28. February 2020 | 05:58 CET
B2Gold, Desert Gold, RosCan Gold - who will be taken over next?
The price of a troy ounce of gold has risen significantly over the past 12 months. Based on the USD, the precious metal has risen from below 1,270.00 to over 1,650.00 per troy ounce. In comparison, the value converted into EUR rose from under 1,150.00 to over 1,500.00. Over a ten-year period, the price of the troy ounce of gold rose by 48.18% in USD and by as much as 83.00% in EUR. As a fear indicator, this price development speaks a clear language. It is therefore advisable for investors to look at the value chain of gold.
time to read: 2 minutes by Mario Hose
Profits with takeover candidates
The extraction of gold in a scalable and investable style is a long road. Typically investors participate in exploration companies when they want to achieve the highest potential in a discovery and subsequent acquisition by a producer. It is important that the region and the projects can demonstrate sufficient potential for gold deposits, so that it is worthwhile for a buyer to enter.
Typically, exploration companies or projects are acquired by gold producers so that reserves can be increased to ensure future production. Exploration companies are particularly exciting in regions where gold producers are already active in the neighbourhood.
B2Gold produces in Mali
In June 2014, gold producer B2Gold announced a USD 570 million takeover bid for exploration company Papillon Resources to gain access to the Fekola Gold Deposit of over 5 million ounces in Mali. The region in West Africa was already interesting back then. B2Gold paid with own shares and therefore Papillon shareholders could continue to benefit from the development of the area.
The share price of B2Gold has doubled since then and those who invested in Papillon early enough were able to increase the value of their investment at least tenfold. The market value of B2Gold was most recently around CAD 6.1 billion.
Desert Gold expands discoveries
Desert Gold Ventures is a gold exploration company with areas in Mali and management plans to discover a deposit of between 1 and 6 million ounces of gold in the coming years. This is usually done through numerous drilling programs and the data obtained from them. The Company has recently successfully completed a program of 74 drill holes and 3,507 metres and has identified several new areas of gold mineralization.
Specific intercepts include 10 metres at 3.03 g/t Au and 30 metres at 2.04 g/t Au. This allows the Company to follow up on previous successes when a grade of 6.3 g/t Au was discovered over 13 metres. The market capitalization of Desert Gold Ventures is approximately CAD 15 million.
RosCan Gold confirms further mineralization
Another exploration company in the Malian neighborhood, on the border with Senegal, is RosCan Gold. The company has also identified numerous gold mineralizations in a program of 50 drill holes and 2,773 metres in length. Highlights include the discovery of gold over a length of 88 metres at 3.18 g/t AU.
This region of Mali appears to have attractive gold deposits. The country is now the fourth largest gold producer in Africa and was able to produce a total of 2.14 million ounces in 2018. The gold deposits in Mali are estimated at over 35 million ounces. RosCan Gold has a market value of approximately CAD 30 million.