12. May 2020 | 06:55 CET
Barrick Gold, Desert Gold, Roscan Gold - protection against shock after Corona
The state aid measures in connection with the containment of the Corona Pandemic cost a lot of money. The restrictions have brought social life and the economy to a virtual standstill. To avoid chaos and unrest, the states are making payments that are currently only partially covered due to declining tax revenues. In the coming months, when the chaos has cleared up and Covid-19 has hopefully disappeared, a cash check will bring the exact costs to the table. Given that the state refinances itself through fees and taxes, citizens and companies will have to bear an additional burden. Moreover, it is to be expected that the value of currencies will fall due to inflation as the money supply increases. Gold can offer a safe haven as a hedge.
time to read:
ISIN: CA25039N4084 , CA0679011084 , CA77683B1076
"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
Shares as an alternative to bars and coins
For investors who are not interested in buying and storing bars or coins with high fees, but still want to park their money in gold, shares of listed companies offer a real alternative. One of the largest gold producers is Barrick Gold and shareholders receive a dividend paid out once a quarter. This is a significant added value compared to physical gold in the vault, because logically this does not pay a dividend.
The advantage of Barrick Gold is also that the company also mines copper and, in the context of global electrification, demand will provide additional revenue streams. Barrick Gold is active in North and South America and Africa.
Focus on Mali
Desert Gold Ventures and Roscan Gold are also active in Africa. Both companies focus on their own areas in Mali. The value driver of these exploration companies is to explore reserves and gather further information on their size. Typically, after each discovery, additional drilling programs are conducted to explore the structures in order to draw conclusions about the grade and quantity of the reserves.
Usually successful exploration companies are taken over by large producers. For shareholders, a takeover often means exit, unless the transaction is paid for with shares of the acquirer.
Price potential through drilling program
Barrick Gold's market capitalization is approximately CAD 67.8 billion at CAD 36.60, making it one of the most valuable mining companies. Roscan Gold is valued at CAD 72.5 million at a price of CAD 0.375. The market capitalization of Desert Gold Ventures is currently around CAD 9.5 million at a share price of CAD 0.105.
Given that Desert Gold's management recently announced the continuation of a drilling program on the approximately 400 square kilometre areas in the context of the completion of an oversubscribed financing, it is expected that further information will be collected and published in connection with this work. The West of Africa is now one of the best regions on the continent for mining. In this context, the interest of investors in Desert Gold will continue to grow as the work progresses. The comparatively low valuation is also an opportunity.