Shock Move at Barrick Mining? Merger with Endeavour Mining? Opportunity in Desert Gold? Gold Price at USD 4,000?

Gold Price Weak, Russia Selling

Gold is currently failing to live up to its reputation as a safe-haven asset. Last Friday is the most recent example of this. With the sell-off in tech stocks, one might have expected investors to flee to gold and for the price to rise accordingly. But the opposite happened. The gold price lost over 3% on Friday alone, fell below USD 4,400 per ounce, and is now trading just above USD 4,300 per ounce. The chart is under pressure, and the price could test the USD 4,000 mark.

Most recently, reports of Russia selling gold have been circulating. According to the Russian Central Bank, the country's gold reserves fell from 74.8 million ounces at the start of the year to 74.1 million ounces in early April. This means that approximately 700,000 ounces of gold were sold within a few months. According to media reports, sales since the start of the year have totalled more than USD 4 billion. The backdrop is the persistently high government spending due to the war in Ukraine. This spending can no longer be covered by the sale of oil and other commodities. At first glance, these sales could be interpreted as a warning sign for the gold market.

No Reason to Panic, China Is Buying

A closer look, however, shows that this development is no cause for panic. The 700,000 ounces sold represent less than 1% of Russia's total reserves. Furthermore, global gold demand last year exceeded 4,500 tons, while Russian sales accounted for only about 22 tons. Against this backdrop, this is more of a liquidity measure than a strategic shift away from gold. Developments on the demand side remain the decisive factor for the market.

And that is precisely where China continues to send a strong signal. The Chinese central bank recently increased its gold reserves for the 19th consecutive month. In May alone, 320,000 ounces of gold were purchased, following the acquisition of an additional 260,000 ounces in April. As a result, China's official gold reserves rose to 74.96 million ounces. It is noteworthy that purchases are continuing despite gold prices being near record highs. Nevertheless, gold accounts for only about 8.8% of China's foreign exchange reserves, which leads analysts to see further potential for expansion. This is an important factor for investors. While Russia is selling gold, China is consistently expanding its reserves. Global gold holdings are therefore not decreasing—they are merely changing hands.

The ongoing purchases by the Chinese central bank and many other emerging markets continue to point to robust structural demand for the precious metal.

Barrick Mining: Merger in Africa?

Is a major announcement on the horizon for Barrick Mining? "Reuters" reports that the gold giant is exploring strategic options for its African operations. According to the report, one idea being considered is a separate listing of its African operations on the London Stock Exchange. One possible option would be a share swap with Endeavour Mining, one of West Africa's largest gold producers. A merger could create a company with a market capitalization of around USD 30 billion. However, talks are still in the early stages, and no decision has been made yet. Barrick has been pursuing a realignment for some time and had announced plans to list its North American operations separately on the New York Stock Exchange.

For the gold industry, such a transaction would be another sign of ongoing consolidation in the sector. Barrick aims to focus more on core regions and reduce its exposure in countries with heightened political risks. Endeavour Mining could be a natural partner in this regard, given its strong presence in Africa. Industry observers see these considerations as an indication that major producers continue to seek high-quality gold projects and additional resources. This could be particularly positive for smaller explorers and producers in West Africa, as attractive deposits and strategically located projects are increasingly coming into the focus of potential buyers. One possible acquisition target is Desert Gold.

Desert Gold Becomes a Producer and Acquisition Target

With its presentation at the International Investment Forum (IIF), Desert Gold Ventures impressively demonstrated why the company ranks among the most exciting gold plays in the West African commodities sector. CEO Jared Scharf presented the 440 km² flagship SMSZ project along the Senegal-Mali Shear Zone, one of the world's most productive gold regions. Particularly noteworthy is its proximity to major producers such as Allied Gold, Endeavour Mining, Barrick Mining, and B2Gold. Desert Gold already holds a resource of approximately 1.2 million ounces of gold, which, according to management, is open in all directions. At the same time, Scharf emphasized the company's massive undervaluation. A comparable land package in this location is practically impossible to replicate today.

Therefore, there is significant acquisition potential. Desert Gold is located in close proximity to several existing processing facilities operated by gold companies. The deposits are also within an economically viable transport distance of the major mining complexes Sadiola (Allied Gold) and Sabodala-Massawa (Endeavour Mining). Given the ongoing consolidation in West Africa, Desert Gold could thus become an attractive acquisition target for established producers seeking additional resources in a proven mining region.

At the same time, the company is pushing ahead with its transition to becoming a producer. With Barani-East, it is bringing a smaller section of the massive SMSZ project into production. The first gold is expected to be mined as early as July 2026. This would be a true milestone for the company, generate cash flow, and create a stir in the industry. According to the study by GBC Research, operating costs per ounce are expected to be a manageable USD 1,100. Analysts estimate that Desert Gold could generate USD 33.06 million in revenue and achieve an EBITDA of USD 20.19 million as early as 2027, even at a very conservative selling price of USD 2,850 per ounce. With just this small portion of the SMSZ project alone, Desert Gold could generate free cash flow of more than USD 155.9 million. Yet the entire company is currently valued at less than CAD 50 million.

To further increase the resource, a new drilling program is underway at SMSZ. And then there is the 300 km² Tegba Gold project in Côte d'Ivoire. Scharf expressed confidence that the projects' total potential is significantly higher than the current resource estimates. In the long term, management believes a resource volume of over 5 million ounces of gold is possible. The conclusion is correspondingly positive.

https://youtu.be/MK7Gjlfn0jg?si=TP5wJJQq2lK5tWGz

The current weakness in the gold price should not be overestimated. Following the historic rally through early 2026, a prolonged breather is certainly healthy. At current price levels, even smaller gold producers can earn handsomely. Desert Gold is a prime example. Even without takeover speculation, the stock appears undervalued. Barrick Mining seems to be seriously exploring all options at the moment. A clear strategy from management would be desirable.