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Greatland Gold (AIM:GGP) remains one of the most closely followed gold mining stocks on the London Stock Exchange, but why all the enthusiasm?

This week it announced two potential new targets for gold exploration on western Australia. Shares in Greatland Gold remain a long way off its 52 week high of 38.5p, so there is plenty of ground to make up.

A quick introduction to Greatland Gold. It is a mining and development company that explores for both precious and base metals. Its flagship asset is the world class Havieron gold-copper deposit in the Paterson region of Western Australia. This is currently under development in a joint venture with Newcrest Mining.

Altogether the company has six projects, located in Western Australia and in Tasmania. Most of the focus at the moment is on Havieron, which has a potential mineral resource estimate of 3.4moz (million ounces) of gold. There are also thought to be around 160,000 tons of copper.

What did Greatland Gold announce today?

Greatland Gold identified two priority targets in areas that it has 100% access to, in what is called the Canning application and the recently acquired Paterson South tenement. It has been carrying out initial survey activity and has detected evidence of potential gold-copper deposits. This is sufficient, the company said, to warrant further exploration activity at the site.

“These targets, which have never been drilled, are exciting opportunities situated within our expanded holdings in the Paterson district,” said Greatland Gold’s CEO, Shaun Day. “Both show strong magnetic and gravity anomalies, with characteristics analogous to the magnetic and gravity signature developed over Havieron.”

The targets sound very positive, and Day calls them ‘bullseye targets’. In mining parlance, that is the red shape in the middle of a geophysical survey that can indicate a good porphyry target for the miner. It means there is a concentration of rocks that looks very interesting.


Why do many investors remain in Greatland Gold?

Greatland Gold remains popular with mining investors for a number of reasons. Many believe that as inflation picks up globally, so gold mining stocks will rally. The entire sector has potential to see some big gains if that happens and the gold price takes off. Right now the gold price has struggled.

The company also has a track record in finding solid gold deposits that its partner Newcrest Mining can develop. It is working in an area of the world which is less prone to disruption, although like all miners, Covid can be a factor. The fact that it feels it could be onto something more in the proximity to an existing deposit is indeed exciting for investors.

Why has the share price struggled?

Greatland Gold’s share price reacted a little to the news today, but overall the stock is well down from where it was. The company was the darling for gold mining investors for a while back there. Back in December last year the share price was up at 34p but since then it has slumped. To be honest this is an issue facing many gold miners at the moment, with all eyes on the gold price and on inflation numbers. Even the Van Eck Gold Miners ETF, which tracks bigger gold miners, is down from a recent peak in May.

The gold price has struggled since early summer, and has not yet responded to rising inflation, although we have seen some upside action on the price in recent weeks.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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