TORONTO, Aug. 19,
2024 /PRNewswire/ - Allied Gold Corporation (TSX:
AAUC) ("Allied" or the "Company") is pleased to announce that
Kurmuk Gold Mine PLC ("KGM"), its subsidiary that owns the Kurmuk
Gold Project in Ethiopia, has
entered into a definitive Power Purchase Agreement ("PPA") with
Ethiopian Electric Power ("EEP") to secure a reliable, competitive,
and sustainable energy supply for the Kurmuk Gold Project
throughout the life of the mine. This is an important milestone in
the project's development, as a steady supply of hydroelectric
power is one of the factors that ensures the Kurmuk Gold Project
remains one of the lowest all-in sustaining cost
("AISC")(1) projects in the world. Ethiopia is a low-cost power producer,
generating power almost entirely through hydroelectric sources,
making it one of the most durable and cleanest power supplies
globally. The Kurmuk Gold Project is currently under development
and is expected to begin operations in the second quarter of 2026
(more information on the project is provided below).
Key Terms of the Agreement:
- Term: The PPA will be in effect for a period of twenty
years and may be extended by mutual agreement.
- Energy Charge: The agreement secures a flat energy
charge of US$0.04 per kWh, applicable
from the supply commencement date and remaining fixed for the
entire term, providing cost certainty for the project.
- Renewable Energy Source: The Kurmuk Gold Mine will
benefit from Ethiopia's
predominantly renewable energy sources, aligning with the Company's
commitment to sustainable mining practices.
- Transmission Line Construction: Electrical grid power
will be supplied to the operation via a 75-kilometer, 132 kV power
line, with substations at Asosa, a major city in the country near
the project, and at the project site. The government will provide
the grid connection, which will increase their equity stake in KGM
from 5 percent to 7 percent, as defined in the Kurmuk Development
Agreement. On-site power will be distributed via a network of 11 kV
power lines.
Securing the terms of the PPA marks a key milestone in advancing
the Kurmuk Gold Project, cementing its path to becoming a low-cost
producing mine for the Company. This agreement not only ensures the
project's financial viability by locking in low energy costs but
also reinforces Allied's strategic focus on leveraging sustainable
energy solutions, positioning the Kurmuk Gold Project as a model
for responsible mining in the region.
About the Kurmuk Project
The Kurmuk Gold Project, located in western Ethiopia, represents a key development for
Allied and the region. The project implementation team, known for
its strong African project delivery capabilities, has made
significant progress since the fourth quarter of 2023, focusing on
early works and execution planning. To date, the team has completed
execution planning and preparation activities, including mobilizing
the EPCM contractor to the site, advancing detailed engineering,
and formalizing the procurement plan.
Key milestones achieved include the mobilization of essential
logistics, the construction of the starter camp, and the successful
completion of a temporary water dam by a local earthworks
contractor under the supervision of DRA. The dam was completed on
schedule and is now full. Additionally, the construction of the
main 1,600-person camp is well underway, with earthworks, civil
works, and module deliveries progressing as planned.
Operational readiness remains a priority, with ongoing
recruitment for key positions, including the General Manager. The
Company is also in the final stages of awarding the mining
contract, focusing on advancing earthworks and preparing for the
early mobilization of equipment. This preparation includes
developing customs, importation, and logistics systems to ensure
seamless operations once mining begins.
The Kurmuk Gold Mine, once developed, is expected to produce
over 240,000 ounces of gold per year, with production in the first
five years exceeding 290,000 ounces annually. AISC is anticipated
to be below $950 per
ounce(1). Recent exploration results, particularly at
Tsenge and extensions of Dish Mountain—one of two initial open pits
planned for the project (which is designed as a series of open pits
with a common plant)—are contributing to the Company's goal of
achieving a minimum of five million ounces of gold in mineral
inventories at the project. These successes align with the
Company's strategy to enhance Kurmuk's existing Mineral Reserves
and Mineral Resources, aiming to extend the mine life to
approximately twenty years (as part of Allied's drive to establish
generational mines) and increase annual gold production to more
than 250,000 ounces at an AISC of less than $950 per ounce(1).
The total development capital required for the project is
expected to be funded through available cash, cash flows from
operations, and a combination of stream and gold pre-pay financing,
which is in advanced stages of discussion. The payback period for
the project is expected to be less than three years after the start
of operations.
The first gold pour is expected in the second quarter of 2026,
and the Company has provided a long-term outlook with a production
expectation of 175,000 ounces in 2026, which will be a partial year
of production.
About Allied Gold Corporation
Allied Gold is a Canadian-based gold producer with a significant
growth profile and mineral endowment which operates a portfolio of
three producing assets and development projects located in Côte
d'Ivoire, Mali, and Ethiopia. Led by a team of mining executives
with operational and development experience and proven success in
creating value, Allied Gold is progressing through exploration,
construction and operational enhancements to become a mid-tier next
generation gold producer in Africa
and ultimately a leading senior global gold producer.
Qualified Persons
Except as otherwise disclosed, all scientific and technical
information contained in this press release has been reviewed and
approved by Sébastien Bernier, P.Geo (Vice President, Technical
Performance and Compliance). Mr. Bernier is an employee of Allied
and a "Qualified Person" as defined by Canadian Securities
Administrators' National Instrument 43-101 - Standards of
Disclosure for Mineral Projects.
END NOTES
(1)
|
This is a non-GAAP
financial performance measure. Refer to the Non-GAAP Financial
Performance Measures section at the end of this news
release.
|
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
AND STATEMENTS
This press release contains "forward-looking information" under
applicable Canadian securities legislation. Except for statements
of historical fact relating to the Company, information contained
herein constitutes forward-looking information, including, but not
limited to, any information as to the Company's strategy,
objectives, plans or future financial or operating performance.
Forward-looking statements are characterized by words such as
"plan", "expect", "budget", "target", "project", "intend",
"believe", "anticipate", "estimate" and other similar words or
negative versions thereof, or statements that certain events or
conditions "may", "will", "should", "would" or "could" occur. In
particular, forward-looking information included in this press
release includes, without limitation, statements with respect to
information concerning the Stream Transaction, conditions precedent
and the closing thereof, expectations to be fully financed,
expected production, exploration, development and expansion plans
discussed herein being met. Forward-looking information is based on
the opinions, assumptions and estimates of management considered
reasonable at the date the statements are made, and is inherently
subject to a variety of risks and uncertainties and other known and
unknown factors that could cause actual events or results to differ
materially from those projected in the forward-looking information.
These factors include the Company's dependence on products produced
from its key mining assets; fluctuating price of gold; risks
relating to the exploration, development and operation of mineral
properties, including but not limited to adverse environmental and
climatic conditions, unusual and unexpected geologic conditions and
equipment failures; risks relating to operating in emerging
markets, particularly Africa,
including risk of government expropriation or nationalization of
mining operations; health, safety and environmental risks and
hazards to which the Company's operations are subject; the
Company's ability to maintain or increase present level of gold
production; the Company's ability to execute on its expansion and
optimization plans; nature and climatic condition risks;
counterparty, credit, liquidity and interest rate risks and access
to financing; the Company's success in executing non-dilutive
financing alternatives; cost and availability of commodities;
increases in costs of production, such as fuel, steel, power,
labour and other consumables; risks associated with infectious
diseases; uncertainty in the estimation of Mineral Reserves and
Mineral Resources; the Company's ability to replace and expand
Mineral Resources and Mineral Reserves, as applicable, at its
mines; factors that may affect the Company's future production
estimates, including but not limited to the quality of ore,
production costs, infrastructure and availability of workforce and
equipment; risks relating to partial ownerships and/or joint
ventures at the Company's operations; reliance on the Company's
existing infrastructure and supply chains at the Company's
operating mines; risks relating to the acquisition, holding and
renewal of title to mining rights and permits, and changes to the
mining legislative and regulatory regimes in the Company's
operating jurisdictions; limitations on insurance coverage; risks
relating to illegal and artisanal mining; the Company's compliance
with anti-corruption laws; risks relating to the development,
construction and start-up of new mines, including but not limited
to the availability and performance of contractors and suppliers,
the receipt of required governmental approvals and permits, and
cost overruns; risks relating to acquisitions and divestures; title
disputes or claims; risks relating to the termination of mining
rights; risks relating to security and human rights; risks
associated with processing and metallurgical recoveries; risks
related to enforcing legal rights in foreign jurisdictions;
competition in the precious metals mining industry; risks related
to the Company's ability to service its debt obligations;
fluctuating currency exchange rates (including the US Dollar, Euro,
West African CFA Franc and Ethiopian Birr exchange rates); risks
related to the Company's investments and use of derivatives;
taxation risks; scrutiny from non-governmental organizations;
labour and employment relations; risks related to third-party
contractor arrangements; repatriation of funds from foreign
subsidiaries; community relations; risks related to relying on
local advisors and consultants in foreign jurisdictions; the impact
of global financial, economic and political conditions, global
liquidity, interest rates, inflation and other factors on the
Company's results of operations and market price of common shares;
risks associated with financial projections; force majeure events;
transactions that may result in dilution to common shares; future
sales of common shares by existing shareholders; the Company's
dependence on key management personnel and executives;
vulnerability of information systems including cyber attacks; as
well as those risk factors discussed or referred to herein.
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking information,
there may be other factors that could cause actions, events or
results to not be as anticipated, estimated or intended. There can
be no assurance that forward-looking information will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. The Company
undertakes no obligation to update forward-looking information if
circumstances or management's estimates, assumptions or opinions
should change, except as required by applicable law. The reader is
cautioned not to place undue reliance on forward-looking
information. The forward-looking information contained herein is
presented for the purpose of assisting investors in understanding
the Company's expected financial and operational performance and
the Company's plans and objectives and may not be appropriate for
other purposes.
CAUTIONARY STATEMENT REGARDING NON-GAAP MEASURES
The Company has included certain non-GAAP financial performance
measures in this press release, which supplement its Consolidated
Financial Statements that are presented in accordance with IFRS,
including the following:
The Company believes that these measures, together with measures
determined in accordance with IFRS, provide investors with an
improved ability to evaluate the underlying performance of the
Company.
Non-GAAP financial performance measures do not have any
standardized meaning prescribed under IFRS, and therefore may not
be comparable to similar measures employed by other companies.
Non-GAAP financial performance measures are intended to provide
additional information, and should not be considered in isolation
or as a substitute for measures of performance prepared in
accordance with IFRS and are not necessarily indicative of
operating costs, operating earnings or cash flows presented under
IFRS.
Management's determination of the components of non-GAAP
financial performance measures and other financial measures are
evaluated on a periodic basis, influenced by new items and
transactions, a review of investor uses and new regulations as
applicable. Any changes to the measures are duly noted and
retrospectively applied, as applicable. Subtotals and per unit
measures may not calculate based on amounts presented in the
following tables due to rounding.
The measures of cash costs and AISC, along with revenue from
sales, are considered to be key indicators of a company's ability
to generate operating earnings and cash flows from its mining
operations.
AISC PER GOLD OUNCE SOLD
AISC figures are calculated generally in accordance with a
standard developed by the World Gold Council ("WGC"), a
non-regulatory, market development organization for the gold
industry. Adoption of the standard is voluntary, and the standard
is an attempt to create uniformity and a standard amongst the
industry and those that adopt it. Nonetheless, the cost measures
presented herein may not be comparable to other similarly titled
measures of other companies. The Company is not a member of the WGC
at this time.
AISC include cash costs (as defined above), mine sustaining
capital expenditures (including stripping), sustaining mine-site
exploration and evaluation expensed and capitalized, and accretion
and amortization of reclamation and remediation. AISC exclude
capital expenditures attributable to projects or mine expansions,
exploration and evaluation costs attributable to growth projects,
DA, income tax payments, borrowing costs and dividend payments.
AISC include only items directly related to each mine site, and do
not include any cost associated with the general corporate overhead
structure. As a result, Total AISC represent the weighted average
of the three operating mines, and not a consolidated total for the
Company. Consequently, this measure is not representative of all of
the Company's cash expenditures.
Sustaining capital expenditures are expenditures that do not
increase annual gold ounce production at a mine site and exclude
all expenditures at the Company's development projects as well as
certain expenditures at the Company's operating sites that are
deemed expansionary in nature, such as the Sadiola Phased
Expansion, the construction and development of Kurmuk and the PB5
pushback at Bonikro. Exploration capital expenditures represent
exploration spend that has met criteria for capitalization under
IFRS.
The Company discloses AISC as it believes that the measure
provides useful information and assists investors in understanding
total sustaining expenditures of producing and selling gold from
current operations, and evaluating the Company's operating
performance and its ability to generate cash flow. The most
directly comparable IFRS measure is cost of sales, excluding DA. As
aforementioned, this non-GAAP measure does not have any
standardized meaning prescribed under IFRS, and therefore may not
be comparable to similar measures employed by other companies,
should not be considered in isolation as a substitute for measures
of performance prepared in accordance with IFRS, and is not
necessarily indicative of operating costs, operating earnings or
cash flows presented under IFRS.
AISC are computed on a weighted average basis, with the
aforementioned costs, net of by-product revenue credits from sales
of silver, being the numerator in the calculation, divided by gold
ounces sold.
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SOURCE Allied Gold Corporation