Barrick Gold, Desert Gold, Endeavour Mining - Is the gold price getting wings?

Barrick Gold - Official annual figures are just around the corner

At the world's second-largest gold producer Barrick Gold, the moment of truth strikes today, February 15, when the official quarterly figures are presented. Already on January 17, the production results were published. In Q4, production was 13% higher than in the previous quarter. Nevertheless, the annual production of gold remained just below the set targets, whereas copper reached the forecasted figures. In total, the Company sold around 1.1 million ounces of gold in the last annual quarter at an average price of USD 1,726. In copper, 99 million pounds were sold at an average of USD 3.63.

On February 9, the group issued an update on its gold reserves. Overall, reserves increased by 6.7 million ounces after deducting mining in 2022 at the same grade. The Company now has 76 million ounces of attributable proven and probable mineral reserves at a grade of 1.67 g/t. In addition, the Company's successful exploration at the Lumwana and Jabal Sayid mines resulted in a 640 million pound increase in attributable proven and probable copper reserves.

In January, 17 analysts looked at the stock. For 4, the stock was a Strong Buy, 8 recommended Buy, and 5 advised Hold. So overall, a Buy recommendation with an average price target of USD 22.32. The share recently bounced off the USD 20 mark and is currently trading around USD 17.93. Due to the dividend and share buyback program, larger discounts only seem possible in the event of a significant drop in the gold price. Since the state banks have recently bought more gold than in years, there is also a tailwind from this side.

Desert Gold - 2023 drilling program started

The share of Desert Gold has not yet been able to benefit from the rising gold price, which is probably due to the tax-loss season on the one hand, and on the other hand, due to the capital measure in December, which was completed on January 30. With this, the Company collected about CAD 2.3 million. It is interesting to note that management subscribed to 24.5% of the private placement itself. This can be taken as a sign that the boards have high hopes for the upcoming drill program at the SMSZ project in Mali, one of the largest properties in West Africa, with 440 sq km and a mineral resource of 1,079,000 ounces of gold.

On February 13, the Company announced the start of its 2023 exploration program, using auger drilling to investigate the Mogoyafara South gold zone. There, 412,000 ounces of gold have been proven, and the current drilling is expected to expand the gold system. The zone has the potential to host several million ounces of gold due to its geography. The first step will be to drill approximately 2,500 m in 325 holes to test the zone, which is 5 km long and has anomalous magnetism, for elevated gold values. The results will then be used to plan the next drill targets. To date, the zone has only been explored over an area of 1.6 x 0.8 km.

There is further potential here. There are 9 gold mines in the area surrounding the property. Most recently, B2Gold acquired Oklo Resources. Major gold producers are attracted by the low production cost of about USD 800 per ounce. If drill results are positive, the Company could come into the focus of the big players. For a more detailed analysis, visit researchanalyst.com, or watch the live Company presentation at the 6th International Investment Forum on February 15. Since early December, the stock has been running sideways between CAD 0.05 and CAD 0.065. Currently, one pays CAD 0.055 for a share certificate.

Endeavour Mining - Low-cost producer in Africa

Just like Desert Gold, Endeavour Mining is active in Africa. The Company is one of West Africa's largest gold producers, with six operating facilities in Senegal, Côte d'Ivoire and Burkina Faso, as well as a strong portfolio of advanced development and exploration projects in the Birimian Greenstone Belt in West Africa. Q4 and full-year 2022 figures were announced on January 23, 2023. A total of 355,225 ounces of gold were produced at an all-in sustaining cost of just USD 928 per ounce.

Compared to other major producers, the cost is almost USD 300 lower. For the full year 2022, the Company reported gold production of 1,410,407 ounces, exceeding its forecasts. Production should increase significantly from 2024 onward, as several mines are under construction and expected to begin operations this year. One of the Company's great strengths is its exploration work, which has repeatedly been crowned with success. As a result, Endeavour Mining is not dependent on acquisitions.

The Company's balance sheets look good, and they pay a dividend of USD 0.41, which is about a 3.4% dividend yield. It also had a share buyback program, from which about USD 24 million worth of shares were purchased in Q4. The stock has been dragged down somewhat in the wake of the recent drop in the price of gold. Currently, one share costs EUR 20.80 in Frankfurt. The high this year was EUR 22.80. However, the main trading place of the share is London.

Inflation declines slightly. The core rate in the consumer price index, which excludes food and energy due to their volatility, fell even more by 0.2%. So things are moving in the right direction. Now the FED has to make the next interest rate decision. Barrick Gold will disclose its quarterly and, thus, annual figures. One should keep a close eye here. Desert Gold has a lot of upside potential, and management seems confident in the success of their own company. Endeavour Mining produces the cheapest of all major gold producers but is still in the growth phase.