Good Havieron Results Aren’t Moving Greatland Gold Shares, GGP – Why?

Greatland Gold (LON: GGP) shares are largely unmoved (0.8% down) on the back of a further update of exploration results from Havieron. Those exploration results are generally encouraging, even good, so why isn't the Greatland share price responding to them? After all, a 0.8% move, within the spread, is something only of interest to those trading by the pip. So, why the general lassitude in that share price if the news flow is good, as it has been?

The answer is twofold. Partly it's the specific nature of the results that Greatland Gold keeps announcing. The other part is that, well, this is what happens with junior miners at this stage of development. Both need unpacking so here we go.

That first part is the specifics of the results that Greatland keeps announcing at Havieron. We know there's both gold and copper there. We know that it's there in concentrations suitable for mining. We're also reasonably sure that there's enough volume in total to make mining the site worthwhile. The current exploration programme is working on seeing how much larger the resources might be. So we're not really looking at a mine or not mine decision on the basis of these results. We're looking at a how large a mine decision. That's not exactly right but it's a useful way of thinking about it.

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Now, if Greatland announced that they'd found something to rival South Africa's Witwatersrand then of course GGP shares would soar. But they're not – they're announcing gradual extensions of the mineralisation that could be exploited. So each new announcement is a marginal addition to the prospects of the project – so Greatland share price movements in response to each piece of news are marginal. So much so that they might well be determined by entirely other factors – the general level of the markets, the gold price, outside influences that is.

This then bleeds into the second issue. Actual revenue from Havieron is still some to many years away. The value of the gold and copper that's there is therefore discounted by that time gap before production. We're also in the specific period of a junior miner's life where the process does not advance in keaps and bounds. Having found an interesting – probably mineable – deposit Greatland is at the stage where there's a wall of evidence being built. The aim is to create the unassailable case for raising significant capital to actually build and operate the mine. Each new piece of drilling, each new drill analysis, is another brick in that wall. There's no one piece of information here that creates that case – it's the whole pile of pieces that tips the decision.

So, the reaction to any one piece of news – barring some superfind – from Greatland Gold is muted. Simply because each new piece of information is adding to that pile of evidence which will lead to the exploitation decision.

What will move Greatland shares is news that is not marginal, is of a size that is unexpected. But then precisely because it needs to be unexpected we can't predict when that will arrive.