'We will be hiring locally, that's a very important practice of ours': Allied Gold CEO on new mines

Key Concepts

• Allied Gold: A gold mining company with operations in Mali and Ethiopia, experiencing significant share price growth.
• Kermach Gold Mine (Ethiopia): A new mine nearing production, expected to contribute significantly to Allied Gold’s output.
• Sadiola Mine (Mali): An existing mine transitioning from oxide to hard rock processing, undergoing expansion to increase production.
• Oxide vs. Hard Rock Ore: Different types of gold-bearing ore requiring different processing methods. Oxide ore is generally easier and cheaper to process.
• Canacorn Forecasts: Production estimates provided by Canacorn, a financial analysis firm.
• Protocol Agreement (Mali): A 10-year agreement with the Malian government securing permit extensions and fostering dialogue.
• BMI Belt (Mali): A highly productive gold mining region in Mali.

Production & Growth Projections

Allied Gold has seen its share price increase approximately fourfold in the past year, significantly outpacing the TSX gold index, which has more than doubled. The company anticipates total gold production of nearly 550,000 ounces in 2024, representing a 45% increase year-over-year. Further growth is projected, with output expected to reach 660,000 ounces in 2025. This growth is driven by the impending production at the Kermach mine in Ethiopia and expansion at the Sadiola mine in Mali.

Kermach Mine (Ethiopia) – Development & Timeline

The Kermach gold mine in Ethiopia is described as a relatively straightforward project, despite the general complexities of mine construction. Allied Gold deliberately took extra time (6-9 months after going public in September 2023) to ensure proper engineering, efficient procurement, and positive relationships with local communities and governments. Commissioning is slated to begin in April, with full production expected by the third quarter of the year. A key advantage of the Kermach project is its location, approximately 8 kilometers from the nearest settlement, avoiding the need for population resettlement. The company plans to hire locally and provide a camp for workers.

Sadiola Mine (Mali) – Transition & Expansion

The Sadiola mine is currently transitioning from processing oxide ore to harder, fresh ore. Despite already having produced nearly 9 million ounces of gold, the mine holds over 10 million ounces in inventory, with potential for further growth. A two-phase expansion is underway. The first phase, already completed along with other optimizations and oxide ore discoveries, has increased production to between 200,000 and 230,000 ounces per year. This is a significant improvement from the 170,000 ounces produced in 2023 as the oxide ore reserves dwindled. The second phase will enable processing of more fresh ore, aiming for a production platform of approximately 350,000 ounces per year, with improved costs.

Mali Government Relations & Protocol Agreement

Allied Gold has adopted a reconciliatory approach to its relationship with the military-led government in Mali, drawing on experience from previous operations under the Yamana Gold management in South America. In late 2024, the company signed a 10-year protocol agreement with the government, securing a permit extension for its operations. Ongoing dialogue focuses on finding a balance between increased state revenue from mining and continued encouragement of investment in the sector. Peter Moroni emphasized the prolific nature of the BMI Belt, where the Sadiola mine is located, noting the presence of multiple mines producing between 200,000 and 500,000 ounces annually.

Strategic Approach & Company Philosophy

Peter Moroni, CEO of Allied Gold, highlighted the company’s commitment to responsible mining practices, including local hiring and community engagement. He described the company’s approach as recognizing the government’s desire to build a sustainable mining industry, rather than simply extracting resources. This approach, similar to that used in South America, aims to foster a positive and collaborative relationship with host governments.

Notable Quote:

“We took an approach…not dissimilar to many of the things that in in in the predecessor company that this management ran Yamana Gold uh we did in South America recognizing what the government was looking to achieve the creation of a mining industry rather than just companies coming in to extract.” – Peter Moroni, CEO of Allied Gold.

Data & Statistics

• Share Price Increase: Approximately 400% in the past year.
• TSX Gold Index Increase: More than 100% in the past year.
• 2024 Production Forecast: ~550,000 ounces.
• 2025 Production Forecast: 660,000 ounces.
• Sadiola Mine Production (2023): 170,000 ounces.
• Sadiola Mine Current Production: 200,000 – 230,000 ounces.
• Sadiola Mine Target Production (Phase 2): 350,000 ounces.
• Sadiola Mine Inventory: >10 million ounces.
• Sadiola Mine Historical Production: Close to 9 million ounces.

Synthesis/Conclusion

Allied Gold is positioned for significant growth driven by the commencement of production at the Kermach mine in Ethiopia and the ongoing expansion of the Sadiola mine in Mali. The company’s proactive approach to government relations, particularly in Mali, and its commitment to responsible mining practices are key factors in its success. The transition of Sadiola from oxide to hard rock processing, coupled with strategic investments, is stabilizing and increasing production. The company’s strong production forecasts and positive outlook suggest continued growth and value creation for shareholders.