Will the Greatland Gold share price rebound in 2023?

It has not been an exciting year for investors Greatland Gold (LSE: GGP). Its share price has fallen 36% over the past 12 months.

But from a long-term perspective, things look better. In the past five years, the stock has increased in value more than tenfold. What could happen next – and should I take advantage of weaker share prices to buy some portfolio?

2023 business prospects

Last year, the company approached production at its flagship project, the Havieron joint venture in Australia.

A feasibility study on the site is underway and I expect the company to announce the results this year. If it’s positive, it could trigger the share price to rise – perhaps dramatically.

But there are downside risks as well. Havieron is a key place of Greatland’s strategy. That’s why I see promising prospects as pivotal to the company’s medium-term success. If the feasibility study is disappointing, that could send the stock plummeting.

Main focus

Meanwhile, there is much else to get excited about Greatland?

Personally I don’t think so. As an investor, I see the Havieron project as the most interesting thing about the business, which has a market capitalization of over £400m. It is huge in size and dangles prospects of both gold and copper deposits.

Currently, the company has no commercial revenue. Developing mining prospects is not cheap. Last year, Greatland’s losses more than doubled to £11.4m. Net cash flow for the year was even greater at £34.9m. I expect cash out to remain high. It is unlikely that it will make any meaningful profits in the future, unless the company decides to dispose of unwanted assets.

Registration

So now I see a company with unclear long-term commercial prospects, no earnings and a cash burn. That doesn’t strike me as an attractive proposition. There is potential upside here, for example if Havieron’s feasibility study turns out to be very positive. But there are also many risks.

Investing in gold shares involves considering the price of the precious metal in general as well as the prospects of a particular company. The price of gold has been riding high. Copper is also performing strongly and the threat of a growing mismatch between demand and supply could push it higher in 2023. This could help the long-term value of the Greatland project and, in turn, the share price.

But commodity prices are likely to decline at some point in the future due to their cyclical nature. They are outside Greatland’s control. I feel the company offers potentially high rewards, but also more risk than I would like as an investor. So, even though I think the stock price may rebound this year, I have no plans to invest.