Analysts split on whether this gold stock will go up – or down – 40%

Analysts at Macquarie and Jarden have run the ruler over this gold miner's newest project and came away with very different conclusions.

Key points
  • Greatland Resources has released a prefeasibility study into a new mine in WA.
  • The project will generate significant cash flows over 17 years.
  • Analyst teams at Macquarie and Jarden have come up with very different price targets on the company's shares.

Analysts are divided about the value of shares in Greatland Resources Ltd (ASX: GGP), after the company announced this week the outcome of a prefeasibility study at its Havieron project in Western Australia.

Greatland on Monday said the PFS had confirmed Havieron's "pathway to a world-class, long-life, lowest-quartile cost Australian gold-copper mine, leveraging existing Telfer infrastructure''.  

A few gold nullets sit on an old-fashioned gold scale, representing ASX gold shares.

Image source: Getty Images

Path to new mine clear

Greatland acquired the operating Telfer mine from Newmont Corporation (ASX: NEM) in late 2024, having earlier discovered the nearby Havieron deposit in 2018. It developed the deposit as a joint venture with Newcrest and then Newmont, before acquiring the project outright in 2024.

The company said in a release to the ASX on Monday that Havieron was expected to generate a steady state pre-tax cash flow of $739 million per year, and would aim to produce 266,000 ounces of gold per year.

The company expected to produce the first gold from the mine about two and a half years after making a final investment decision on the project, which would cost $1.065 billion to bring into production. The initial mine life has been estimated at 17 years.

Analysts divided on share price targets

The teams at Jarden and Macquarie have run the ruler over this week's announcement, and have come up with very different results.

Macquarie has an outperform rating on Greatland shares and a 12-month price target of $10.50, for a 39.1% return from current levels.

The Macquarie analysts stated that the release this week exceeded consensus estimates for production costs at Havieron and the rate at which it would ramp up to steady state production.

They went on to say:

We think further upside to Havieron could be revealed in time, as Greatland explores Telfer extensions and integration.

The team at Jarden were not so convinced, however, saying the base case outcomes for the Havieron study were below their estimates.

The Jarden analysts explained that they also had doubts around the time it would take to permit the project.

So, what were the key differences versus our ingoing forecasts that caused the decline in valuation? We remain cautious over the Greatland permitting timelines (which appear aspirational in our view), and have pushed out first production into FY29.

The Jarden team said the prefeasibility study largely confirmed that Havieron was a "high quality project'', and that the "abundant" cash generation from Telfer had largely derisked its development program.

But they believe Telfer will shortly deplete its high grade or stockpiles, increasing the challenge of keeping its mills operating at full strength.

The Jarden analysts have a price target of just $5 on Greatland shares, which would be a 39.9% decline from Monday's closing price of $8.32.

Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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