Greatland Gold PLC (LON: GGP) shares have been trading just under the 15 p mark for most of this month. As we pointed out about Greatland recently there’s a requirement for some new information to move the stock significantly from this trading range. Given the spread here 5% movements this way and that don’t provide interesting trading opportunities – movements of this sort of size get swallowed in the costs of moving in and out of the shares.
So, what’s required is some major news one way or the other to jolt Greatland out of this trading range. It would appear that the latest news from Havieron isn’t large enough news to do that. Greatland has announced – because its JV partner Newcrest so announced to the ASX – that further interesting mineralisations have been found at the Havieron site.
It has to be said that the numbers are interesting. 5.9 g Au, 7.1g Au, those are good and interesting numbers. Find any substantial deposit like that and it’s definitely game on. But then that’s also the problem.
For any junior miner – that’s someone prospecting or exploring rather than currently producing – there are a number of hoops that have to be jumped through. The first is that there has to be some mineralisation that’s worth digging up and processing. OK, 6 and 7 g per tonne Au, that passes that test at least in its first iteration. But there’s a long way to go after that.
Then it’s necessary to show that there’s enough of this mineralisation to make mining it worthwhile. This is still something that Greatland is exploring, or perhaps attempting to prove. There are, after all, fixed costs to doing anything and it’s necessary to show that those can be covered, however rich some small seam might be.
Following all of that, it’s then necessary to show that the capital to undertake the adventure is available. Finally, that production can be sold at a profitable price once the system is fully up and running. One advantage with gold is that a new mine entering the market isn’t going to change the global price, something that isn’t, often, true of more minor metals.
The net effect of this is that changes in the mineralisation results can have very minor effects upon a share price, as here at Greatland. Simply because there’s so much of a long process still to come. Of course, this would be different if the announcement were of something comparable to the South African reefs but that’s not being claimed in the slightest.
It’s still a reasonable view that for the Greatland Gold share price to move significantly either way there needs to be some significant news either way. What the news is going to be – and when – is what determines the speculation and the trading position.
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Tim Worstall is a freelance writer specialising in economics and the financial markets.