron project in Western Australia, Newcrest Mining, gave the green light to $112m of initial funding for the construction of mining infrastructure at Havieron. Newcrest’s experts believe that production will begin within at least three years from the commencement of this construction. To put it another way, it looks as if Havieron will be producing cash for both of its partners by 2025. I believe this will help underpin further positive performance for the GGP share price.
Further growth ahead
While the gold miner has made tremendous progress over the past five years, it still has some way to go before it becomes a profitable enterprise.
As such, I’m cautiously optimistic about its long-term potential. I think the GGP share price may continue to rise from current levels as the business pushes ahead with its construction projects. However, I want to keep an eye out for setbacks, which could significantly impact sentiment towards the company.
Still, overall, I think the business is only really just getting started. Suppose Havieron turns out to be as lucrative as initial estimates suggest. In that case, I reckon the GGP share price could continue its multi-year rally and produce additional positive returns for investors in the years ahead.
The post Here’s how much £1k invested in the GGP share price 5 years ago would be worth today appeared first on The Motley Fool UK.
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.
Motley Fool UK 2021