BioNTech, Desert Gold, Nel ASA - Rebound or crash

Little interest in gold investments

Nervousness on the stock market is rising and, with it, volatility in stocks. Daily fluctuations of more than 10% are currently the order of the day, and not only for cryptocurrencies. In contrast, little is happening in the precious metals sector, specifically gold, at the moment. One could argue that gold serves as a safe haven. The precious metal has been moving lethargically in a narrow range for months, and investor interest is low, at least for the moment. However, an escalation of the situation in Ukraine could ensure that the precious metal receives new splendor and actually has to serve as a crisis currency.

Desert Gold announces milestone

Shares of gold producers such as Barrick Gold or Newmont are currently little sought after; even at a more favorable level, the volume is low. However, the situation is even more serious for smaller exploration companies. Desert Gold, a junior explorer that owns two gold exploration projects in western Mali (SMSZ and Djimbala) and the Rutare gold project in central Rwanda, recently came to the fore with two milestone announcements. Still, they were literally ignored by the market. The share price barely moved at EUR 0.10, and rising trading volumes were sought in vain. Nevertheless, the recently announced results are value-enhancing for the Canadian mining company.

On the one hand, Desert Gold announced the first pit constrained mineral resource from five deposit zones of the most important project, SMSZ. The zones are located within a tight, 12km radius in the southern half of the 440 sq km area, with the resource estimate totaling over 1.07 million ounces of gold.

Accordingly, the measured and indicated mineral resource totaled 310,300 ounces of gold at 8.47 million tonnes and a grade of 1.14 g/t gold. The majority was in the "inferred" category, i.e. associated with higher uncertainty, with 769,200 ounces of gold (at a tonnage of 20.7 million and a grade of 1.16 g/t). Jared Scharf, CEO of the Company, commented, "The release of this maiden mineral resource is a significant milestone for the Company and represents an excellent starting point. We believe that with further drilling, the Company will be able to significantly expand these resources and develop new resource areas such as the Gourbassi North West discovery. We anticipate a busy 2022 working towards a 20,000m drill program with high expectations for results."

Announcements fizzle out

A few days later, another bang in the still-young history of the Canadian Company followed. On the newly developed Gourbassi North West area within the SMSZ zone, further results from 72 air core wells were announced. It revealed that the Gourbassi West North zone can be traced for approximately 1.6km and is open to the north and south. That makes the zone one of the longest and widest mineralized zones in the concession area. Further AC drilling and auger drilling are planned to test extensions of Gourbassi West North and delineate potential parallel mineralized structures. Top results returned intercepts of 30 meters at 1.94 g/t gold, 12 meters at 2.75 g/t gold, and 37 meters at 1.10 g/t gold, with the Company estimating that the measured lengths represent approximately 65% of actual width. Further AC drilling and auger drilling are planned to test the Gourbassi West North zone extensions and delineate potential parallel mineralized structures.

These two announcements demonstrate the potential of Desert Gold. As interest in the gold sector increases, second-tier gold companies should benefit disproportionately.

Correction over?

Shares of vaccine manufacturers came back strongly in recent weeks. Many investors used the hope of the people that the milder variant Omicron would end the pandemic and pave the way to an endemic to sell the shares of the vaccine producers. BioNTech has lost more than 70% since its peak in August 2021, when the stock was trading at USD 464.00 and is trading now slightly firmer at USD 155.11. The chart shows an intense battering, with the next support at around USD 131.00.

Some relief was provided by the announcement that BioNTech and Pfizer started the first clinical trial with a Corona vaccine adapted to the Omicron variant, with a total of 1,420 people participating. According to Pfizer CEO Albert Bourla, the pharmaceutical giant could seek approval for the vaccine as early as March. The booster vaccine does protect against severe disease from the Omicron variant, explained Kathrin Jansen, Pfizer's head of vaccine research. Still, "we see the need to prepare for waning protection or the emergence of a new variant," she stressed. Now then, decide for yourself.

Is the market leader becoming a penny stock?

It is a tough time for investors in Norwegian hydrogen specialist Nel ASA. If US bank JP Morgan has its way, this should only be a matter of time. The analysts downgraded the former stock market star from 13 to 10 Norwegian kroner, the equivalent of EUR 0.99. The rating was repeated as "underweight".

While higher fossil fuel prices have served as a reminder that the transition to "green" hydrogen could become competitive sooner than expected, low utilization in the industry could continue to weigh on the margins of power hydrogen producers like Nel, wrote analyst Patrick Jones.

Stock markets remain in correction mode. Despite news that BioNTech is working on a vaccine for the Omicron variant, the stock remains battered. Also struggling is hydrogen specialist Nel ASA. Desert Gold delivered two excellent reports and should benefit significantly if the gold price rises.