Saturday, September 23rd 2023

Greatland Gold

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Australia-focused exploration and development business Greatland Gold have sent its investors on a rollercoaster ride over the last year, with operational updates lifting and battering its shares in equal measures. With Greatland soaring over the last month thanks to strong developments at three of its key licences, we take a look at what has been moving shares since October and ask whether the current goodwill is sustainable.

Greatland’s shares underwent a tremendous amount of turbulence between Q4 2017 and Q1 2018 thanks to developments at its 100pc-owned Ernest Giles project in Australia. The site covers a virtually unexplored 200km strike of gold prospective rocks where Greatland is targeting 5Moz deposits and clusters of 1Moz gold discoveries.

In October 2017, the company announced that it had identified multiple gold anomalies at the site, several of which had exhibited a strike length in excess of 9km and a width of up to 3km. Days after this, the firm applied for a new exploration licence to capitalise on its findings, while chief executive Gervaise Heddle further drummed up excitement by declaring: ‘We believe these results further highlight the potential for the Ernest Giles gold project to be one of most significant gold districts to be identified globally within the last decade.’

The market responded to the news fervently, and Greatland’s shares to rose from around 0.6p to a high of 2.3p in just over a week. However, this couldn’t last, and after teetering between 1.5-2p, the business crashed in January after announcing that Newmont, its work partner at Ernest Giles, was dropping the project.

Shares fell 65pc in just one session and efforts to reverse negative sentiment days later with news of a brand new planned exploration programme at Ernest Giles only made matters worse. In the space of just over a week, shares had fallen from 2.2p to 0.6p

Greatland remained under 1p until last month when it announced the discovery of multiple pieces of gold from surface in the first days of it maiden exploration campaign at its Black Hills licence in Paterson, Australia. Heddle said the results ‘far exceed[ed] our initial expectations’ before reporting that Greatland was reviewing a range of options to accelerate exploration as a result. Greatland has previously said Black Hills has the potential to host gold deposits similar to the nearby 27Moz Telfer mine.

The good news didn’t stop there, either, with Greatland announcing just days later that it had finally started the aforementioned drilling campaign at Ernest Giles, focusing specifically on three gold targets. The business also took the opportunity to report that it had received approval to drill a hole to test a nickel sulphide target at the project’s Carnegie licence.

Finally, on 25 June, Greatland announced ‘exceptional’ assay results from its Havieron licence, also in Paterson, that establishes the presence of high-grade gold within the area’s mineralised zone. It added that they highlight the potential for Havieron to represent an extensive mineralised system. It followed this up with more positive assay results in early July.

All-in-all, the raft of good news has seen Greatland’s share advance from 0.74p to their current 1.42p over the last month, a jump of more than 90pc.

So, with shares rising so much in recent weeks, is Greatland still worth a punt or has the ship sailed?

With a total of six 100-owned projects containing numerous prospects, the firm has plenty of potential sources of news flow, even if recent volatility has shown this is not always a good thing. More information about all of the licences can be found here.

Greatland is currently undergoing drilling programmes at both Havieron and Ernest Giles, both of which have been well received by investors. Earlier this week, it also announced plans to launch a new drilling programme at Black Hills following recent exploration success.

While we cannot predict what results will come out of these programmes, what we do know is that they are likely to generate newsflow over the coming months. If the sites can deliver any indication of the potential that Greatland believes they hold, then shares could enjoy a rise- especially if last month’s performance is anything to go by.

It is worth caveating this by pointing out that Greatland has not declared its cash balance since 31 December 2017, when its coffers were lined to the tune of £4.5m. With the business leveraging this strong financial position since then to accelerate exploration, it seems logical to assume that it now has less cash, given that it is not generating any revenues and has not raised money.

With that in mind, some investors will want to wait and see if the firm announces a placing before entering however financially the company is in better shape now than it has been for many years. Furthermore, with a current market cap of £43.1m, it seems the market is already ascribing considerable value to the firm’s portfolio. This point is more of a timing issue than a question of fundamentals. What remains clear is that Greatland has a collection of assets with strong indicative potential that already appears to have captured the market’s imagination.

You can see Andrew Scott talking to Gervais Heddle by clicking the link below
The author was not remunerated nor do they hold stock in the company