Greatland Gold Plc

Greatland Gold PLC (GGP) is a London-headquartered, mineral exploration and development company and focused on gold in Tasmania and Western Australia. The operations of the group are differentiated in two operating segments, namely the UK and Australia.

Investment Highlights – Expensive at GBX 16.50

• Trading near 52-week high and P/E, P/CF and EV/EBITDA metrics are in the negative zone.
• The Company is non-revenue generative, and the Board does not intend to declare a dividend. Also, the profitability margins have remained stagnant or declined.
• Currently, the Gold prices are trading close to their all-time highs, and any correction from hereon can have a negative impact on the Gold stocks in the near term.

Key Risks

• Moreover, the directors identified certain risk related to COVID-19, which can lead to complete production shutdown, perils to employee health, and delay in supply of materials and equipment.
• The prices of commodities in which the company markets and explores can be subject to significant fluctuations, which can lead to a significant impact on the financials and affect the business assumptions.

Recent News

On 1 September 2020, the Company announced that it issued 11.9 million new Ordinary Shares of 0.1 pence each, which have a total consideration of £297 thousand.

On 27 August 2020, it announced the appointment of PKF Littlejohn LLP as an Auditor, with immediate effect.

On 19 August 2020, the Company stated the drilling campaign would initially focus on high-priority targets within the prospect. Once the initial phase of drilling is accomplished, it expects to drill additional high-priority targets on the Paterson Range East and the Black Hills licences.

Financial Highlights (for the six months to 31 December 2019 - H1 FY20)

(Source: Company Website)

• As the Company is still in the exploration phase, no revenue was recorded during the current period.
• It has raised £4.2 million in strategic financing to accelerate exploration in the Paterson region.

One Year Share Price Chart

 1-Year Chart as of 3 September 2020, before the market close (Source: Refinitiv, Thomson Reuters)

Technical Analysis

From the technical standpoint, 14-day RSI is currently close to the overbought zone, which means there is a likelihood for a short-term correction in the stock price.

Conclusion

The Company achieved high-grade results from Newcrest drilling majorly conducted last year. It has a decent financial position and continued its Paterson exploration programmes in 2020. Greatland Gold would continue to focus on moving the portfolio of assets up the value curve, with regards to its recent discovery of gold-copper deposits in Australia.

The fundraising has significantly strengthened the balance sheet. However, the Company is in the development stage and do not generate any revenue for the period. The profitability margins have remained stagnant or declined.

The Company is trading near a 52-week high, raising doubts at the upside potential at current prices. Furthermore, the Company’s Price/Earnings, EV/EBITDA and Price/Cash Flow multiples are in negative zone as compared to the industry multiples. The stock made a 52-week low and high of GBX 1.51 and GBX 16.60, respectively.

Based on the factors as highlighted above, we believe the stock of Greatland Gold is “Expensive” at the current price of GBX 16.50 (as on 3 September 2020, before the market close GMT 1:45 PM), with support from few catalysts needs to be evaluated at a later stage.

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