The world’s second-largest gold miner, Barrick Gold Corporation, is actively pursuing buyers for its Tongon mine in Côte d’Ivoire. Collaborating with Toronto-Dominion Bank (TD), Barrick began soliciting bids in late November, aiming to streamline operations and focus on higher-quality assets as part of its long-term strategy.
Depleting Resources Push Tongon to the Sidelines
Tongon has been a key asset for Barrick since its inception but is now nearing the end of its productive life. While the mine generated 204,000 ounces of gold in 2023, representing 5% of Barrick’s annual output, its reserves are expected to run out by 2027. Located 682 kilometers north of Abidjan, Tongon has been instrumental in Côte d’Ivoire’s mining sector, but its declining potential makes it a less strategic asset for Barrick’s future.
Barrick has expressed its intent to concentrate on higher-margin operations that align with its long-term goals. The sale of Tongon is part of this vision, enabling the company to enhance its operational efficiency and focus on core assets with stronger growth potential.
Gold Market Boom Boosts Seller Confidence
The current gold market dynamics provide a lucrative backdrop for the sale. Record-high gold prices, driven by geopolitical uncertainty, central bank purchases, and interest rate adjustments, have significantly increased the valuation of mining assets.
Competitors like Newmont Corporation have taken full advantage of the gold rally. In 2024 alone, Newmont raised $3.9 billion through mine sales, surpassing its initial target. Notably, the sale of Newmont’s Akyem mine in Africa to Zijin Mining Group Co. for $1 billion highlighted the demand for African mining assets among global investors.
Barrick is now positioning itself to benefit from these favorable market conditions, ensuring the Tongon sale aligns with its strategic and financial goals.
Prior Sale Attempts and Lessons Learned
Barrick previously considered selling Tongon in 2019 but failed to secure a deal. Industry analysts speculate that market conditions and potential buyers’ hesitations may have contributed to the unsuccessful attempt. However, the current gold price rally, combined with Barrick’s proactive market engagement, suggests a much stronger likelihood of a successful transaction this time.
During an investor briefing in November, Barrick COO Sebastiaan Bock highlighted the strategic importance of the sale. “Although we have continued extending Tongon’s life, it has become increasingly non-core to Barrick,” Bock stated. The company is optimistic that divesting the asset will reduce its cost structure by more than $50 per ounce and enhance its overall portfolio quality.
Economic Benefits for Côte d’Ivoire
The sale of Tongon has implications beyond Barrick’s corporate strategy. The mine has been a cornerstone of Côte d’Ivoire’s mining industry, generating local employment and contributing to economic growth. While Barrick’s exit might raise concerns about continuity, new ownership could bring fresh investment and opportunities to the region.
Analysts suggest that the Ivorian government and local investors, who hold a minority stake in the mine, could benefit from the sale. New ownership might unlock further exploration and technological advancements, potentially extending the mine’s lifespan and maximizing its value for stakeholders.
Preparing for Future Growth
Barrick’s decision to divest Tongon reflects its commitment to strategic realignment in an evolving market. By focusing on core assets with greater growth potential, the company is better positioned to navigate industry challenges and maintain its competitive edge.
The Tongon sale, if executed successfully, is expected to free up capital for reinvestment in projects with stronger returns, aligning with Barrick’s vision of sustainable, high-margin operations. As gold prices remain strong, the company’s ability to adapt and capitalize on favorable conditions will likely determine its future success.