03.06.2022, Author: Carsten Mainitz

Desert Gold - In Pole Position — Massive undervaluation of the African gold explorer

  • Gold
  • Edelmetalle
  • Rohstoffe
  • Investment

Desert Gold Ventures is a Canadian gold exploration and development company focused on gold deposits in Africa, primarily West Africa. The Company's SMSZ project is one of the largest gold exploration projects in West Africa and has more than 20 open gold zones discovered to date. The project has the potential for further resource increases and the discovery of one or more large gold deposits comparable to Tier 1 gold mines in the region. Current news, project progress, and increasing M&A activity in the industry should boost the stock.

The recently published data from the first three core drill holes in the Gourbassi West North zone in the SMSZ project, which were drilled to test the depth extension, underline the potential of the gold explorer. The share price reacted very positively to the results in the meantime. The Company is still significantly undervalued with a market capitalization of only CAD 17 million.

Excellent prospects

All three holes intersected zones of gold mineralization. The top intercept, 124m long, assayed 1.08 g/t gold, including 1.85 g/t gold over 41.1m and 0.7 g/t gold over 30.6m. In addition, the data demonstrate that gold mineralization extends to a depth of at least 175m. Previously, only a depth extension of 35m was documented.

Jared Scharf, President and CEO, classified the results, "This is a fantastic start to our 2022 drill program, intersecting thick zones of gold mineralization that start at or near surface, indicating real potential for delineating a significant gold deposit with good economics. Hole DD009 returned approximately 160m of near continuous gold mineralization. These initial results are particularly encouraging as the Gourbassi West North zone is a new discovery in a previously unexplored part of the concession area. Gourbassi West North has the potential to significantly expand the existing resource at SMSZ as we continue to flesh out this objective."

Convincing analytical results

With assay results pending for most of the AC and RC wells, shareholders can look forward to a continuation of the positive newsflow. A few months ago, the Company already achieved a significant milestone with the release of the first pit-constrained mineral resource from five deposit zones at its flagship SMSZ project.

The zones on which the resource estimate was based are located within a tight, 12km radius in the southern half of the 440sqkm area. The resource estimate totals approximately 1 million ounces of gold, with the majority in the inferred category, i.e. associated with higher uncertainty - a total of 769,200 ounces of gold (at a tonnage of 20.7 million and a grade of 1.16 g/t). The measured and indicated mineral resource (measured & indicated) totaled 310,300 ounces of gold at 8.47 million tonnes at a grade of 1.14 g/t gold.

With the SMSZ flagship project, Canadians own one of the largest non-producing land areas in West Africa. Located in Mali, Africa's third-largest gold producer, the SMSZ project has enormous development potential, evidenced by recent drill results.

Desert Gold owns one of the largest non-producing land packages in West Africa. Source: Desert Gold Ventures Inc.

The SMSZ project is located in the west of the country, on the border with Senegal, and is named after the shear zone (a significant tectonic discontinuity area in the Earth's upper crust that often contains mineralization such as Precambrian gold deposits) between Senegal and Mali. Covering 440sqkm, the project comprises the largest contiguous non-producing land package in the region. Several producing Tier 1 gold mines are located in close geographic proximity, including those of Barrick Gold (Gounkoto and Loulo), Allied Gold (Sadiola and Yatela), Endeavour Mining (Tabakoto, Segala and Massawa) and B2Gold (Fekola).

The latter company recently made news after reaching an agreement with the management of neighboring competitor Oklo Resources for a takeover. Although Oklo's project seems relatively small, the proximity to B2Gold's open pit Fekola mine was probably the deciding factor here. All of the aforementioned Tier 1 gold mines near the SMSZ project each produce more than 500,000 ounces of gold per year at very low costs of around $800 per ounce (AISC).

In southern Mali, on the border with Guinea, the Canadians own the much smaller Djimbala project. There are quite a few producing mines nearby, such as Hummingbird Resources' Komana mine, which is directly west of the Djimbala project, and Endeavour Mining's Kalana mine, which is about 18km to the south. Initial drilling has encountered gold grades of up to 12.65 g/t at 3m depth.

Interim conclusion

A reassessment of Desert Gold could gradually take hold. The neighboring M&A activities could prove decisive in this regard. The Company has a huge acreage. Drilling data underpins the potential to produce one or more larger mines. Further exploration activity should help the share price soar. Desert Gold is currently one of the most exciting gold explorers, not only on the African continent, but also on an international scale.

The update following our initial Report 11/21.

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