Allied Gold nets nearly $500M from UAE for Mali

Allied Gold (TSX: AAUC) (OTCQX: AAUCF) is creating a joint venture in Mali with a United Arab Emirates-based investment group that’s also covering the expansion of main mine Sadiola. 

Ambrosia Investment Holdings, run by UAE businessman Ahmed Amer Al Amry with interests in construction, hotels and energy, said Tuesday it’s paying $375 million for the asset stake including 80% of Sadiola. Of this amount, $145 million is to be paid to Allied on closing with the remaining $230 million paid later.

Al Amry’s company is also taking a 12% stake in Allied for about $110 million that the miner plans to use on expanding Sadiola. 

“This is an impressively unique transaction in that it brings together a Canadian company whose management has significant experience and engagement in the country and whose operational competence and experience is tier one,” Allied chairman and CEO Peter Marrone said in a statement.

“This collaboration is the first of its kind, with a Canadian company partnering with Emirati entrepreneurs and business persons investing in Mali.”

The deal comes as Allied finalizes plans to more than double output from Sadiola by late 2028 and amid attempts by the country’s junta to squeeze more out of Western miners from a new mining code. The political unrest put some operations like Barrick Gold (TSX: ABX; NYSE: GOLD) in limbo for a time while others such as Robex Resources would prefer to sell and leave. 

Muslim ties

This transaction bolsters a project with the Muslim-led government by getting support from the UAE, an Islamic country which happens to be Africa’s most prominent backer of new business, surpassing China. Between 2019 and 2023, Emirati companies have committed more than $110 billion to African projects, the Financial Times said last May.

Allied championed Ambrosia as holding key regional expertise, broader market support and renewable energy knowhow. The company is getting its stake in Allied by buying 46 million shares at C$3.40 apiece, a discount to Tuesday’s opening price of C$4.70.

Allied Gold’s shares closed 2.9% lower on Tuesday in Toronto at C$4.41 apiece for a market capitalization of C$1.45 billion.

Growth plans

Allied said this transaction will improve the company’s financial flexibility as it pursues its growth plans, including the expansion of Sadiola and the development of its Kurmuk project in Ethiopia.

According to the Canadian miner, its staged expansion approach at Sadiola is driving production increases from about 170,000 oz. in 2023 to a mid-term range between 200,000-230,000 oz. per year as a result of oxide ore feed and the implementation of the first expansion later this year.

The second expansion, anticipated to be completed in late 2028, will target a production level of 400,000 oz. per annum over the first four years and 300,000 oz. per annum over a 19-year mine life based on 7.2 million oz. in mineral reserves.

The estimated costs of the two expansions are $65 million and $400 million, respectively.

The partnership with Ambrosia will also see a new photovoltaic power generation system deployed at Sadiola, as part of a 12-year supply agreement with UAE-based power company ATGC. This, Allied says, is expected to improve the asset’s costs and environmental footprint.

Kurmuk

In Ethiopia, the Kurmuk project is expected to enter production in mid-2026 with a target production of about 290,000 oz. per annum over the first four years and 240,000 oz. per annum over the life of mine. With mineral reserves of 2.7 million oz. and further exploration potential, the company is targeting a mine life greater than 15 years at Kurmuk.

To support the project’s development, in late 2024, Allied signed a C$175-million gold streaming deal with Wheaton Precious Metals (TSX: WPM, NYSE: WPM; LSE: WPM).

Meanwhile, Allied wants to join the NYSE in addition to its TSX listing. It’s started the process and expects word by mid-year, CEO Marrone told Bloomberg.