May 4th, 2020 | 05:50 CEST
Desert Gold Ventures, Glencore, Kinross - now is the right time!
Table of contents:
"[...] Internally we expect the resource to significantly grow the deeper we mine. [...]" Dennis Karp, Executive Chairman, Manuka Resources
Born and raised in Hannover, Lower Saxony follows social and economic developments around the globe. As a passionate entrepreneur and columnist he explains and compares the most diverse business models as well as markets for interested stock traders.
Advantages of gold companies
There are different ways in which investors can position themselves in the gold asset class. Besides coins and bars with storage costs, certificates with issuer default risk are available. Alternatively, shares of listed companies that are active in the gold industry can be used.
The creation of value from gold can be extremely lucrative, because the value of exploration companies usually increases when new deposits are discovered. The value driver for producers is a rising price per troy ounce as long as costs are not correlated. Low energy costs also increase margins for the industry.
Drilling program delivers potential
The Canadian company Desert Gold Ventures focuses on the exploration of areas in Mali on the border with Senegal in West Africa. The management has more than 300 square kilometers of exploration licenses available for development.
The company has already been successful on several occasions and the next steps in the drilling programs will be to obtain further information on the gold content and potential quantity in the ground. In the most recent announcement, management has announced that the upcoming drilling program covers 10,000 metres.
All holes are targeted at extensions of the known mineralization and, for example, at the Gourbassi West area, a 33 metre wide intersection grading 3.52 g/t gold at surface is being further examined and at Barani East a 13 metre wide section grading 6.28 g/t gold is being explored at depth.
As gold resources increase, the likelihood that well-known producers with a focus on the region will take a closer look at Desert Gold Ventures increases. A takeover is the usual exit scenario of exploration companies. The market value of Desert Gold Ventures was less than 10 million CAD at the closing price of 0.10 CAD on Friday.
Alternative to the majors
The gold producer Kinross closed at CAD 6.84 on Friday and its market capitalization was CAD 8.6 billion. In the past three months, the shares changed hands between CAD 2.72 and 7.25. The shares of the commodity company Glencore have traded between EUR 1.24 and 2.84 in the past three months. On Friday the shares closed at EUR 1.70, which corresponds to a market value of EUR 23.2 billion.
While the two majors are swinging with the market, the great upside potential of Desert Gold Ventures lies in the success of its drilling programs.
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