"Master Investor"8 Dec 2023 12:11
Gold’s recent almost doubling from its 6p lows is, I think, an enormous bear trap – set off by the spike in gold, in turn stimulated by the Palestine war and interest rate speculation and which might not continue, and by chartist mumbo-jumbo. Either way nothing has changed (yet) to make Greatland a less risky investment at current levels. There are still big traps ahead. The updated Havieron resource statement due soon won’t, I think, boost the shares as much as the hopefuls think. That is because most informed opinion doesn’t believe the mineable gold there will double and, more important but not appreciated by the hopefuls, is that even a larger resource, if it won’t be mined for a long time ahead as will be the case for what Havieron has been drilling, won’t be accorded nearly as much value as nearer term production. The reason is obvious. Who knows what costs and commodity prices will be that far ahead ?. And whatever is definitely monetised in the far future will have a heavily discounted present value today.
The second reason of course is the continuing uncertainty what Havieron’s new 70% owner, Newmont, will do with it. Opinion seems to be swinging towards its retention, rather than a ‘sale’ back to Greatland Gold. If so, Newmont’s plans for it won’t necessarily be in GGP’s favour, especially in regard to the timing of the necessary additional investment that an expanded mining plan and much higher costs looks certain to call for and which GGP at the moment can ill afford. Whatever outcome, it isn’t clear that GGP shareholders won’t avoid substantial dilution, at least in the medium term.
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