Clas­si­fi­ca­ti­on of GBC AG to De­sert Gold Ven­tures Inc.

Com­pa­ny Name:	De­sert Gold Ven­tures Inc.
ISIN:	CA25039N4084
Re­ason for the re­se­arch:	Re­se­arch Com­ment
Re­com­men­da­ti­on:	Buy
Tar­get pri­ce:	0.425 CAD
Tar­get pri­ce on sight of:	31.12.2025
Last ra­ting ch­an­ge:
Ana­lyst:	Mat­thi­as Greif­fen­ber­ger, Mar­cel Gold­mann

Op­por­tu­ni­ties and Chal­lenges in Mali’s Evol­ving Mi­ning Sec­tor

Mali’s mi­ning sec­tor is curr­ent­ly un­der­go­ing a pe­ri­od of dy­na­mic trans­for­ma­ti­on, trig­ge­red by the im­ple­men­ta­ti­on of a new mi­ning code from Au­gust 2023. While the Jun­ta go­vern­ment has framed the­se ch­an­ges as a way to en­su­re that Mali be­ne­fits more si­gni­fi­cant­ly from its vast mi­ne­ral wealth, the re­gu­la­to­ry ad­jus­t­ments have been de­si­gned spe­ci­fi­cal­ly to in­crease sta­te ow­ner­ship in mi­ning pro­jects and rai­se ta­xes on the sec­tor. The goal is to cap­tu­re a lar­ger share of the pro­fits from mi­ne­ral ex­tra­c­tion, po­ten­ti­al­ly boos­ting the government’s re­ve­nues. Ho­we­ver, the­re is a broa­der pat­tern in the re­gi­on that is cri­ti­cal to un­der­stand. His­to­ri­cal­ly, re­gu­la­to­ry ch­an­ges made by mi­li­ta­ry Jun­ta go­vern­ments tend to re­sult in a tem­po­ra­ry shift, only to be re­pea­led un­der ci­vi­li­an go­ver­nan­ce once it be­co­mes clear that the­se ch­an­ges have been coun­ter­pro­duc­ti­ve to sec­tor growth and for­eign in­vest­ment. This is a vi­tal con­side­ra­ti­on for in­ves­tors and com­pa­nies ope­ra­ting in the re­gi­on, as such po­li­cy swings can in­tro­du­ce un­cer­tain­ty and risk to long-term ope­ra­ti­ons.

Un­der the new mi­ning code, the go­vern­ment has in­creased its sta­ke in new mi­ning pro­jects from 20% to 35%, and royal­ty ta­xes have ri­sen to 10.5% from ap­pro­xi­m­ate­ly 6%. While the in­ten­ti­on be­hind the­se in­crea­ses is to en­su­re grea­ter sta­te par­ti­ci­pa­ti­on in Mali’s mi­ne­ral wealth, they could act as se­rious road­blocks to the com­mis­sio­ning of new lar­ge-sca­le com­mer­cial mi­nes, po­ten­ti­al­ly slo­wing sec­tor growth. One of the pri­ma­ry me­cha­nisms in­tro­du­ced to achie­ve this goal is the ex­pan­si­on of sta­te par­ti­ci­pa­ti­on in mi­ning com­pa­nies. Un­der the 2019 Mi­ning Code, the Ma­li­an sta­te had an au­to­ma­tic “free car­ri­ed” in­te­rest of 10%, with an op­ti­on to ac­qui­re an ad­di­tio­nal 10% in­te­rest for cash. Un­der the New Mi­ning Code: The free car­ri­ed in­te­rest is now set at a mi­ni­mum of 10%, im­ply­ing that the sta­te may nego­tia­te an even hig­her share in spe­ci­fic pro­jects.

The ad­di­tio­nal op­tio­nal par­ti­ci­pa­ti­on the sta­te may ac­qui­re has in­creased to 20%.

Ad­di­tio­nal­ly, whe­re­as the 2019 Mi­ning Code re­qui­red that a 5% in­te­rest be trans­fer­red to lo­cal Ma­li­an in­ves­tors wi­t­hout de­fi­ning the spe­ci­fic be­ne­fi­ci­a­ries, the new code man­da­tes that the­se shares be trans­fer­red to the sta­te, which will over­see their al­lo­ca­ti­on to lo­cal investors—though no time­line for this pro­cess has been pro­vi­ded. In to­tal, the sta­te now has the op­ti­on to ac­qui­re at least 35% ow­ner­ship of lo­cal mi­ning com­pa­nies ope­ra­ting in Mali, a si­gni­fi­cant in­crease com­pared to other re­gio­nal mi­ning ju­ris­dic­tions such as Bur­ki­na Faso, Ga­bon, Ke­nya, Mo­zam­bi­que, Tan­z­a­nia, and Se­ne­gal, which have ty­pi­cal­ly cap­ped op­tio­nal sta­te par­ti­ci­pa­ti­on at 25%.

An­o­ther ma­jor head­wind for com­pa­nies and in­ves­tors has been the sus­pen­si­on of ope­ra­ti­ons at the Di­rec­tion Na­tio­na­le de la Géo­lo­gie et des Mi­nes (DNGM), which has been on­go­ing for th­ree ye­ars. This has crea­ted si­gni­fi­cant dis­rup­ti­ons in mi­ning and ex­plo­ra­ti­on li­cen­se re­ne­wals and new ap­pli­ca­ti­on pro­ces­ses, lea­ving the sec­tor in lim­bo and ge­ne­ra­ting an at­mo­sphe­re of un­cer­tain­ty for in­ves­tors and cor­po­ra­ti­ons ali­ke. Ho­we­ver, the even­tu­al lif­ting of this sus­pen­si­on re­pres­ents a ma­jor ca­ta­lyst once re­sol­ved and will mark a si­gni­fi­cant po­si­ti­ve de­ve­lo­p­ment, res­to­ring con­fi­dence and ac­ce­le­ra­ting new in­vest­ment, as­sum­ing it is hand­led ef­fec­tively by the Ma­li­an go­vern­ment.

Key De­ve­lo­p­ments

Re­vi­sed mi­ning code de­si­gned for long-term growth but rai­ses con­cerns: Mali’s new mi­ning code ali­gns with a broa­der trend seen in the re­gi­on, whe­re Jun­ta-led go­vern­ments have sought to in­crease sta­te ow­ner­ship in ex­tra­c­ti­ve in­dus­tries. His­to­ri­cal­ly, the­se ch­an­ges are of­ten wal­ked back or re­sc­in­ded once a coun­try tran­si­ti­ons back to de­mo­cra­tic ci­vi­li­an rule.

Com­mit­ment to sta­bi­li­ty and le­gal cla­ri­ty: While re­gu­la­to­ry ch­an­ges have led to ope­ra­tio­nal hurd­les, in­clu­ding tem­po­ra­ry halts at some sites, the go­vern­ment and mi­ning com­pa­nies are en­ga­ged in con­s­truc­ti­ve dis­cus­sions to re­sol­ve dis­pu­tes. Po­si­ti­ve mo­men­tum has al­re­a­dy been ob­ser­ved, as ma­jor firms such as Al­lied Gold, B2Gold, and Re­so­lu­te Mi­ning have re­a­ched agree­ments with the go­vern­ment, while Bar­rick Gold re­mains in ac­ti­ve nego­tia­ti­ons. This dis­pu­te re­so­lu­ti­on pro­cess re­pres­ents an­o­ther key ca­ta­lyst for sec­tor sta­bi­li­ty mo­ving for­ward.

Sus­tained gold pro­duc­tion and fu­ture pro­s­pects: Mali’s in­dus­tri­al gold pro­duc­tion saw a tem­po­ra­ry dip in 2024 but re­mains ro­bust at 51 me­tric tons (PY: 66.5 me­tric tons). With new pro­jects in de­ve­lo­p­ment and ex­pan­si­ons such as B2Gold’s Fe­ko­la pro­ject pro­gres­sing, pro­duc­tion is ex­pec­ted to re­bound in the co­ming ye­ars, rein­for­cing Mali’s po­si­ti­on as a top glo­bal gold pro­du­cer. Ho­we­ver, in­ves­tor sen­ti­ment re­mains cau­tious as com­pa­nies na­vi­ga­te the shif­ting re­gu­la­to­ry land­scape.

Proac­ti­ve In­dus­try En­ga­ge­ment and Po­li­ti­cal Ca­ta­lysts: Mi­ning com­pa­nies con­ti­nue to en­ga­ge with the Ma­li­an go­vern­ment to en­su­re re­gu­la­to­ry cla­ri­ty and busi­ness con­ti­nui­ty. While con­cerns per­sist, the ex­pec­ta­ti­on of an even­tu­al elec­tion and po­ten­ti­al re­turn to a ci­vi­li­an-led go­vern­ment in­tro­du­ces an­o­ther key ca­ta­lyst. His­to­ri­cal pre­ce­dent sug­gests that a new ad­mi­nis­tra­ti­on may re­as­sess the cur­rent mi­ning code, po­ten­ti­al­ly rol­ling back some of the more rest­ric­ti­ve me­a­su­res.

Com­pa­ny-Spe­ci­fic Up­dates

De­sert Gold Ven­tures (DAU): De­sert Gold Ven­tures is stra­te­gi­cal­ly po­si­tio­ned to ca­pi­ta­li­ze on Mali’s evol­ving mi­ning land­scape. The com­pa­ny holds a 440 km² land packa­ge in the Ke­nie­ba Win­dow, sur­roun­ded by ma­jor in­dus­try play­ers such as Bar­rick Gold, B2Gold, Al­lied Gold, and En­dea­vour Mi­ning. Gi­ven the on­go­ing re­gu­la­to­ry tran­si­ti­on, De­sert Gold sees in­creased po­ten­ti­al for stra­te­gic part­ner­ships and M&A ac­ti­vi­ty.

B2Gold (BTG): With en­vi­ron­men­tal ap­pr­ovals se­cu­red for the Fe­ko­la ex­pan­si­on, B2Gold is well-po­si­tio­ned for in­creased pro­duc­tion. The pro­ject is ex­pec­ted to si­gni­fi­cant­ly con­tri­bu­te to Mali’s gold out­put start­ing this year, rein­for­cing the country’s strong mi­ning sec­tor.

Bar­rick Gold (GOLD): The Lou­lo-Goun­ko­to com­plex re­mains one of Mali’s lar­gest gold ope­ra­ti­ons. While fa­cing tem­po­ra­ry re­gu­la­to­ry chal­lenges, Bar­rick is ac­tively nego­tia­ting with the go­vern­ment, de­mons­t­ra­ting a com­mit­ment to long-term col­la­bo­ra­ti­on and con­tin­ued ope­ra­ti­ons in Mali.

Re­so­lu­te Mi­ning (RSG): Re­so­lu­te Mi­ning is ac­tively en­ga­ged in stra­te­gic dis­cus­sions with the go­vern­ment re­gar­ding its long-term pre­sence in Mali. The company’s wil­ling­ness to work wi­thin the evol­ving re­gu­la­to­ry frame­work un­ders­cores the re­si­li­ence and ad­ap­ta­bi­li­ty of mi­ning ope­ra­tors in the re­gi­on.

Con­clu­si­on

Mali’s mi­ning sec­tor is in a pha­se of con­s­truc­ti­ve evo­lu­ti­on, ba­lan­cing sta­te in­te­rests with in­ves­tor con­fi­dence. The government’s en­ga­ge­ment with in­dus­try lea­ders sug­gests a com­mit­ment to re­fi­ning po­li­ci­es that pro­mo­te sus­tainable growth and long-term in­vest­ment. While re­gu­la­to­ry ch­an­ges in­tro­du­ce si­gni­fi­cant chal­lenges, they also pre­sent op­por­tu­ni­ties for a more sta­ble and equi­ta­ble mi­ning en­vi­ron­ment.

Key po­si­ti­ve ca­ta­lysts mo­ving for­ward in­clude:

Lif­ting of the DNGM sus­pen­si­on, which would rein­sta­te clear li­cen­sing and re­ne­wal pro­ces­ses, re­mo­ving a ma­jor bar­ri­er to in­vest­ment.

Re­so­lu­ti­on of dis­pu­tes with ma­jor mi­ning com­pa­nies, al­re­a­dy achie­ved with Al­lied Gold, B2Gold, and Re­so­lu­te Mi­ning, with Bar­rick Gold still in nego­tia­ti­ons.

A po­ten­ti­al elec­tion, which could lead to a roll­back of the cur­rent mi­ning code, alig­ning Mali with his­to­ri­cal re­gio­nal pat­terns whe­re Jun­ta-era po­li­ci­es are of­ten re­vi­sed un­der ci­vi­li­an rule.

Cur­rent va­lua­tions in the sec­tor re­flect a worst-case sce­na­rio, with many in­ves­tors pre­vious­ly fea­ring full nationalization—a sce­na­rio that has not ma­te­ria­li­zed. As po­li­ti­cal and re­gu­la­to­ry con­di­ti­ons im­pro­ve, this dis­con­nect pres­ents a com­pel­ling op­por­tu­ni­ty for com­pa­nies with strong po­si­ti­ons in Mali.

For De­sert Gold Ven­tures, the­se con­di­ti­ons of­fer si­gni­fi­cant po­ten­ti­al up­si­de. With an ex­pan­ding gold re­sour­ce in a prime lo­ca­ti­on near ma­jor play­ers, the com­pa­ny stands to be­ne­fit from im­pro­ving in­ves­tor sen­ti­ment. As va­lua­tions ad­just to re­flect the im­pro­ving rea­li­ty on the ground, De­sert Gold re­mains a pro­mi­sing ex­plo­ra­ti­on and de­ve­lo­p­ment play with strong up­si­de po­ten­ti­al.

We re­af­firm our tar­get pri­ce of USD 0.311 (CAD 0.425; EUR 0.29), em­pha­si­zing its strong up­si­de po­ten­ti­al, and main­tain a Buy ra­ting.

You can down­load the re­se­arch here: http://​www​.more​-ir​.de/​d​/​3​1​7​7​7​.​pdf

Cont­act for ques­ti­ons:
GBC AG
Hal­der­stra­ße 27
86150 Augs­burg
⁰⁸²¹⁄₂₄₁₁₃₃ 0
research@​gbc-​ag.​de
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Of­fen­le­gung mög­li­cher In­ter­es­sens­kon­flik­te nach § 85 WpHG und Art. 20 MAR Beim oben ana­ly­sier­ten Un­ter­neh­men ist fol­gen­der mög­li­cher In­ter­es­sen­kon­flikt ge­ge­ben: (5a,11); Ei­nen Ka­ta­log mög­li­cher In­ter­es­sen­kon­flik­te fin­den Sie un­ter: https://​www​.gbc​-ag​.de/​d​e​/​O​f​f​e​n​l​e​g​u​n​g​.​htm
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Date of Com­ple­ti­on: 14.02.2025 (12:30 pm)
Date of First Dis­tri­bu­ti­on: 17.02.2025 (09:00 am)