ALLIED GOLD ANNOUNCES SETTLEMENT OF TERMS OF A DEFINITIVE PROTOCOL AGREEMENT WITH THE GOVERNMENT OF MALI WHICH WHEN SIGNED WILL DEAL WITH THE ISSUE OF A TEN YEAR EXPLOITATION PERMIT FOR SADIOLA, ADVANCEMENT OF THE KORALI-SUD (DIBA) DEPOSIT, SETTLEMENT OF CERTAIN CLAIMS AND ADVANCEMENT OF THE EXPANSION PLANS FOR THE MINE, AND ALSO ANNOUNCES FINANCING STRATEGY UPDATE
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.
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
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
Sadiola Gold Mine Phased Expansion Plan
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
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
Sadiola Optimization Initiatives
Allied is dedicated to further optimization and improvement of the
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
With this long-term, value-focused strategy, the
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
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 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,
Qualified Persons
Except as otherwise disclosed, all scientific and technical information contained in this press release has been reviewed and approved by
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
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:
- AISC per gold ounce sold
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
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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