Ori­gi­nal-Re­se­arch: De­sert Gold Ven­tures Inc. – by GBC AG
19.09.2024 / 06:00 CET/CEST
Dis­se­mi­na­ti­on of a Re­se­arch, trans­mit­ted by EQS News – a ser­vice of EQS Group AG.
The is­suer is so­le­ly re­spon­si­ble for the con­tent of this re­se­arch. The re­sult of this re­se­arch does not con­sti­tu­te in­vest­ment ad­vice or an in­vi­ta­ti­on to con­clude cer­tain stock ex­ch­an­ge tran­sac­tions.

Clas­si­fi­ca­ti­on of GBC AG to De­sert Gold Ven­tures Inc.

Com­pa­ny Name: De­sert Gold Ven­tures Inc.
ISIN: CA25039N4084
Re­ason for the re­se­arch: Ma­nage­ment in­ter­view
Re­com­men­da­ti­on: BUY
Tar­get pri­ce: 0.311 USD
Tar­get pri­ce on sight of: 31.12.2025
Last ra­ting ch­an­ge:
Ana­lyst: Mat­thi­as Greif­fen­ber­ger, Mar­cel Schaf­fer

‚This is a huge op­por­tu­ni­ty for mi­ning in­ves­tors pay­ing at­ten­ti­on to Mali as va­lua­tions are only just start­ing to re­flect the more po­si­ti­ve rea­li­ty on the ground.‘

In this in­ter­view, GBC AG speaks with Jared Scharf, CEO of De­sert Gold Ven­tures, a pro­mi­nent gold ex­plo­ra­ti­on com­pa­ny with a fo­cus on West Af­ri­ca, par­ti­cu­lar­ly Mali. Re­cent de­ve­lo­p­ments in Mali’s mi­ning sec­tor, in­clu­ding key go­vern­ment ap­pr­ovals for ma­jor play­ers like Al­lied Gold and B2Gold, have led to a op­ti­mi­stic mar­ket out­look for the re­gi­on. Scharf pro­vi­des in­sight into De­sert Gold Ven­tures‘ stra­te­gic po­si­ti­on in this evol­ving re­gu­la­to­ry land­scape and how the com­pa­ny is well-po­si­tio­ned to ca­pi­ta­li­ze on this mo­men­tum. He dis­cus­ses po­ten­ti­al syn­er­gies with neigh­bor­ing mi­ning gi­ants such as Bar­rick Gold, the im­pact of ri­sing gold pri­ces on their stra­tegy, and the company’s long-term ex­plo­ra­ti­on and de­ve­lo­p­ment goals. Ad­di­tio­nal­ly, our re­cent­ly pu­blished re­se­arch re­port as­signs a tar­get pri­ce of USD 0.311 (CAD 0.425; EUR 0.29) with a buy ra­ting, high­light­ing the si­gni­fi­cant up­si­de po­ten­ti­al com­pared to the cur­rent share pri­ce (https://​www​.more​-ir​.de/​d​/​3​0​3​4​1​.​pdf). Scharf also ex­plains how De­sert Gold Ven­tures plans to le­vera­ge its stra­te­gic lo­ca­ti­on and im­pro­ving in­ves­tor sen­ti­ment to crea­te las­ting va­lue for share­hol­ders.

GBC AG: Mr. Scharf, with the re­cent an­nounce­ments from Al­lied Gold and B2Gold re­gar­ding their mi­ning ac­ti­vi­ties in Mali and the government’s sup­port, how do you view the cur­rent re­gu­la­to­ry en­vi­ron­ment for mi­ning ope­ra­ti­ons in the coun­try?

Jared Scharf: The­se are ma­te­ri­al break th­roughs for both com­pa­nies that can­not be un­der­sta­ted and the mar­ket is re­ac­ting ac­cor­din­gly with both company’s stock mo­ving ma­te­ri­al­ly hig­her. Mo­ving for­ward this pro­vi­des a pre­ce­dent, clear un­der­stan­ding and frame­work for mi­ning com­pa­nies and in­ves­tors that even with the re­cent chal­lenges of the last few ye­ars, the Ma­li­an go­vern­ment is sup­port­i­ve of the mi­ning in­dus­try and its sta­ke hol­ders. This is a huge op­por­tu­ni­ty for mi­ning in­ves­tors pay­ing at­ten­ti­on to Mali as va­lua­tions are only just start­ing to re­flect the more po­si­ti­ve rea­li­ty on the ground. I think the mar­ket was over­ly pes­si­mi­stic re­gar­ding Mali. Com­pa­nies like B2, Al­lied and our­sel­ves have been over­sold as a re­sult in my opi­ni­on. With the re­cent po­si­ti­ve news co­ming out of Mali, I think a lot of tho­se con­cerns have been put to rest. I ex­pect the si­tua­ti­on will con­ti­nue to im­pro­ve for in­ves­tors who hold po­si­ti­ons in Mali ba­sed mi­ning stocks.

GBC AG: The mar­ket has re­spon­ded po­si­tively to the­se de­ve­lo­p­ments, as re­flec­ted in the ri­sing stock pri­ces. How do you be­lie­ve De­sert Gold Ven­tures is po­si­tio­ned to ca­pi­ta­li­ze on this mo­men­tum in the Ma­li­an mi­ning sec­tor?

Jared Scharf: De­sert Gold has been buil­ding its land po­si­ti­on in Mali and de­ve­lo­ping its as­sets the­re sin­ce 2011. With so many geo­po­li­ti­cal head­winds along the way, it hasn’t been an easy ride for our share­hol­ders. I su­spect ho­we­ver that this dy­na­mic is chan­ging as we speak and the worst is be­hind us. As the mi­ning sec­tor in coun­try nor­ma­li­zes, both our ex­plo­ra­ti­on and mi­ning in­itia­ti­ves will be­co­me more va­luable. The gold pri­ce is also hel­ping.

GBC AG: Con­side­ring Bar­rick Gold’s pro­xi­mi­ty to De­sert Gold Ven­tures and their pro­duc­tion hit­ting a 20-year low, do you see po­ten­ti­al syn­er­gies or op­por­tu­ni­ties for col­la­bo­ra­ti­on bet­ween your com­pa­nies?

Jared Scharf: Bar­rick, like all ma­tu­re mi­ning com­pa­nies, is con­stant­ly loo­king for op­por­tu­ni­ties to grow their eco­no­mic re­sour­ce base and re­place their mi­ning re­ser­ves. They ty­pi­cal­ly do this by one of two ways; eit­her th­rough brown­field ex­plo­ra­ti­on near their exis­ting mi­nes or via ac­qui­si­ti­ons. Of­ten times both. De­sert Gold is stra­te­gi­cal­ly lo­ca­ted in the he­art of West Mali’s mi­ning camp with Al­lied Gold bor­de­ring us to the north, En­dea­vour Mi­ning bor­de­ring us to the south west and Bar­rick and B2 Gold along trend to the South. Gi­ven the re­gio­nal size of our land packa­ge at 440 km2 and its lo­ca­ti­on, I be­lie­ve De­sert Gold is a via­ble ac­qui­si­ti­on can­di­da­te for the big­ger play­ers in the re­gi­on. Wes­tern Mali/Eastern Se­ne­gal has a long histo­ry of si­gni­fi­cant M&A tran­sac­tions.

GBC AG: What im­pact do you ex­pect the re­cent mi­ning per­mits gran­ted by the Ma­li­an go­vern­ment to have on De­sert Gold Ven­tures‘ ex­plo­ra­ti­on and de­ve­lo­p­ment time­lines?

Jared Scharf: Ge­ne­ral­ly spea­king, I be­lie­ve it shows a wil­ling­ness on the Ma­li­an Government’s part to col­la­bo­ra­te and com­pro­mi­se with Wes­tern Mi­ning com­pa­nies on a pro­duc­ti­ve ba­sis to achie­ve po­si­ti­ve re­sults for all stake­hol­ders. I su­spec­ted that this was the case all along but I be­lie­ve the ca­pi­tal mar­kets had a much more pes­si­mi­stic view in re­cent ye­ars. With the re­cent re­gu­la­to­ry per­mit­ting breakth­roughs with Al­lied and B2, I be­lie­ve mar­ket sen­ti­ment will gra­du­al­ly im­pro­ve for all com­pa­nies ope­ra­ting in Mali. Our SMSZ pro­ject is ful­ly sup­port­ed by the Mali go­vern­ment and I do not ex­pect any re­gu­la­to­ry per­mit­ting is­sues. I note that in our 10 ye­ars in-coun­try we haven’t had any.

GBC AG: With in­cre­asing in­sti­tu­tio­nal fo­cus on elec­tri­fi­ca­ti­on and base me­tals, many mi­ners are pi­vo­ting towards cop­per and other re­sour­ces. How does De­sert Gold Ven­tures ba­lan­ce the fo­cus on gold while main­tai­ning re­le­van­ce in this shif­ting land­scape?

Jared Scharf: I’m so­me­what skep­ti­cal re­gar­ding the nar­ra­ti­ve sur­roun­ding base me­tals and elec­tri­fi­ca­ti­on. I think the mar­ket is too. Look at the li­thi­um pri­ce for ex­am­p­le. I do think the glo­bal eco­no­my is slo­wing down and could pos­si­bly even dip into re­ces­si­on in 2025. I’m not sure in­dus­tri­al me­tals will out-per­form in that sce­na­rio. Ho­we­ver mo­ne­ta­ry me­tals like gold ty­pi­cal­ly do per­form well in that sce­na­rio. I think in that con­text gold is a lea­ding in­di­ca­tor for what is hap­pe­ning in the glo­bal eco­no­my. I don’t think this time will be any dif­fe­rent. The macro en­vi­ron­ment re­minds a lot of 2000/2001.

GBC AG: Al­lied Gold and B2Gold have both re­cent­ly re­cei­ved ap­pr­ovals for key mi­ning pha­ses. What les­sons can De­sert Gold Ven­tures take from their ex­pe­ri­en­ces to po­ten­ti­al­ly ex­pe­di­te your own ap­pr­ovals and de­ve­lo­p­ment pha­ses?

Jared Scharf: In our case we al­re­a­dy have a ful­ly per­mit­ted mi­ning li­cen­se whe­re we plan to start our in­iti­al open pit. So no is­sues the­re. In terms of les­sons lear­ned, I think the big­gest one is per­se­ver­ance. When macro forces are working against you the best thing to do is fo­cus on crea­ting va­lue even if that va­lue isn’t yet ack­now­led­ged by the mar­ket. Have a plan and stick to it as best you can and fo­cus on what you can con­trol. In our case that has been con­ti­nuing with our ex­plo­ra­ti­on in­itia­ti­ves and de­ve­lop the mine to fast track into pro­duc­tion.

GBC AG: How does the rise in gold pri­ce in­fluence your over­all stra­tegy for De­sert Gold Ven­tures, par­ti­cu­lar­ly with re­gard to at­trac­ting in­ves­tors and achie­ving pro­duc­tion in the short to me­di­um term?

Jared Scharf: At the mo­ment the­re is a huge dis­con­nect bet­ween the va­lue of our gold oun­ces in the ground at rough­ly $10 mar­ket cap per oun­ce and the spot pri­ce of gold at $2,500. My in­ten­ti­on is to rea­li­ze that va­lue dis­con­nect for our share­hol­ders by mi­ning tho­se oun­ces. I be­lie­ve as the bull mar­ket in pre­cious me­tals ma­tures, as­sets like ours will be­co­me more va­luable which will make it much ea­sier to at­tract ca­pi­tal in both the pri­ma­ry and se­con­da­ry mar­kets. From an eco­no­mic per­spec­ti­ve, a hig­her gold pri­ce me­ans bet­ter mar­gins which will no doubt po­si­tively im­pact the re­sults of our mine stu­dy which will hop­eful­ly be fi­nis­hed be­fo­re year end. The im­pro­ved po­li­ti­cal si­tua­ti­on in Mali should also help.

GBC AG: Can you pro­vi­de an up­date on De­sert Gold Ven­tures‘ ex­plo­ra­ti­on re­sults and how they may con­tri­bu­te to the broa­der gold pro­duc­tion ca­pa­ci­ty in Mali?

Jared Scharf: Even though the in­vest­ment cli­ma­te has been tough in Mali re­cent­ly, we were still able to do a small 3,500 me­ter drill pro­gram in 2023. Re­sults are still pen­ding for rough­ly half the pro­gram. In­iti­al re­sults came out a month ago and were en­cou­ra­ging and sup­port­i­ve of our mi­ning plan. I look for­ward to re­leases the next set of re­sults and mine plan be­fo­re year end.

GBC AG: With in­ves­tor sen­ti­ment im­pro­ving due to Mali’s proac­ti­ve stance on mi­ning, how do you plan to le­vera­ge this op­ti­mism to se­cu­re fur­ther in­vest­ment or stra­te­gic part­ner­ships for De­sert Gold Ven­tures?

Jared Scharf: To be ho­nest with you I’ve seen many ju­ris­dic­tions fall in and out of fa­vor over the ye­ars. Mali has been out of fa­vor for se­ve­ral ye­ars now, but it wasn’t al­ways that way and now this is chan­ging again. The work we do as a com­pa­ny does not ch­an­ge re­gard­less of sen­ti­ment. The au­di­ence just be­co­mes more re­cep­ti­ve to our va­lue pro­po­si­ti­on. In­ves­tors are op­por­tu­ni­stic and I think they are see­ing the op­por­tu­ni­ty in Mali be­cau­se stock pri­ces have been hit hard. The up­si­de is ob­vious in the con­text of the gold mar­ket and im­pro­ving si­tua­ti­on in Mali.

GBC AG: Gi­ven De­sert Gold’s stra­te­gic lo­ca­ti­on along­side ma­jor in­dus­try play­ers like Bar­rick, En­dea­vour, B2Gold, and Al­lied, how does this geo­gra­phi­cal po­si­tio­ning pro­vi­de a com­pe­ti­ti­ve ad­van­ta­ge for De­sert Gold Ven­tures? Do you see this pro­xi­mi­ty in­fluen­cing your fu­ture de­ve­lo­p­ment plans or po­ten­ti­al part­ner­ships?

Jared Scharf: Yes, the­re are stra­te­gic ad­van­ta­ges to our pro­ject lo­ca­ti­on. The­re is the po­ten­ti­al to le­vera­ge exis­ting mi­ning in­fra­struc­tu­re clo­se to us. En­dea­vour Mi­ning and Al­lied Gold’s mi­ning in­fra­struc­tu­re is clo­se en­ough to se­ve­ral of our de­po­sits to look into pos­si­ble JVs like toll mil­ling etc. M&A is al­ways more com­pel­ling for com­pa­nies al­re­a­dy ope­ra­ting in the dis­trict of their tar­get.

GBC AG: Fi­nal­ly, how do you see De­sert Gold Ven­tures evol­ving in the next 5 to 10 ye­ars? What role do you en­vi­si­on your com­pa­ny play­ing in the Ma­li­an gold sec­tor, and how will you dif­fe­ren­tia­te your stra­tegy from other play­ers in the re­gi­on?

Jared Scharf: At the mo­ment we are sit­ting on 1.1 mil­li­on oz re­sour­ce at our SMSZ pro­ject. The­re are 28 gold zo­nes on the pro­per­ty and only 5 of them are in­cor­po­ra­ted into the exis­ting re­sour­ce. We will be up­dating the re­sour­ce as part of the mine stu­dy and I’m hop­eful we can in­cor­po­ra­te ad­di­tio­nal re­sour­ces from a new zone cal­led Gour­bas­si West North. But the point is the­re are ob­vious ways to grow our cur­rent re­sour­ce base. Ul­ti­m­ate­ly what I en­vi­si­on for our SMSZ pro­ject is an emer­ging mi­ning dis­trict wi­thin the Ke­nie­ba Win­dow of Wes­tern Mali/Eastern Se­ne­gal. Our mine stu­dy en­vi­si­ons the de­ve­lo­p­ment of two in­iti­al open pits to start. With con­tin­ued ex­plo­ra­ti­on and de­ve­lo­p­ment over time I be­lie­ve we will bring on many more. Hop­eful­ly once we start mi­ning in this area we’ll con­ti­nue to do so for the next 30 ye­ars un­less of cour­se our share­hol­ders are of­fe­red so­me­thing bet­ter!

GBC AG: Thank you for the in­ter­view.

GBC con­clu­si­on from the re­se­arch re­port: De­sert Gold Ven­tures Inc. pres­ents in our opi­ni­on an at­trac­ti­ve in­vest­ment op­por­tu­ni­ty due to its stra­te­gic lo­ca­ti­on in a rich gold re­gi­on, a si­gni­fi­cant re­sour­ce base, and on­go­ing ex­plo­ra­ti­on ef­forts. The company’s SMSZ Pro­ject in Mali co­vers 440 km² along a pro­li­fic gold zone and con­ta­ins over one mil­li­on oun­ces of gold. The plan­ned 30,000-meter dril­ling pro­gram in 2024 aims to ex­pand re­sour­ces and iden­ti­fy new tar­gets.

The Ke­nie­ba Win­dow, part of the Bi­ri­mi­an Green­stone Belt, is known for high-qua­li­ty gold re­sour­ces aver­aging 2.22 g/t and sub­stan­ti­al mar­ket va­lua­tions. Re­cent ac­qui­si­ti­ons in this area have aver­a­ged 1.81 mil­li­on oun­ces of gold at $66 per oun­ce. De­sert Gold Ven­tures’ SMSZ Pro­ject, with 1.08 mil­li­on oun­ces of gold at 1.14 g/t and va­lued at $9 per oun­ce, re­pres­ents a no­ta­ble op­por­tu­ni­ty. The project’s cur­rent mar­ket cap is about $10 mil­li­on, but it could be va­lued at $71.4 mil­li­on ba­sed on re­cent ac­qui­si­ti­on pri­ces. Af­ter ac­coun­ting for war­rants and op­ti­ons, the equi­ty va­lua­ti­on is $69.5 mil­li­on. Due to De­sert Gold’s lower avera­ge gra­de com­pared to peers, a 50% dis­count is ap­pli­ed, re­sul­ting in a va­lua­ti­on of $35 mil­li­on, or $0.155 per share. As the gra­de im­pro­ves, the va­lua­ti­on is ex­pec­ted to in­crease.

The com­pa­ny is also ex­plo­ring the fe­a­si­bi­li­ty of a small heap leach mine, which could po­ten­ti­al­ly ge­ne­ra­te sub­stan­ti­al cash flow. Preli­mi­na­ry as­sess­ments sug­gest the mine could pro­du­ce 15,000 to 20,000 oun­ces per year, with a po­ten­ti­al an­nu­al free cash flow of $20 mil­li­on. With a 70% dis­count ap­pli­ed to this project’s va­lua­ti­on, its con­tri­bu­ti­on is $0.101 per share.

In­cor­po­ra­ting this with the over­all va­lua­ti­on, our tar­get pri­ce is $0.311 per share. Gi­ven the si­gni­fi­cant up­si­de po­ten­ti­al, we rate the stock as a BUY.

You can down­load the re­se­arch here: http://​www​.more​-ir​.de/​d​/​3​0​8​1​5​.​pdf

Cont­act for ques­ti­ons:
GBC AG
Hal­der­stra­ße 27
86150 Augs­burg
0821241133 0
research@​gbc-​ag.​de
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Com­ple­ti­on Date (Time): 18.09.2024, 9:00am
First Dis­tri­bu­ti­on Date (Time): 19.09.2024, 6:00am

Ori­gi­nal-Re­se­arch: De­sert Gold Ven­tures Inc. (by GBC AG): BUY

GBC AG
Hal­der­stra­ße 27
86150 Augs­burg

Pho­ne: +49 821 241133–0
E‑mail: office(@)gbc-ag.de

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