Original-Research: Desert Gold Ventures Inc. (von GBC AG): Buy

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

17.03.2026 / 15:30 CET/CEST

Dissemination of a Research, transmitted by EQS News - a service of EQS

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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 Report (Anno)

Recommendation: Buy

Target price: 0.93 CAD

Target price on sight of: 31.12.2026

Last rating change:

Analyst: Matthias Greiffenberger, Cosmin Filker

From exploration optionality to a funded path to first gold

Desert Gold Ventures is in the middle of a strategic transition from a long

running exploration optionality story in western Mali into a staged

development and early operating readiness story anchored by its fully

permitted Barani East oxide gold project. The most important takeaway from

the recent flow of company communication is not simply that more planning is

being done, but that execution planning has begun to translate into real

mobilization, site governance, infrastructure sequencing, and an explicit

calendar toward an initial go live event. In parallel, management has taken

steps to ensure the balance sheet can support that near term execution push

while keeping broader exploration options alive across the much larger SMSZ

land package and the newer Tiegba exposure in Cote d'Ivoire. The equity

story is therefore shifting from a primarily geological debate into an

operational and project delivery debate, with the near-term share price

likely to be driven less by incremental drill intersections and more by the

cadence of tangible milestones such as water development, civil completion,

plant delivery, installation, commissioning and first gold production

performance.

Why the market should care now

Historically, Desert Gold has been valued primarily on optionality, scale,

and the probability of making a large discovery within a proven structural

corridor. Optionality stories tend to trade on sentiment cycles, drill

result momentum, and the cost of capital. They also tend to be punished when

capital markets tighten because the underlying asset cannot self fund.

Management is now attempting to change that dynamic by advancing Barani East

as an execution led, lower initial capital intensity project that can move

toward cash generating operations in phases. The central thesis is

straightforward: compress time to first meaningful operational validation by

starting with a simpler gravity only processing approach, validate mining

and metallurgy in the field, stockpile unrecovered or partially recovered

material for future processing, and then step up to higher recovery and

higher throughput configurations when technical confidence and financing

capacity improve. This staged approach is designed to reduce the upfront

engineering burden, lower the initial capital hurdle, and create shorter

cycle catalysts that are easier for the market to price.

The company is trying to create an internally consistent bridge between

exploration upside and development credibility. If Barani East progresses

from a permitted project into a constructed and operating asset, even at

modest throughput, the market can begin to treat Desert Gold as a company

with a pathway to recurring cash flows rather than solely a capital

consuming explorer. That changes the valuation framework, broadens the

investable audience, and can reduce the equity risk premium applied to

longer dated exploration optionality.

Barani East is moving from concept into execution

What matters most now is that Barani East appears to be moving from concept

into execution. The project has progressed from conceptual planning into a

series of field and engineering actions that indicate the company is

attempting to lock down execution risk early. This is evidenced by physical

mobilization, camp and site readiness work, on the ground technical

assessment, discovery of a material design conflict, and the creation of an

oversight framework that includes independent civil and conformity controls.

Physical presence and mobilization matter more than they appear. Opening and

operationalizing the project camp, initiating site cleaning and readiness,

and beginning community relations engagement signals the company is moving

from desktop planning into field governance. For early stage mining projects

in remote jurisdictions, the transition from head office planning to onsite

execution is where many hidden risks emerge. Logistics, site access

constraints, local administrative procedures, contractor availability, and

ground truth differences versus maps all begin to surface. The fact that the

company has disclosed a structured assessment visit and an explicit set of

mission objectives suggests a more disciplined approach than the typical

small cap pattern of mobilizing contractors without robust independent

verification.

The technical assessment element is particularly instructive. A key

disclosed finding was a conflict between the proposed infrastructure layout

and a strong natural drainage network. In practical terms, this type of

conflict is one of the most common sources of civil failure, schedule

slippage, and expensive rework, particularly in seasonal rainfall

environments. A poorly placed plant pad or access road can become a flood

channel. Foundations can be undermined. Road culverts and water diversion

structures can be undersized. The discovery of this issue prior to major

construction start is a positive signal. Even more important is the response

methodology: identification, proposal, submission to layout designers,

validation, then execution. This sequence indicates that management is not

treating the project as a simple drop in the plant and start running effort.

They are acknowledging that civil design and hydrology are critical path

items, and they are trying to resolve them before capital is committed

irreversibly to incorrect earthworks.

Another significant development is the articulation of a parallel workstream

approach. The company is sequencing site preparation and infrastructure

tasks to run ahead of plant delivery, which is a rational attempt to

compress the overall timeline and reduce idle time once major equipment

arrives. This includes site clearing and earthworks, road upgrades, ROM pad

preparation, plant foundations, water development, drainage controls,

utilities, security, lighting, offices, control rooms and camp

infrastructure. Each of these is typically straightforward in isolation but

becomes schedule critical when materials, labor, and approvals have to

align. Doing them early reduces the probability that the plant arrives and

sits on the ground while civil work catches up.

The use of independent civil oversight is also important. Selecting an

independent civil consultant team with a mission lead engineer and onsite

technical personnel, and mobilizing them once contracts are signed, suggests

an institutional commitment to quality control. For first time or early

producer builds, independent oversight can prevent a cascade of downstream

failures. Governance quality often explains why two projects with similar

scope have very different outcomes. A small modular plant can still fail if

foundations are wrong, drainage is mismanaged, or equipment is installed

without alignment and tolerance discipline. Independent oversight can also

improve contractor accountability, documentation quality, and the rigor of

handover procedures.

The financing now supports the build

The financing now supports this shift in emphasis. Desert Gold has raised

approximately C$7.21 million gross in recent equity financing. The company

stated that the proceeds are intended in part to commission the first phase

of its gravity plant at the fully permitted Barani East oxide gold project,

while also supporting exploration and general working capital.

The plan: start small, prove the mine, scale with confidence

The plan itself is best understood as a staged development roadmap.

Management's approach begins with a modular gravity processing plant

supported by enabling infrastructure, executed with a risk reduction

mindset, and tied to a defined commissioning target. The processing approach

starts with gravity only beneficiation of oxide material. Gravity circuits

exploit the density contrast between gold bearing particles and gangue to

concentrate free gold, often through centrifugal concentrators, shaking

tables, and associated classification and pumping systems. Gravity can be

attractive for oxide operations because it can be modular, relatively fast

to install, and does not require the same level of reagent handling and

tailings chemistry management as cyanidation circuits.

The key strategic point is that gravity only is not being presented as the

terminal configuration. The conceptual framework is an initial gravity phase

with moderate recovery, alongside a longer dated pathway to higher

recoveries through additional processing steps. The operational implication

is that the company intends to begin generating a gravity concentrate

product and recover a portion of contained ounces quickly, while maintaining

a pathway to capture additional ounces later from material that gravity does

not recover. This can be implemented through stockpiling of tails or

intermediate products, or by blending and reprocessing strategies once

additional circuits are installed. In that sense, the first phase is not

just a mine plan. It is also a field validation exercise intended to shorten

the route to a financeable, more optimized second phase.

Throughput and scalability sit at the center of this staged concept.

Management has outlined a small initial operation built for roughly US$2

million of initial capex and designed to start at around 200 tpd. It then

plans to expand in Q4 2026 with roughly another US$2 million of capex to

lift throughput toward 1,200 tpd. Investors should view this as a deliberate

decision to avoid overbuilding at the start. Expansion potential is only

valuable if the first phase proves the ore and the operating environment can

support scale. That means early commissioning metrics and operating

stability are disproportionately important. If the first phase demonstrates

repeatable throughput, recoveries near expectations, and manageable

operating costs, expansion becomes a credible and financeable next step. If

the first phase struggles with feed variability, mechanical reliability, or

recovery volatility, scaling up would simply scale up the problem. The logic

of the strategy is therefore to buy operational proof before spending

heavily on full optimization.

Infrastructure and water are part of the investment case

Site preparation and infrastructure planning deserve equal attention because

they determine whether the plant can operate sustainably. The plan includes

water sourcing via boreholes with meaningful targeted flow rates, suggesting

that process water and camp water availability is being treated as a core

constraint. Water is typically one of the most underestimated factors in

early oxide operations. Even if geology and metallurgy cooperate,

insufficient water supply can throttle throughput, degrade recovery,

increase downtime, and force capital spend into emergency solutions. The

decision to mobilize geophysical and drilling teams simultaneously is

consistent with a desire to accelerate the water workstream and reduce the

chance that water becomes the gating item during commissioning.

Civil works and drainage controls are another cornerstone. The earlier

discovery of a drainage network conflict implies that hydrology must be

engineered properly to avoid plant pad erosion, flooding of access roads,

and washouts that isolate the site. The plan therefore includes layout

adjustments, validation, and then execution. In a best practice framework,

this should also encompass appropriate road camber, culvert sizing,

diversion channels, retention or settling structures for stormwater, and

robust surface management around stockpiles and ROM pads. Management appears

to understand that for a small mine in a remote jurisdiction, the line

between a clean startup and a delayed startup often runs through earthworks,

drainage, and logistics rather than metallurgy alone.

Operational readiness also requires local stakeholder engagement.

Communication with local administration and community relations matters

because a fully permitted project still requires social license maintenance,

local hiring practices, vendor engagement, and proactive communication

around site activity, water use, and environmental controls. As the project

transitions from exploration style intermittent activity to continuous

operations, this governance layer becomes part of the execution framework.

That is relevant to valuation because a staged producer is worth more when

the market believes it can actually keep operating, not merely start

operating.

The timeline underpinning this strategy is also increasingly explicit. Our

base case assumes Barani East follows a straightforward critical path to a

mid June 2026 go live. Under that framework, plant fabrication and factory

acceptance are completed by late March 2026, enabling shipment at month end.

We then assume roughly seven weeks of maritime transport to Dakar, followed

by late May port handling, customs clearance and inland delivery to site. In

parallel, site preparatory works run through March to late May and are

substantially complete when equipment arrives, allowing immediate

installation. Finally, we assume a late May to mid June assembly and

commissioning window, culminating in initial startup in mid June 2026. The

importance of this schedule is less about precision than about sequencing.

Our valuation: a small mine that should fund itself

Our valuation framework reflects this change in the company's profile. Using

the operating framework from the PEA and the staging assumptions, the Barani

East small mine points to a business that can sustain itself once

commissioned. The model assumes 96 kt processed in 2026 during ramp-up, then

432 ktpa from 2027 onward, with recovered grade of 0.96 g/t and

metallurgical recovery of 87%. That translates into roughly 2,578 ounces

sold in the startup year, about 11,600 ounces per year through steady state,

and 6,847 ounces in the final partial year. At a gold price of US$2,850 per

ounce, revenue rises from about US$7.35 million in 2026 to roughly US$33.06

million annually in steady state.

The operating cost structure is equally straightforward in the model. Mining

cost is set at US$10.10 per tonne, processing at US$13.90 per tonne, and G&A

at US$5.80 per tonne, for a total cash operating cost of approximately

US$29.80 per tonne. On a per-ounce basis that equates to roughly US$1,110

per ounce cash cost. On this basis, EBITDA is about US$4.49 million in 2026

and around US$20.19 million per year from 2027 through 2035. After

depreciation and a 20% cash tax assumption, free cash flow is slightly

negative in the startup year because the model places both the initial capex

and the stage-2 capex into the upfront build period, but it turns strongly

positive thereafter at roughly US$16.29 million annually in steady state.

Cumulative free cash flow exceeds US$155.9 million over the modeled mine

life.

The crucial implication is that this is not being valued as a large, capital

intensive mine build requiring repeated trips to the equity market just to

get to operating scale. It is being valued as a modest starter operation

with low upfront capital, rapid conversion of revenue into operating margin,

and a realistic path to becoming self funding after commissioning. On the

assumptions above, the project generates an NPV discounted at 10% of

approximately US$89.6 million. Those numbers are high because the capital

burden is small relative to the potential cash generation. The project

therefore has significance beyond its absolute production scale. It gives

the company a mechanism to convert part of its mineral inventory into

internally generated funding capacity.

Valuation impact of the Barani East gravity plant

The Barani East gravity plant is the most important new element in our

valuation framework because it introduces a near-term, already financed

production component into what has historically been a predominantly

exploration and development story. In our sum-of-the-parts valuation, we

assign the gravity plant a value of US$89.6 million, making it the

second-largest contributor to group intrinsic value after the Mali Oxide

Project PEA valuation of US$124.0 million. On this basis, the gravity plant

accounts for approximately 36.6% of total group value of US$244.8 million.

This is a meaningful shift in the structure of the valuation. The broader

Mali Oxide Project, the Tiegba Project in Côte d'Ivoire, and the Mali

non-PEA resources continue to support the company's strategic asset value,

but the Barani East gravity plant adds a different category of value. It is

not being valued primarily as long-dated geological optionality. Instead, it

is being valued as an already financed, staged, and executable mine

development with a credible route to near-term cash flow generation. In our

view, that distinction is central to the investment case because public

markets typically place greater value on assets that can move from

permitting and planning into production on a visible timeline and with

modest capital intensity.

The gravity plant therefore enhances both the magnitude and the quality of

Desert Gold's valuation. Numerically, it adds US$89.6 million to total

intrinsic value. Strategically, it changes how the market can think about

the company. Rather than valuing Desert Gold solely on what it owns in the

ground, investors can increasingly begin to value it on what it may be able

to monetize in the near term through a staged small-mine build that is

already financed at the first phase. That matters because the company has

now moved beyond a hypothetical funding discussion and into an execution

phase where the key debate shifts toward delivery, ramp-up, and operating

performance.

This also improves the balance of the sum-of-the-parts. The Mali Oxide

Project remains the largest component at US$124.0 million, or approximately

50.7% of total intrinsic value. The Tiegba Project contributes US$9.5

million, or roughly 3.9%, while Mali non-PEA resources contribute US$21.7

million, or around 8.9%. Against that backdrop, the gravity plant stands out

not just for its size, but for its role as the company's clearest bridge

between asset value and operating value. In other words, it is the component

most directly linked to a potential rerating from explorer-developer to

emerging producer.

On a per-share basis, our total intrinsic value of US$244.8 million

translates into US$0.68 per share based on 360.3 million shares outstanding.

This is equivalent to CAD$0.93 per share and EUR 0.59 per share. Within that

total, the Barani East gravity plant contributes approximately US$0.25 per

share. That is a substantial portion of total equity value and reinforces

our view that successful execution at Barani East is likely to be one of the

most important determinants of share price performance over the next phase

of the company's development.

In our view, the significance of the gravity plant extends beyond its

standalone DCF contribution. Because the first phase is already financed,

the project provides Desert Gold with something the market has not

historically been willing to ascribe in full: a credible and funded path to

internally generated cash flow. That would not only support the valuation of

Barani East itself, but could also strengthen confidence in the monetization

potential of the wider SMSZ portfolio. For that reason, we view the gravity

plant as both a major valuation contributor in its own right and a catalyst

capable of improving the market's valuation of the rest of the asset base.

You can download the research here:

https://eqs-cockpit.com/c/fncls.ssp?u=e3241d040ad0599d87531a85089d3958

Contact for questions:

GBC AG

Halderstrasse 27

86150 Augsburg

0821 / 241133 0

research@gbc-ag.de

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Beim oben analysierten Unternehmen ist folgender möglicher

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Completion: 16.03.2026 (5:45 p.m. CET)

First distribution: 17.03.2026 (3:30 p.m. CET)

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