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December 22nd, 2022 | 11:21 CET

Barrick Gold, Desert Gold, Iamgold - Takeovers on the rise

  • Mining
  • Gold
  • Commodities
  • Investments
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The record year 2020, with highs of over USD 2,070 per troy ounce at the base price, filled the coffers of the large gold producers. Due to the correction that has been going on for 2 years, smaller and mid-sized mining companies lost more than 80% of their value, making them attractive takeover targets at a cheaper level. Recently, there has been an increase in acquisitions, which are likely to increase further in the coming months. A particularly high level of activity can be observed on the African continent at the moment, as the latest example shows.

time to read: 3 minutes | Author: Stefan Feulner

Table of contents:

    Iamgold - Acquisition completed

    The Managem Group is a pan-African, fully integrated mining group that has been developing and mining a balanced portfolio of gold and energy transition metals for more than 90 years. The Company, majority owned by Al Mada, a pan-African private equity fund, has expanded its portfolio with exploration and development projects in Senegal, Mali and Guinea. The seller of the "Bambouk" assets is Iamgold, a mid-tier gold mining company operating in North America, South America and West Africa. The Company has three mines in operation, Essakane (Burkina Faso), Rosebel (Suriname) and Westwood (Canada). It is building the Côté gold project in Canada in partnership with Sumitomo Metals & Mining, which is expected to be in production in early 2024.

    Under the terms of the agreements, Iamgold will receive cash payments totalling approximately USD 282 million for the Company's 90% interest in the Boto gold project in Senegal, 100% interest in the Diakha-Siribaya gold project in Mali, the Karita gold project and associated exploration properties in Guinea, and the Boto West, Senala West, Daorala early exploration properties and vested interest in the Senala option earn-in joint venture also in Senegal. The remaining 10% interest in Boto continues to be held by the Senegalese government. Boto has total indicated resources including reserves of 1.8 million ounces according to an optimized 2020 study.

    Desert Gold - Neighbor cashes in

    In close proximity to Desert Gold's property is Iamgold's divested Diakha-Siribaya gold project in Mali. The deposit consists of 8 contiguous exploration permits covering a total area of 596.5 sq km, located in the Kédougou-Kéniéba inlier of the West African Kraton region in western Mali along the borders with Senegal and Guinea. As of the end of 2018, total mineral resources on a 100% basis included indicated resources of 18.0 million tonnes grading 1.3 g/t Au for 744,000 ounces and inferred resources of 23.2 million tonnes grading 1.6 g/t Au for 1.2 million ounces.

    The gold mineralization is hosted in highly prospective metasedimentary, volcanic and intrusive rocks of the Birimian age near the Senegal-Mali shear zone. Comparing the acquisition's valuations to Desert Gold's CAD 8.18 million market cap, the Canadians should certainly be on the big producers' docket. With the SMSZ project in Mali, Desert Gold owns one of the largest non-producing land areas in West Africa at 440 sq km. Several producing mines are located in the neighbourhood, including those of Barrick Gold, Allied Gold, Endeavour Mining, and B2Gold. The SMSZ property hosts Measured and Indicated Mineral Resources totaling approximately 1.1 million ounces. A total of more than 23 gold zones have been discovered in the area to date, which will be developed and analyzed for economic grades.

    Next on the agenda is the commencement of a 35,000m drill program, which includes 10,000m of potential drilling aimed solely at resource delineation. Overall, Desert Gold intends to follow up and expand known gold zones, with plans to focus on Mogoyafara South and Gourbassi West North initially. Desert Gold believes these are the largest gold systems discovered on the SMSZ property to date. Desert Gold's shares have lost nearly 85% of their value since the 2020 high. Due to high demand, the current financing round was raised to CAD 4 million through the sale of 57,142,857 units at CAD 0.07 per unit. Proceeds from the financing will be used primarily for drilling at the Company's flagship project, SMSZ, in western Mali and for general working capital purposes.

    Barrick Gold - Restructuring completed

    Expansion is also moving forward at the world's second-largest gold producer. The Company announced that the restructuring of the Reko Diq project in Pakistan has been completed after the Supreme Court of Pakistan issued a favorable opinion and the necessary legislation came into effect. Reko Diq is one of the largest undeveloped copper-gold projects in the world and is 50% owned by Barrick, 25% owned by three state-owned companies, 15% owned by Balochistan Province on a fully funded basis and 10% owned by Balochistan Province on a freely carried basis.

    Barrick president and CEO Mark Bristow said the completion of the legal proceedings is an important step in advancing the development of Reko Diq into a world-class long-life mine that will significantly expand the Company's strategically important copper portfolio. "We are currently updating the 2010 feasibility study and the 2011 feasibility study for the project. This should be completed by 2024, with first production targeted for 2028," Bristow said.

    Barrick Gold's stock has been able to move well off its lows for the year. The next test is likely the currently still falling 200-day line at USD 18.33.

    Takeover activity in the gold sector increased significantly in recent weeks. Iamgold was able to sell a portfolio near the Senegal Mali Shear Zone for USD 282 million. Desert Gold, located in the immediate vicinity of its SMSZ project, should thus become attractive as a takeover candidate. Meanwhile, Barrick Gold is pushing ahead with the expansion of its copper portfolio.

    Conflict of interest

    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 hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author

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