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June 16th, 2020 | 11:34 CEST

Barrick, Desert Gold, Endeavour Mining - Who benefits from the gold shortage?

  • Gold
Photo credits: pixabay.com

The production of gold is expected to reach its historic peak this year and from then on it will go down more or less dramatically. While the production of the largest producers was still below 80 million ounces in 2009, since then it has risen almost linearly to the volume of over 117 million ounces forecast for 2020. In 2029, not even 55% of this quantity is expected to be reached - with consequences for the gold price.

time to read: 2 minutes | Author: Mario Hose
ISIN: CA25039N4084 , CA0679011084 , KYG3040R1589

Table of contents:


    No production without exploration

    Anyone who wants to mine gold has to find it first. The origin of all gold production is exploration. Once the gold is discovered in the ground, the next step is to determine the size of the reserves. The goal of exploration companies is usually to discover quantities of gold in the ground that will allow the project to develop into an economically attractive production.

    Replacement for mined reserves

    Without success in exploration, mining will not be possible. For this reason, the big gold producers often keep an eye on the exploration scene, especially if they are located in the vicinity of producing mines. Everything that has been mined in the gold mine is logically gone. Conversely, the producers' reserves decrease with every ounce sold. This scenario is not abstract, but already reality. Since 2012, the reserves of the biggest producers have dropped 34% from 967 million ounces to 584 million ounces in 2019. The level of reserves is now less than in 2007 - before the first gold boom in conjunction with the financial crisis.

    Quality has its price

    Increased requirements and quality demands in connection with image building are also a major burden on production. As a result of accidents and environmental damage, producers and authorities have increased requirements and standards. In 2000, it took ten years before a discovery could go into production and ten years later the duration has increased to 20 years. In the meantime, it is expected to take 30 years before a discovery goes into production.

    Exploration benefits from rising prices

    The declining reserves of the producers let the prices for the take-overs of exploration companies rise as the gold price rises. The pressure on producers to act is constantly increasing. The exploration company Desert Gold Ventures has projects covering an area of 400 km2 in Mali. The company is surrounded by the following large mines: Fekola 7 million ounces, Gounkoto 4.4 million ounces, Loulo 9.8 million ounces, Sadiola 8.1 million ounces, Takakoto & Segala 3.3 million ounces and Yatela with 3.5 million ounces.

    Attractive takeover prices in Africa

    Desert Gold's prominent neighbors include B2Gold, Barrick Gold, Endeavour Mining and Resolute. As the exploration company has already discovered several gold prospects (2.04 g/t Au over 30 m, 3.03 g/t Au over 8 m and 6.28 g/t Au over 13 m), it stands to reason that the likelihood of an investment or acquisition by a producer from the region increases with further success from drilling programs. In 2018, takeovers in Africa averaged USD 200.33 per ounce in the ground. According to the presentation on the website, management is aiming for the discovery of up to six million ounces.


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    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.

    Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.

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    Der Autor

    Mario Hose

    Born and raised in Hannover, Lower Saxony follows social and economic developments around the globe. As a passionate entrepreneur and columnist he explains and compares the most diverse business models as well as markets for interested stock traders.

    About the author



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