After a long wait for shareholders in Greatland Gold (GGP) for news on their collaboration on the Ernest Giles project in Western Australia with Newmont Mining, it was not the result they have hoped for. Instead of the expected multi-bagger on good news, the shares tanked 70% at one point from Friday close of 2.16p to a low of 0.6p, before rebounding to around 1p later after a YouTube video was released featuring Chief Executive Gervaise Heddle.
GGP said that
Newmont has informed the Company that its current corporate priorities are largely focused in other districts. Consequently, it has informed Greatland that it will not be proceeding with the project at this time. Newmont's six month right of first refusal over the Ernest Giles Project has already lapsed in accordance with the agreement announced 16 May 2017.
Newmont's DSG survey has been successful in defining a new large gold anomaly, covering an area of approximately 5km by 1.5km and untested by previous drilling.
Heddle helped the shares to recover by remininding investors that they had £4 million in place to start work on Ernest Giles in Q1 2018 to further prove up the asset and that a "Large 5km long by 1.5km wide gold anomaly identified, oriented in an east-west direction, that sits approximately 1km to the north of Greatland's previous drilling" and that " Several additional robust gold anomalies successfully identified, many of which have not been drill-tested".
Still this is bad news for GGP and a major setback. Although Ernest Giles may prove to be a great asset Newmont Exploration decided to walk and it was not surprising that the shares are 50% plus down. A positive result would have propelled the shares many times higher of course.
The Ernest Giles project has the potential to host a several multi-million-ounce gold deposit but this will take time to develop to a proven JORC resource and lots of $$$. The bounce from the lows of 0.6p was not unexpected, but a return to 2p will be many months away as more positive data will need to be released either from Ernest Giles or its other projects. The Newmont collaboration and potential buy-out or JV was a game changer which won't come along in the short term again but maybe in the medium-long term. Certainly the new data from Newmont will help GGP get another deal to develop the area underway but patience will be needed that's for sure. A very disappointing day for GGP shareholders, other than those buying in several months ago or at the open today.