In 2020 the Greatland Gold (LSE:GGP) share price erupted, climbing from 1.93p to 32.5p. That’s an extraordinary return of nearly 1,600% in the space of a year. But since then, the share price has been on a bit of a downward trajectory. In fact, over half of this gain has been wiped out in the last 12 months alone.
What happened? And will the stock recover in 2022 or beyond? Let’s explore.
The rise and fall of the GGP share price
As a reminder, Greatland Gold is a late-stage exploration business operating out of Western Australia. The GGP share price quickly gained momentum after the group discovered a massive gold and copper deposit. A mineral resource estimate placed the total at 4.2 mega ounces of gold equivalents. The project is called Havieron, and based on today’s prices, it’s worth around £5.6bn!
This revelation was understandably exciting. So, it’s easy to see why the share price exploded as a consequence. But despite the company releasing further encouraging drilling results, the stock hasn’t been able to maintain its gains.
This is also hardly surprising to me, given the momentum originated from expectations rather than fundamentals. Yes, the company continues to deliver solid evidence of a literal mountain of wealth. But extraction won’t actually start until 2024. And that’s assuming the complete feasibility study to be released in December this year comes back with positive news.
In my experience, expecting most investors to remain patient for four years is a big ask. So, I’m not surprised to see the GGP share price tumble after the initial excitement died down.
Another source of growth?
Beyond its flagship Havieron project, Greatland Gold has another potentially exciting opportunity up its sleeve. The final results from its Juri Joint Venture 2021 exploration programme recently came in.
The company encountered a 60-metre-thick anomalous zone of low- and medium-grade copper-gold mineralisation. This potentially means it may have just discovered the edge of a larger higher-grade deposit. Meanwhile, a ground electromagnetic survey was completed, identifying additional targets for the group’s 2022 drilling programme.
This is obviously encouraging news. And there’s speculation that the Juri Joint Venture could be a second Havieron. However, this project is still in its infancy, with plenty that can still go wrong. Even if the 2022 drilling results come back positive, it will be years before any extraction can start taking place.
Will the stock soar in 2022?
I don’t think the GGP share price will be returning to its 2020 highs this year. Once the feasibility study for Havieron is completed in December, it could reignite investor interest, providing no viability issues are uncovered. It might soar, of course. But even if that’s the case, there’s no guarantee that any gain in the share price will be sustainable. This is a pre-revenue business, after all. And it will remain that way until it starts digging precious metals out of the ground.
That’s why I don’t expect a lasting surge in the price and won’t be adding any shares to my portfolio at this stage.