Should I pile into Greatland Gold (GGP) now the share price is just 7.25p?

As the price of gold nears its all-time high, Greatland Gold (LSE: GGP) may be worth considering if the share price near 7.25p shows it offers decent value.

However, there is a small problem with this. The Australian-based gold exploration and development business has not had a full trading year of revenue, never mind profits.

But that situation may be about to change.

Is this an opportunity, or what?

On September 10, the company announced a “revolution” to gain from Company Newmont Corporation The agreement says Greatland will buy the Telfer gold-copper mine and the remaining 70% of the adjacent Havieron gold-copper project, as well as other related interests in the Paterson region of Western Australia.

The two companies aim to finalize the deal by early December, so it’s close. But it is also expensive. The total consideration and repayment of the loan will be “up to” US$475m.

But that is just the beginning. Greatland has already raised $334m through an institutional placement and an offering to retail investors “subsidizing acquisitions and other uses”. This is the latest in a long series of fundraising events, each one purging existing shareholders.

Coming down the road, there is also the promise of a loan from the banking union: $75m for working capital, $25m for contingencies, and a total of $750m to finance the development of the Havieron project.

These are huge investments and shareholders have suffered so far in Greatland’s journey. The stock chart tells the story.

I have found in the past with these unprofitable mine development companies that the best time to invest is right in the first production. There is often plenty of time to find a decent entry price for a stock when the earnings are almost guaranteed.

Self-control has saved me from several investment disasters over the years.

That way, a lot of things that could go wrong in the development business used to – and that almost always happens, there are a lot of financial calls.

Wait, this one might be different

However, this situation seems unusual because the company buys almost ready for production. But how far from finishing the asset development part of the deal? Looks like there’s still a long way to go.

Chairman Mark Barnaba said Telfer’s acquisition is a positive one a “de-risk” near term mining plan. In addition, there is “big” ore stockpiles at the top and opportunities to extend mine life are attractive.

Most importantly, production from Telfer should generate free cash flow to support the development of the Havieron project.

Ownership of Telfer infrastructure “big” reduces the cost of completing Havieron’s development, Banaba said. Again “improves” the potential value of experimental success to the company “broad” Paterson assessment portfolio.

There is still risk here, so I would wait at least until the deal closes next month and possibly a few weeks and months after that before considering buying shares.

Nevertheless, Banaba considers that the company is in a good position to build a “generational mining complex and create shareholder value”. So I keep the stock on hold and intend to follow the news flow.