January 11th, 2023 | 13:03 CET
Barrick Gold, Desert Gold, Newmont - Gold shares on the rise
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"[...] We quickly learned that the tailings are high-grade, often as high as 20 grams of gold per tonne; because they are produced by artisanal miners, local miners who use outdated technology for gold production. [...]" Ryan Jackson, CEO, Newlox Gold Ventures Corp.
Barrick Gold - Quarterly results on February 15
In addition to the positive factors listed above, there is still a rumor that Russia wants to sell 2 barrels of oil for 1 gram of gold, which would drive the gold price towards USD 3,600. Central banks are buying more gold than they have in a long time, further fueling this rumor. For Barrick Gold, this is good news because, in parallel, the oil price is falling. That immediately lowers the operating costs and increases the margin when the gold price rises. On January 10, the group announced its release date for quarterly results for February 15, and preliminary information regarding production, sales and costs is to be released as early as January 17.
Operationally, things are going well. One of the world's largest undeveloped gold deposits, the Reko Diq project in Pakistan, has been given the green light for mine construction. Production there is scheduled to start in 2028. By contrast, the mines of the joint venture with Newmont in Nevada are already active. Higher production volumes are expected there in the coming year. Barrick holds 61.5%, while Newmont has to make do with 38.5%. But also, fundamentally, the Company is now in a good position.
The debts have almost been reduced, and about 1% of the outstanding shares have been repurchased in the first 9 months of 2022. In addition, the dividend has been raised. Although the gold price was weak in October, November and December should have more than made up for it. The stock has gained almost 50% at its peak since the beginning of November and is currently priced at USD 18.97. With the opening of the Chinese economy, copper could also be in much higher demand again.
Desert Gold - Financing underway
Desert Gold owns a 440 sq km land package in the Senegal-Mali shear zone. It is associated with 11 gold deposits, 9 of which are currently being mined. The area's geology is similar to the nearby Sadiola/Yatela and Sabodala mines. It contains Measured and Indicated Mineral Resources of 8.47 million tonnes grading 1.14 g/t gold (totaling 310,300 ounces) and Inferred Mineral Resources of 20.7 million tonnes grading 1.16 g/t gold (totaling 769,200 ounces). There are 24 known gold zones, 19 of which have experienced minimal exploration. In order to expand the mineral resources, the Company plans to undertake a USD 4 million exploration program, including drilling of approximately 30,000m. A resource update is expected in the fourth quarter of 2023.
The planned drilling will cost money, so on December 14, 2022, Desert Gold announced that it had raised financing, subject to Toronto Venture Stock Exchange approval, for a total of 57,142,857 shares at a price of CAD 0.07 per unit. That will add up to CAD 4 million to the coffers. At the time of the announcement, subscription warrants for 32,717,184 shares were already on hand. In addition, each investor will receive one warrant. The boards of the Company participated with 8,128,571 shares. Drilling is expected to commence at the Gourbassi West North Gold Zone as soon as the transaction is completed.
The sooner the resource estimate can be raised, the sooner the Company will appear on the radar of the larger gold producers. In December, Managem purchased exploration rights in Senegal, Mali and Guinea from Iamgold Corporation for CAD 282 million. The project is also located in the Senegal-Mali shear zone and is not far from the Desert Golds property. The stock is currently under pressure due to financing and can be purchased at CAD 0.05, below the private placement price.
Newmont - In the Dow Jones Sustainability World Index
Newmont is the largest gold producer in the world by market capitalization. After energy costs rose and the price of gold fell rather than rose, Newmont's stock lost over 56% at its peak. But since the gold price has been rising, Newmont has also been on the upswing again. The Company has already moved 40% away from its lows. The group is active in Africa, Australia and North and South America. In addition to gold, it also mines silver, copper and other metals. Thus, the Company is broadly positioned.
On December 13, the Company was included in the Dow Jones Sustainability World Index for the 15th consecutive year, achieving the highest score of all metals and mining companies. This shows how serious the Company is about implementing ESG criteria. In the last quarter, the group reported production of 1.49 million ounces of gold and 299,000 ounces of gold equivalent from by-products. Gold costs were USD 968 per ounce, and total sustaining costs were USD 1,271 per ounce.
Fourth quarter numbers will be released on February 23, and chances are, like Barrick, they will be decent. It will be interesting to see how much of the USD 1 billion share buyback program has been implemented. Higher gold production is expected from the joint venture with Barrick in Nevada in 2023. Currently, one share costs USD 52.29. As long as there are no closing prices below USD 45.25, the established upward trend will remain intact.
If sentiment in the gold market was at its lowest point in 2022, the precious metal's inflation protection has again been demonstrated. Many believed in cryptocurrencies and were bitterly disappointed. This year, almost everything is going for the gold companies. Barrick Gold is enticing investors with a higher dividend. Desert Gold is currently funding its upcoming drilling program - in the long term, a strategic partner would make sense here. As the largest gold producer, Newmont benefits most from higher gold prices.
Conflict of interest
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