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Greatland Gold Gains Drilling Subsidy – Is This Important?

Tim Worstall
Tim Worstall trader
Updated 10 May 2022

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Key points:

  • Greatland Gold has been awarded a drilling subsidy
  • This is to explore the Rudall licence – something little is known about
  • The cash isn’t important, what it means could be
  • Greatland Gold Stock Forecast

Greatland Gold (LON: GGP) shares seem rather unexcited at the news that the company has gained a subsidy – sorry, a grant – in Australia. The reason for this is perhaps that it’s just not a material sum for a company of Greatland’s size. On the other hand, we can look at it as being a positive for future prospects.

Greatland’s announcement is that it has received a grant of up to AUS $200,000 from the Western Australia government. This is to co-fund drilling at the Rudall prospect. On the one hand we can think of this as being really not all that important. Greatland has, after all, a market capitalisation of £500 million and change, £115k is really neither here nor there at that sort of scale. Which could be one reason for no real move in the Greatland share price as a result.

Another way to look at this though is to suggest that it means Greatland is not sitting on its laurels. The Havieron site – which it is working with Newcrest upon – is at a much later stage of exploration and development and is the major portion of value within Greatland. But we never do really want a junior miner to find just the one site and then wait for value to be created on that one project. We’d far prefer that continued exploration take place to see whether other and further project can also be developed.

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This is where Rudall comes in. The base geology seems – and it is just seems at this stage of exploration – to be similar enough to Havieron, even perhaps an extension of it, that there’s a reasonable enough chance that there’s copper and gold there. As the exploration licence is already secured then why not go and have a look?

Yes, it’s nice that the government will pick up half the tab for that very first level of exploration but as above, that’s hardly a material consideration for Greatland. It de-risks the decision somewhat but that’s all. What does matter is that Greatland isn’t just awaiting any final decision on Havieron but is continuing to explore for further deposits.

At this stage, the value of Rudall is trivial – simply because even that very first and initial stage of exploration has not as yet been done. But then that’s rather the point of this current activity, to do that. So, Greatland Gold’s valuation is almost entirely, at present, dependent upon Havieron. But as exploration at Rudall continues there’s the possibility of a new find adding substantially to that. The absence of a new find won’t decrease the valuation, the presence of one would increase. And the government’s picking up half the bill to find out.

It’s not a material influence on the current Greatland Gold share price but it is an interesting development all the same.

Tim Worstall
Tim Worstall is a freelance writer specialising in economics and the financial markets.