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April 15th, 2024 | 06:45 CEST

First Majestic Silver, Desert Gold, Albemarle - Escalation paves the way

  • Mining
  • Gold
  • Silver
  • chemicals
  • Lithium
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The events at the weekend, during which Iran carried out a massive airstrike on Israel for the first time, are likely to have escalated the already troubled geopolitics to a new level. It is not yet known whether Israel is planning a counter-attack. Precious metals gold and silver are once again likely to benefit from the uncertainties following the rather weak close to the week. The yellow precious metal could recapture the USD 2,400 per ounce mark, which could also boost the shares of producers and gold exploration companies.

time to read: 3 minutes | Author: Stefan Feulner

Table of contents:

    Nick Luksha, President, Prospect Ridge Resources
    "[...] As we look at four or more zones in more detail from the beginning, investors can expect a continuous news flow that will underscore our vision of the Holy Grail project as a giant opportunity. [...]" Nick Luksha, President, Prospect Ridge Resources

    Full interview


    Desert Gold Ventures - Potential takeover candidate

    After reaching an all-time high of USD 2,431.78 per ounce, gold saw the first signs of profit-taking at the end of the trading week, and the price crumbled to USD 2,343.29 per ounce by the end of Friday's session. Although this reversal is rather negative from a technical perspective, another high could be reached at the beginning of the new week following the warlike events in Israel. The general conditions for a further rise, with gold bulls already calling targets beyond the USD 3,000 mark, are better than ever due to the burgeoning trouble spots worldwide.

    Compared to the base price of gold, both gold producers and smaller exploration companies such as Desert Gold Ventures are still far from their highs. The Desert share price has more than doubled since the beginning of the year to currently CAD 0.08. The share still has a potential of 337% from its interim high of CAD 0.35 in July 2020 alone.

    Desert Gold Ventures has acquired one of the largest land packages among non-producers in western Mali, totaling over 440 sq km, in recent years. This area is among the most significant gold regions in the world. To date, more than 25 gold discoveries have been made on the SMSZ project, 5 of which alone contain around 1.1 million ounces of gold resources. Of particular interest is the location of the discussed project, which is situated amidst well-known mines of gold producers such as Allied Gold, B2Gold, Barrick Gold, and Endeavour Mining.

    A few weeks ago, Barrick Gold and CEO Mark Bristow made interesting statements indicating that Desert Gold Ventures could end up in the gold producer's portfolio in the future. After decades of positive experience with its Loulo-Gounkoto complex in Mali, one of the largest producing gold deposits in the world, Barrick Gold intends to make further acquisitions in the region.

    First Majestic Silver - Turnaround achieved

    The gold bull market also pulled its little brother silver upwards. After overcoming the double top at USD 26 in April and May 2023, the precious metal was on the verge of testing the USD 30 per ounce mark last Friday. Breaking above this level would mean a new eleven-year high and should give the silver price further momentum.

    One of the best-known companies in this segment is First Majestic Silver. At its core are four mines: the San Dimas Silver/Gold Mine, the Santa Elena Silver/Gold Mine, the La Encantada Silver Mine and the Jerritt Canyon Gold Mine. The first mine, San Dimas, covers 71,868 hectares in the Mexican states of Durango and Sinaloa and is the Company's flagship.

    Due to excessively high production costs and weak production, the share price fell sharply last year. However, the turnaround was completed in the fourth quarter, and the Company was back in the black. Since the low of CAD 5.67 on February 12, the share price has risen by around 80% to CAD 10.37. The next significant resistance level is CAD 13.04. If this level is breached, it would generate further potential up to the range of CAD 18.

    Albemarle - Promising market leader

    Now that precious metals have soared to new highs, other commodities could follow suit. For example, the price of lithium, which has fallen sharply in recent months, is bottoming out. One direct beneficiary of a rising lithium price would be the global market leader Albemarle.

    After the Company announced a capital increase of USD 1.75 billion at the beginning of March, the share price corrected significantly to a new year-low of USD 106.69. However, the share has since recovered strongly to USD 122.58.

    Analysts are optimistic about the lithium producer's future. Bank of America upgraded the stock from "Neutral" to "Buy". One of the main reasons has been the stabilizing lithium price. The price target was raised from USD 137 to USD 156. The experts at Berenberg also see a long-term growth story for lithium stocks despite the slump in demand for electric vehicles. Demand from other sectors is still on an upward trend. Berenberg analysts set the price target at USD 160.

    With the ongoing flare-ups in crisis hotspots, the rally in precious metals is unlikely to end soon. Desert Gold Ventures should continue to benefit from the rising gold price and is considered a potential takeover candidate due to the location of its project. First Majestic Silver has managed to initiate a turnaround. Several analysts see further potential in Albemarle.

    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.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    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.

    About the author

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