TORONTO, Aug. 7, 2024
/PRNewswire/ - Allied Gold Corporation (TSX: AAUC) ("Allied" or the
"Company") is pleased to announce that it has entered into a
streaming transaction (the "Stream Transaction") with Triple Flag
International Ltd., a wholly-owned subsidiary of Triple Flag
Precious Metals Corp. (collectively, "Triple Flag"). Under the
terms of the agreement, Allied will receive a US$53 million upfront cash payment (the "Advance
Amount") and an ongoing payment equal to 10% of the spot gold
price. Triple Flag will have the right to purchase 3% of the
payable gold produced at each of the Agbaou and Bonikro mines,
subject to a step-down to 2% after set delivery thresholds.
The Stream Transaction crystallizes significant value in
Allied's Côte d'Ivoire Complex (CDI Complex), and enables the
advancement of initiatives designed to incrementally increase asset
value beyond the life of mine plans, unlocking upside potential
without diminishing shareholder equity value.
"We are delighted to partner with Triple Flag on
this streaming agreement. This transaction not only underscores the
inherent value of our Côte d'Ivoire assets, as it implies a
valuation multiple significantly higher than that at which the
Company went public and the price at which the Company's shares
currently trade in the market, but it also provides us with the
financial flexibility to advance our exploration, growth, and
optimization initiatives at a competitive cost of capital, which is
significantly better than other alternatives evaluated, including
equity financing," commented Peter
Marrone, Chairman and CEO. "Our goal is to unlock
significant value for our shareholders while ensuring sustainable
and responsible growth across our impressive asset portfolio. In
the case of the CDI Complex in particular, this transaction allows
us to accelerate the realization of its significant upside
value."
Key Terms
- Triple Flag will have the right to purchase 3% of payable gold
from each of the Company's Agbaou mine (the "Agbaou Stream") and
Bonikro mine (the "Bonikro Stream" and, collectively, the
"Streams").
- Under the Agbaou Stream, the gold stream rate will step
down to 2% of payable gold after the delivery of 29,000 ounces of
gold ("ozs").
- Under the Bonikro Stream, the gold stream rate will step
down to 2% of payable gold after the delivery of 39,300 ozs.
- Triple Flag will make ongoing payments of 10% of the spot gold
price for each oz delivered under the Streams.
- The Streams are subject to a period of certain minimum
deliveries. From 2024 to 2027, an annual minimum of approximately
2.50 to 2.75 thousand gold equivalent ounces ("GEOs") will be
delivered under the Agbaou Stream and an annual minimum of 3.50 to
4.25 thousand GEOs will be delivered under the Bonikro Stream.
- The Streams will cover the existing mining and exploration
licenses for the Agbaou and Bonikro mines.
- Triple Flag has committed to work with Allied to identify
social programs in the communities surrounding Bonikro and Agbaou
to support with separate additional investment.
Transaction Rationale
- Crystallizes Significant Value in the CDI Complex: The
transaction recognizes the inherent value of the Company's CDI
Complex and implies a valuation multiple significantly higher than
that at which the Company's shares currently trade in the market
and the price at which the Company went public. The CDI Complex
comprises the Agbaou and Bonikro mines, which are located in Côte
d'Ivoire within the Birimian Greenstone Belt. Allied is targeting a
sustainable production platform of 180,000-200,000 gold ounces per
annum on a combined basis and a mine life greater than 10 years for
the complex, driven by an extensive exploration program, cost
optimizations, and process improvements aimed at extending mine
life and increasing value.
- Attractive Cost of Capital: The Company evaluated
different financing options as part of this process, concluding
this transaction provides much better cost of capital than any
other alternative, including equity financing. The streaming
agreement offers a competitive cost of capital based on Proven
& Probable Mineral Reserves and remains favorable when assuming
Mineral Resource conversion and exploration upside.
- Enhanced Financial Flexibility: The Advance Amount
ensures self-funding for Allied's extensive exploration program for
the CDI Complex, with a total of US$16.5
million allocated for 2024 to advance highly prospective
sites such as Oume, Akissi-So, Agbalé, and other targets. It also
allows for the acceleration of improvement projects to increase the
reliability of operations, optimize plant capacity, and brings
forward value and extensions of mine life. Allied expects this
flexibility to facilitate capturing further upside beyond the
current life of mine plans. These enhancements are designed to
increase asset value and unlock upside potential without
diminishing shareholder equity.
Closing of the transaction and funding of the Advance Amount is
subject to certain conditions precedent, including certain
third-party consents and agreements, and completion of related
security documents which are expected to be completed in short
order.
Financing Strategy
The Company's ability 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. Based on recent gold prices, the Company
expects to be fully financed based on cash flows; however, as a
precaution, so that the Company is not dependent on the price of
gold, Allied is actively executing a select number of non-dilutive
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
minimum $250 million Kurmuk funding
package comprising a gold stream and a gold prepay facility on the
Kurmuk development project. This comprehensive funding solution is
expected to close by the end of September
2024. 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 gold prepay facility would bring forward cash flows and
include a built-in gold price hedge amidst favorable market prices.
This prepay would begin gold deliveries after Kurmuk's anticipated
mid-2026 construction timeframe, further balancing the cash
requirements for its construction.
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 ongoing operational improvements, toward possible
acceleration of expansion plans at Sadiola and maximizing value
creation and returns to shareholders.
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.
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.
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SOURCE Allied Gold Corporation