Australian mining company Greatland Gold (LSE:GGP) is having a better 2020 than many other UK listed companies. In fact, if I’d invested £1,000 in the Greatland Gold share price a year ago, it would have netted me around 55,865 shares. Today they’d be worth approximately £16,201! That’s great news for committed shareholders.
The Greatland Gold share price is soaring
The AIM-listed company has had an exceptional year with success at its projects and excellent drilling results. The trouble with a small company like Greatland is that it needs to find the cash to continue exploration, which can often cause a downward share price slide. Thankfully, Greatland has continued backing from Newcrest Mining and investors can breathe a sigh of relief. The company has just signed two new agreements with Newcrest which will see it through a good part of 2021. And investors have responded very well to this news with the Greatland Gold share price soaring 30% in the past week.
Joint ventures and expansion plans
The first of these joint venture agreements is to expand and speed up its exploration activities at its Havieron gold-copper deposit. And the second is a farm-in and joint venture to develop Greatland’s Black Hills and Paterson Range East licences. Newcrest is also lending around $50m to the Havieron project via its Operations division. This loan will cover Greatland’s expenditure costs in the joint venture up to the completion of a feasibility study.
Shareholders have enjoyed outstanding returns this year, from the success at Havieron. So, both Greatland and Newcrest are delighted with progress. That’s why they’re looking to speed things up and continue expanding the project. Both parties believe the Havieron system still has great potential hidden in its depths.
Riding the bull run on gold
The price of gold has enjoyed an excellent price performance this year in response to the Covid-19 pandemic. This is because in times of economic uncertainty gold is seen as a safe-haven asset, causing cautious investors to buy it as a hedge against inflation. It has a little competition this year in the form of Bitcoin, but it’s still a favourite. Even gold ‘bear’ Warren Buffett got in on the action, buying shares in gold mining giant Barrick Gold. This was a completely unexpected move from the billionaire investor and one that really paints a picture of the uncertainty facing the financial sector.
The price of gold is currently sitting around £1,368 per ounce. This is down from its August high of £1,559 per ounce. The positive news surrounding vaccine distribution boosted share prices, bringing down the gold price. But even though vaccine rollout is likely to happen soon, I don’t think it will send the price of gold plummeting. Global debt is at levels never before recorded, and concerns about inflation will remain high until we do something about it.
It sounds like Greatland Gold has a lot to look forward to in 2021, and I’m tempted to invest. I also think the price of gold has further to travel, which would boost the miner’s share price even more.
Mining shares and AIM-traded shares are always a riskier option than FTSE 100 shares in safer sectors. But for investors like me who don’t mind a bit of risk and diversification, I think Greatland Gold shares look a good buy.