TORONTO, Sept. 3,
2024 /PRNewswire/ - Allied Gold Corporation
("Allied" or the "Company") announces that it has settled the terms
of a definitive protocol agreement (the "Protocol Agreement") with
the Government of Mali, the
execution of which is pending. The Protocol Agreement provides for
the renewal of the Exploitation Permit for the Sadiola Gold Mine,
the advancement of the development and processing of the nearby
Korali-Sud (Diba) deposit, and the continued development of the
phased expansion of the Sadiola Gold Mine. The Sadiola Exploitation
Permit, which will be valid for a full ten years, will be issued
under the newly decreed 2023 Mining Code, with renewals of equal
duration available until all mineral reserves have been mined out.
An application is in progress, and the permit is expected within a
few weeks. With the completion of a feasibility study and tolling
agreement relating to Korali-Sud, which the Company expects to file
with mining authorities forthwith, all necessary approvals for the
development of Korali-Sud and the processing of ore from this
satellite deposit at the Sadiola Gold Mine facilities are expected
within a defined period of time after entering into the Protocol
Agreement, thereby ensuring contributions to production from this
satellite deposit in the third quarter and, most significantly, in
the fourth quarter. The Protocol Agreement also contemplates
certain derogations from royalties otherwise applicable under the
2023 Mining Code. Finally, the Protocol Agreement provides that, in
consideration of a one-time upfront cash payment, all outstanding
disputes, allegations, audits, and assessments, including those
related to tax, customs levies, maintenance and management of
offshore accounts, and the development and management of the mine
and satellite areas, will be settled. The cash payment is expected
to be paid from available cash on hand and other sources.
As the Company has been given assurances that the Protocol
Agreement is approved and its execution is pending, the Company has
been progressing its implementation, which includes the preparation
and filing of required applications and documents for the issuance
of the Sadiola Exploitation Permit and relating to mining and
processing of ore from Korali-Sud. In the interim, the Company
continues to mine under legal authority and support from various
ministries and authorities in country.
The Sadiola Gold Mine is directly owned by SEMOS, which is 80%
owned by Allied and 20% owned by the Government of Mali. Located in the Kayes region of
Western Mali, it is a producing
gold mine undergoing a phased expansion. Korali-Sud is a nearby
oxide gold deposit that will contribute to increased
intermediate-term oxide gold production at the Sadiola Gold Mine,
as ore from Korali-Sud is processed at the mine's facilities.
As previously disclosed, Allied, along with other industry
participants, has been meeting with Malian government
representatives to discuss the impact of the new mining law on
mining companies. The Company has actively participated in these
meetings and continues to engage in ongoing discussions while
maintaining normal mining operations. The settlement of the
Protocol Agreement terms marks a significant step in securing the
future of, and creating certainty for, the Sadiola Gold Mine and
its expansion plans. The Protocol Agreement reaffirms Allied's
commitment to working collaboratively with the Malian government
and other stakeholders and, in that regard, contemplates ongoing
dialogue on advancing the mine's expansion and improving its
economics and value.
Allied Gold continues to work collaboratively with all local
stakeholders to advance project improvements and optimizations
while balancing project economics with the importance of making
positive contributions to the Malian economy. This ongoing dialogue
reflects Allied's commitment to advancing the development of mining
opportunities in a cooperative manner, ensuring that the benefits
are shared with the people of Mali. The settlement of the Protocol Agreement
terms represents a significant milestone, providing certainty for
the future of the Sadiola Gold Mine, while also reinforcing
Allied's long-term commitment to Mali as a prolific precious metals mining
jurisdiction with significant gold mining opportunities along the
same trend as Sadiola. The Company intends to advance further
discussions related to these opportunities.
Sadiola Gold Mine Phased Expansion Plan
The Sadiola Gold Mine expansion is designed as a two-phased, yet
integrated, project. The first phase focuses on operational
sustainability, establishing key infrastructure, and providing
critical plant-scale technical information on the processing of
fresh ore, allowing for further confirmation of the extensive
testwork conducted to date and paving the way for a seamless
transition into a transformational second phase that is expected to
position the Sadiola Gold Mine as a top-tier, generational,
low-cost gold mine.
The first phase of the expansion involves primarily crushing and
milling modifications to the existing CIP processing plant,
resulting in up to 60% of fresh ore (compared to roughly 20%
currently) being processed at the plant at a rate of up to 5.7
Mt/y. This phase also includes infrastructure upgrades to prepare
the site for the second phase of the expansion. Engineering related
to the integrated expansion is well advanced, pre-construction
activities have been progressing according to plan this year, and
modifications to the existing plant as part of the first phase are
scheduled to begin in Q4 2024. The first phase will lead to a
planned production level of 200,000 to 230,000 ounces per year for
at least four years. This planned yearly production represents a
significant increase over 2023 production, which is used as a
baseline. The Company expects to spend approximately $65 million through 2025 on this phase, with the
majority of the investment focused on plant modifications,
including an additional provision of $5
million for cyanide detoxification, which was originally
planned for the second phase but has now been accelerated into the
first.
The first phase will also provide the Company with plant-scale
technical information on the processing characteristics of SEMOS'
inventory of fresh ore, corroborating previous historical test work
and enabling the Company to better determine the expected plant
capacity for the second phase. During this phase, the Company will
also evaluate various optimizations and anticipated increases in
recoveries.
The second phase involves the construction of a new CIL
processing plant specifically designed to process fresh ore, along
with related infrastructure. Construction is set to begin in late
2026 and is expected to be completed in 2028. The Company plans to
complete the expansion a full year ahead of schedule, drawing on
its project optimization program. The capital costs of the new CIL
plant in the second phase of the expansion are expected to be
approximately $400 million, to be
spent from 2026 to 2028.
Sadiola Optimization Initiatives
Allied is dedicated to further optimization and improvement of
the Sadiola Gold Mine, and it is currently advancing several
initiatives to improve project production and economics. These
opportunities include improved recoveries, increased throughput,
and optimized mining inventories, among others.
Previous studies suggested that metallurgical recoveries could
increase by up to 15% via flotation and concentrate treatment
options. To confirm and optimize this important opportunity, the
Company is advancing metallurgical test work and a prefeasibility
study to confirm the parameters for a flowsheet including whole ore
flotation and atmospheric leaching. This optimization could
significantly enhance the project's economics compared to the
current CIL circuit recoveries of an average of 75% and related
production projections, reinforcing the value of Allied's phased
investment approach.
In addition to the recoveries optimization, Allied is also
advancing the engineering of an optimized comminution circuit that
could potentially lead to a 10% increase in throughput. By
combining the impact of both initiatives, the Company is targeting
higher production and lower costs after the second phase of the
expansion.
Due to the improvements mentioned above, Allied is also
advancing studies to optimize the mining inventory, considering the
impacts of increased recoveries and increased throughput.
Preliminary optimizations show that increased recoveries along with
other optimizations could potentially lead to a significant
increase in mineable inventories.
While pursuing the expansion of the Sadiola Gold Mine, the
Company is targeting optimized production in the near term, driven
by contributions from high-grade oxide ore from recent discoveries
in its mineral tenements, which are now advancing to development,
and from Korali-Sud. On the latter, the Company has advanced an
updated feasibility study, which is planned for submission to
governmental authorities soon. The Protocol Agreement also
contemplates obtaining pending approvals for the advancement of
Korali-Sud within thirty days, subject to approval of the updated
feasibility study and entering into a tolling agreement for
processing its ore at the Sadiola Gold Mine plant. As previously
discussed, the Company's objective is to maintain production levels
between 200,000 and 230,000 ounces per year over the next two years
as a minimum, reduce All-In Sustaining Costs
("AISC")(1), and increase revenue and cash flows to
support development projects across the Company in line with
Allied's financial strategy.
With this long-term, value-focused strategy, the Sadiola Gold
Mine is planned as a generational gold mine with low-cost
production continuing for several decades, initially at a
production level of 200,000 to 230,000 ounces per year beginning
this year, and increasing to up to 400,000 ounces per year.
Financing Strategy Update
The Company's strategy to unlock the significant value in its
large and expanding mineral inventory is supported by the financial
flexibility needed to internally fund these optimizations and
growth initiatives, and as a precaution, so that the Company is not
dependent on the price of gold and other variables, Allied is
actively executing a select number of financing alternatives. This
strategic direction is prompted by the current capital markets not
fully capturing the inherent value of the Company's assets, leading
Allied to seek alternative sources of capital that offer low-cost
options with the added benefit of more accurately reflecting true
value to market participants.
Given the competitive cost of capital realized via the Côte
d'Ivoire stream and strong market feedback, Allied is arranging a
$225 million to $275 million Kurmuk funding package comprising a
gold stream and a gold prepay facility on the Kurmuk development
project. The prospective stream validates the opportunities at
Kurmuk, including its strong geological upside potential, and has
attracted significant interest at an attractive cost of capital.
The Company is in advanced stages of discussions with potential
partners, and it is targeting proceeds between $125 million to $175
million in exchange for a gold stream at Kurmuk in the range
of 5% to 7%, and single-digit rates of cost of capital. The gold
prepay facility is targeted in the range of $75 million to $100
million and it would bring forward cash flows and include a
built-in gold price hedge amidst favorable market prices. This
prepay would begin gold deliveries in September 2026 and it is expected to be completed
by March 2028, further balancing the
cash requirements for its construction while also presenting
competitive cost of capital rates. This comprehensive funding
solution is expected to be formalized by the end of September 2024.
Lastly, a further benefit of this financing plan is that it will
provide the Company further financial flexibility to apply cash
flows from existing operations, which are expected to increase
because of operational improvements and optimizations, toward the
possible acceleration of expansion plans at Sadiola and maximizing
value creation.
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
Services). 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 and section 11 of the Q2 2024
MD&A.
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.
Forward-looking information included in this press release
includes, without limitation, statements with respect to
information concerning the Sadiola phased expansion plan, including
possible acceleration of same; expected production and costs,
exploration, development and operating plans herein being met; the
anticipated execution of the Company's proposed financing
alternatives related to the Kurmuk funding discussed herein and the
expectation that this will provide the Company further financial
flexibility possible acceleration of expansion plans at Sadiola and
maximizing value creation. 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; risks related to the Company's expansion and
optimization plans discussed herein not being met within the
timeframe anticipated, or at all; risks related to the Company's
proposed alternative financing initiatives discussed herein not
being met within the timeframes anticipated, or at all; 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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