As gold prices reach unprecedented heights, industry leaders are urging caution to avoid repeating past mistakes. Jorge Ganoza, CEO of Fortuna Mining, has emphasised the importance of disciplined investment strategies in the face of a booming market.
Gold Prices Surge to Record Levels
The price of gold has recently climbed to $3,500 per troy ounce, driven by global economic uncertainties and increased investor demand for safe-haven assets. This surge has raised concerns about potential overinvestment in the mining sector, reminiscent of the early 2010s when high prices led to the development of unprofitable projects.
Lessons from the Past
Reflecting on previous cycles, Ganoza cautioned against complacency:
“In previous cycles [of high prices] about a decade ago, mining companies were very complacent, thinking that higher prices would take care of everything.”
He stressed the need for careful capital allocation, focusing on viable projects in stable jurisdictions.
Strategic Divestment from Burkina Faso
In line with this prudent approach, Fortuna Mining has announced the sale of its Yaramoko Mine in Burkina Faso to Soleil Resources International for approximately $130 million. The transaction includes a $70 million payment upon closing and $57.5 million in cash dividends. This move allows Fortuna to avoid around $20 million in future mine closure liabilities and reallocate resources to more promising opportunities.
Ganoza explained the rationale behind the sale:
“Considering the limited remaining life of mineral reserves at Yaramoko (approximately one year), the cessation of our exploration activities in-country, and the increasingly challenging business climate in Burkina Faso, the transaction represents a prudent exit that optimises value.”
Shifting Focus to More Stable Regions
Post-divestment, Fortuna plans to concentrate on its assets in Senegal, Ivory Coast, and Latin America. The company is also exploring investment opportunities in Guinea, attracted by its geological potential and comparatively stable political environment.
Ganoza highlighted the appeal of Guinea:
“We find Guinea to be a place we would invest today.”
This strategic shift underscores Fortuna’s commitment to operating in regions with favourable investment climates and robust resource potential.
Industry-Wide Implications
Fortuna’s actions reflect a broader industry trend towards cautious investment amidst market volatility. By prioritising fiscal discipline and strategic asset management, mining companies aim to ensure long-term sustainability and shareholder value.
As the gold market continues to evolve, industry leaders like Ganoza advocate for a balanced approach that mitigates risk while capitalising on growth opportunities.
For further insights, watch the following interview with Jorge Ganoza discussing Fortuna Mining’s recent strategic decisions: