GOLD RUSH IN WEST AFRICA: HOW DESERT GOLD VENTURES, THOR EXPLORATIONS, AND ZIJIN MINING ARE BENEFITING

ZIJIN MINING LAUNCHES AN ASSAULT ON THE WORLD'S TOP SPOTS

China's appetite for raw materials remains unbroken. With the acquisition of Canadian project developer Allied Gold for approximately CAD 5.5 billion by its subsidiary Zijin Gold International, Zijin Mining is making a bold statement. In doing so, the group secures not only the historic Sadiola mine in Mali, whose production is set to rise to 400,000 ounces per year by 2029, but also the Bonikro & Agbaou mining complex in Côte d'Ivoire and a promising large-scale project in Ethiopia.

Zijin is already the world's fourth-largest gold producer. While established market leaders Newmont and Barrick Mining are scaling back production to focus on their most profitable projects, Zijin is shifting into expansion mode. Management is targeting a 17% increase in production to 3.38 million ounces for the current year. If these plans come to fruition, Zijin could overtake Barrick and rise to become the world's number two. The acquisition of Allied Gold and the purchase of the Akyem mine in Ghana underscore these ambitions.

POLITICAL BACKING AND SANCTION RISKS

The group is operating with tailwinds from Beijing: The Chinese government holds about one-third of the shares through various investment vehicles; furthermore, company founder Chen Jinghe is close to the State Council and has already received multiple awards. At the beginning of the year, he handed over the reins to Zou Laichang and Lin Hongfu, who also aim to lead Zijin into the world's top three in copper production. The expansion in lithium is particularly massive: production is set to increase tenfold to 320,000 tons by 2028. With a market capitalization of over EUR 100 billion, Zijin is already playing in the same league as BHP and Rio Tinto. Despite the aggressive expansion, the stock appears moderately valued. Analysts forecast earnings per share of CNY 2.96 for the current year, which is expected to rise to around CNY 3.42 (approximately EUR 0.43) by 2027. At the current share price of around EUR 4.02, this would correspond to a 2027 P/E ratio of less than 10—a significant discount compared to Western competitors.

But the company's proximity to the state is a double-edged sword—and an explanation for the current valuation discount. The US Department of Homeland Security has blacklisted Zijin over allegations related to Uyghur forced labor. Furthermore, the company faces the threat of being classified as a "Chinese Military-Industrial Complex Company," which in extreme cases could lead to a trading ban on Western stock exchanges. The example of China Mobile shows just how real this danger is. The mobile communications giant's stock was virtually untradeable for German investors for years. Despite some easing of restrictions, many brokers still only allow sales but not new purchases.

DESERT GOLD VENTURES: FROM EXPLORER TO PRODUCER

The acquisition of Allied Gold caused a stir, particularly in West Africa.
This is because there are several other companies active in the region that could also become potential acquisition targets for Zijin. One candidate is Desert Gold Ventures. The company, also based in Canada, operates in Mali and controls the largest contiguous land package in the Senegal-Mali Shear Zone (SMSZ), one of Africa's most productive gold regions, covering 440 sq km. The main project is located just a few kilometers from the Sadiola mine. In the immediate vicinity, industry giants such as Barrick and B2Gold have also been mining successfully for years.

Compared to the established corporations, Desert Gold is still a minnow with a market capitalization of around CAD 38 million, but an operational breakthrough is imminent. The company is currently transitioning from a pure-play explorer to a producer with measurable revenue: the Barani East project is scheduled to commence operations in June. According to the classic Lassonde curve, this is the ideal time for a revaluation.

Pierre Lassonde, co-founder of Franco-Nevada, sees this phase—when financing is secured, and production is about to begin—as the decisive catalyst for value appreciation. Financing has already been secured through a recently completed private placement of CAD 7.2 million.

ANALYSTS SEE ENORMOUS UPWARD POTENTIAL

Although the share price has already doubled over the past six months, this appears to be just the beginning. In Germany, the stock is currently trading at around EUR 0.09. Analysts Cosmin Filker and Matthias Greiffenberger from the Augsburg-based investment firm GBC Research estimate the fair value at EUR 0.59 (CAD 0.93). The experts forecast annual production of 11,600 ounces and annual revenue of around USD 33 million for Desert Gold starting in 2027. While their conservative estimate assumed a gold price of USD 2,850, the precious metal is actually trading at nearly USD 4,800 per troy ounce. This translates to massive revenue potential of more than USD 55 million (approximately EUR 47 million), which is double the current market capitalization. Should the gold price maintain its current level, even GBC Research's estimated earnings before interest and taxes (EBIT) of just under USD 19.5 million appear significantly too low. Yet even under this assumption, the stock is currently trading at an EBIT multiple of less than two. This would make Desert Gold Ventures a prime target for larger competitors from China, North America, or Australia seeking to expand their reserves in West Africa cost-effectively.

ATTRACTIVE KEY FIGURES AND STRATEGIC OUTLOOK

Although no official analyst estimates for earnings per share are available yet, a rough calculation illustrates the potential: assuming interest and tax expenses of 50%, earnings would range between USD 0.04 and USD 0.07 per share, depending on the final gold price. This would place the price-to-earnings (P/E) ratio in a range between 2 and 4. Since the company has significant potential for resource expansion with additional properties in Mali as well as the Tiegba Gold project in Côte d'Ivoire, it would be almost desirable from the shareholders' perspective if a takeover bid were to be delayed. CEO Jared Scharf is pursuing a compelling strategy. At its core is a modular and capital-efficient approach to generate cash flows as quickly as possible. Jared Scharf will provide further details on this strategy on Wednesday, May 20, at 6:00 p.m. at the International Investment Forum (IIF). However, Desert Gold could draw increased attention ahead of the event, particularly if operational updates are announced in the near term.

THOR EXPLORATIONS: THE CASH MACHINE AS A MODEL

Thor Explorations could serve as a blueprint for Desert Gold's development. The company, also based in Canada, has always focused on West Africa. Its flagship project is the Segilola Gold mine in Nigeria, which began operations in 2021 and currently produces around 85,000 ounces annually. Since production began, the stock price has more than quadrupled from CAD 0.35 to its current level of CAD 1.50; the market capitalization now hovers around the CAD 1 billion mark. With cash reserves of more than CAD 200 million, the company is excellently positioned to drive forward its ambitious expansion plans. The Douta project in Senegal is scheduled to begin operations in early 2028 and is expected to deliver approximately 1 million ounces of gold over a 13-year period. In addition, drilling is underway at four sites in Côte d'Ivoire with the goal of establishing a third producing mine in the long term. The most advanced of these is the Guitry project, which promises high-grade gold deposits at depths of 82 to 104 m. A first official resource estimate is expected by early 2027 at the latest.

Among analysts, Thor Explorations is regarded as a cash cow capable of fully financing its expansion in Senegal and Côte d'Ivoire from the profits of its Nigerian production. Based on current estimates from firms such as Canaccord and Shore Capital, the P/E ratio for the current year ranges between 3 and 4. Due to upcoming investment costs, it could rise to 6 by 2027; a figure that remains extremely attractive by industry standards. Consequently, experts consider price targets between CAD 2.00 and CAD 2.49 to be realistic. The preliminary figures for the first quarter, with over 20,000 ounces of gold, confirm that the Vancouver-based company is fully on track operationally.

TAKEOVER ONLY WITH POLITICAL APPROVAL

Given its favorable valuation, Thor Explorations would theoretically also be a potential takeover candidate. However, this would require that the Africa Finance Corporation (AFC), which holds 15.9% of the shares as the largest single shareholder and played a key role in financing the Segilola mine, be willing to sell. Another 12.3% of the shares are held by management, with CEO and co-founder Segun Lawson having a particularly strong stake at just under 5%. While this is not enough to formally prevent a takeover, a deal without the approval of the executive board, the board of directors, and the AFC is considered unlikely for political reasons alone. China's appetite for raw materials may know no bounds, but a hostile takeover is unlikely to be in the interest of Zijin & Co.—especially since Thor Explorations operates the only major gold mine in Nigeria and is closely networked with the local government and communities.

THREE PLAYERS, ONE MEGATREND: A COMPARISON OF OPPORTUNITIES

Thor Explorations is a rock-solid investment that is significantly undervalued compared to the industry, with analysts attributing it an upside potential of around 50%. Even as a takeover target, the company would be attractive due to its favorable valuation, though only for interested parties with political negotiating skills.

Desert Gold Ventures is currently on the cusp of transitioning from an explorer to a producing company, and thus exactly where Thor Explorations was in 2021. A takeover is more likely here due to its smaller size, but from the shareholders' perspective, it would be rather counterproductive at this point. For if everything goes as smoothly as with its larger counterpart, significant share price increases are inevitable. However, the risk is correspondingly higher.

Zijin Mining is on its way to becoming the world's second-largest gold producer. The group plays the role of consolidator in industry and could finance a takeover of both companies practically out of pocket change. Compared to Western commodity groups, the stock is indeed undervalued, but the risk is political in nature. Since the company is considered a strategic player in the commodities conflict between China and the West and has been on the US government's blacklist since January 2025, the danger remains. In an extreme case, this could lead to a temporary trading ban on Western stock exchanges—just look at the example of China Mobile.