Original-Research: Desert Gold Ventures Inc.

Original-Research: Desert Gold Ventures Inc. (von GBC AG): Buy. - from GBC AG 17.02.2025 / 09:01 CET/CEST Dissemination of a Research, transmitted by EQS News - a service of EQS Group.

Original-Research: Desert Gold Ventures Inc. - from GBC AG

17.02.2025 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group.
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.

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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to be repealed under civilian governance once it becomes clear that these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/31777.pdf

Contact for questions:
GBC AG
Halderstraße 27
86150 Augsburg
0821 / 241133 0
[e-mail]
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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/de/Offenlegung.htm
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Date of Completion: 14.02.2025 (12:30 pm)
Date of First Distribution: 17.02.2025 (09:00 am)

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2086679 17.02.2025 CET/CEST