July 7th, 2023 | 07:20 CEST
Barrick Gold, Desert Gold Ventures, Newmont - Back on track
Weak job market data from the United States caused stock markets worldwide to enter the red territory and triggered massive sell-offs in the gold market, which was on the verge of breaking out of its short-term downtrend. These sell-offs, accompanied by high volume, temporarily brought the base price close to the USD 1,900 mark. A further short-term setback cannot be ruled out. In the long term, however, this asset class will likely start flying high again. Already at the current level, many companies are available at bargain prices.
time to read: 3 minutes
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Author:
Stefan Feulner
ISIN:
BARRICK GOLD CORP. | CA0679011084 , DESERT GOLD VENTURES | CA25039N4084 , NEWMONT CORP. DL 1_60 | US6516391066
Table of contents:
"[...] 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
Author
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.
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Cheap gold giant with huge potential
In contrast to the gold price, which has lost only 7.50% of its value since the start of the correction phase in August 2020, large gold producers such as Newmont have been hit much harder, losing 40% of their value. The share of the second largest global gold prospector, Barrick Gold, decreased by a whopping 45% to its current value of USD 16.70. The lowest point was reached in October of last year at USD 13.01. Since then, the Barrick share price has been in an upward trend. A strong buy signal will be generated if it breaks through the resistance at USD 20.20.
From a fundamental point of view, the major belongs in every precious metals portfolio. On the one hand, the Company expects declining total costs in the third and fourth quarters and forecasts a cash flow for the full year of USD 4.54 billion, which would mean about 6.5 times the cash flow compared to the current share price. The dividend yield is a high 3.82%. The share buyback program of USD 1 billion should also support the share price.
Positive news also comes from the Kibali mine, the largest gold mine in Africa. President and Chief Executive of Barrick Gold, Mark Bristow, announced that the combined open pit and underground gold mine in the Democratic Republic of Congo has significantly increased production over the past quarter in line with planned production growth and is well on schedule to meet its full-year guidance. It also said it is developing a long-term plan to secure the mine's status to produce 500,000 ounces of gold or more for at least 10 years at costs below the industry average.
Growth market Mali
Barrick also wants to further expand its partnership with the African state of Mali, which has been ongoing for more than a quarter of a century. Here, Bristow told the media that the Loulo-Gounkoto complex, one of the world's 10 largest gold producers, is the largest company in West Africa regarding enterprise value. Together with the Morila mine, the complex contributed USD 9.3 billion to the Malian economy and between 5% and 10% to the country's GDP over the past decade.
"We continue to invest in the future of Loulo-Gounkoto. Successful exploration is more than just a replacement for the ounces we mine. It also identifies new growth opportunities with the potential to deliver the next generation of great discoveries in the Loulo region", said the Company's leader.
Desert Gold Ventures - Best-positioned junior
Also based in Mali is the exploration company Desert Gold Ventures, with a market capitalization of only CAD 10 million. When considering the location of the 440 sq km SMSZ project, one of the largest non-producing land areas in West Africa, located in the Senegal-Mali shear zone, one can only imagine the potential. Just a few kilometers away are already producing mines from Barrick Gold, Endeavour Mining, and B2Gold. Allied Gold's Sadiola Mine even directly borders the property being explored by Desert Gold Ventures.
More than 23 gold zones have been discovered in the area so far, which will be developed and analyzed for economic grades. Already in February 2023, the Canadian company completed 445 drill holes with a total length of 2,067 m. Currently, Desert Gold is targeting a drilling program of approximately 30,000 m, to be followed seamlessly by an updated resource estimate. Current estimates are for total Indicated Mineral Resources of 310,300 ounces and Inferred Mineral Resources of 769,200 ounces of gold.
Desert Gold's share price is a limited reflection of its current potential. Since the mid-2020 highs, the share price has lost about 85%. With further drilling successes and due to its positioning among the big players in the gold sector, Desert Gold should mutate into a potential takeover candidate by then at the latest.
Due to weak data from the US, the gold price buckled and came dangerously close to the psychological mark of USD 1,900 per ounce, making a fall below this mark seem possible. Nevertheless, majors Newmont and Barrick Gold offer long-term potential at current levels. After another successful drilling program, Desert Gold Ventures is expected to become one of the most attractive acquisition targets.
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.
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