The Greatland Gold (LSE: GGP) The share price was extremely tough in 2021, down 46% from year-to-date. In the last one year, it has dropped by 12%. Nonetheless, the gold miner has consistently posted exciting updates in the wake of its world-class heavyweight deposits, which have not performed poorly due to the fall in the share price. Instead, I believe it has been due to the impatience of many shareholders and the bank’s desire for profit. This is especially true after the stock rose 1,800% in 2020. For example, after I initially bought some shares a few months ago, should I add more to my portfolio now?
What is the reason for yesterday’s strong performance?
There were a few reasons that increased 25% yesterday. First, the partners of Greatland Gold, Newcrest Mining, Announced that it intends to release the results of its pre-feasibility study from Haviron on 12 October. After a series of positive updates from these deposits, the results are expected to be positive, and hopefully, a decision to mine at some point may be made soon. This may increase the share price of GGP.
Second, the bank reiterated its buy rating for the Berenberg GGP, giving it a target price of 26p. This means that the stock has a potential rise of 32% from its current price. Thus, I think it could revive a lot of optimism in 2020, leading to a rise in GGP share prices. Hopefully, this optimism will continue in the future.
For other reasons
Despite these two things being positive, the 25% increase is still very large, and there is a possibility that some of these gains may be lost in the next few weeks. Indeed, GGP is still in its exploration stage, which means it is pre-revenue. Accordingly, it is incredibly difficult to price the stock and its current share price is based solely on speculation. Therefore, extreme instability is a possible consequence. This means that, despite the company’s potential, there are still plenty of risks.
In addition, if Xavier’s results are disappointing, it will significantly reduce the stock. This is because last year’s share price increase was dependent on its success in Xavier. Yesterday’s 25% increase showed that expectations are too high and there seems to be too little room for bad news.
Where is the GGP share price?
Due to the difficulty in finding an appropriate valuation, it is difficult to say where the GGP share price will go next. Still, I am willing to add shares to my portfolio. It is because of their incredible potential and hints that the company is sitting with a ton of gold. There are also encouraging results from other deposits like the pair joint venture. Hopefully, it can be seen that the company will start earning revenue at some point soon, which I think will have a very positive impact on GGP share prices. As such, even though I want to keep GGP as a small part of my portfolio, I am tempted to add some more shares.
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Stuart Blair owns shares in Greatland Gold. Motley Flower UK has no position on any of the shares mentioned. Opinions expressed in the companies mentioned in this article may differ from those of the author and therefore our official recommendation in our subscription services such as Share Advisor, Hidden Winner and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.