Allied Gold Corporation (TSX: AAUC) (OTCQX: AAUCF) (“Allied” or the “Company”) is pleased to announce a strategic partnership (the “Partnership” or the “Transaction”) with Ambrosia Investment Holding (“Ambrosia”), a United Arab Emirates-based investment fund, marking a significant move to realizing immediate value from its Sadiola mine in Mali, while significantly bolstering the Company’s financial strength and adding an influential partner endorsing Allied’s strong growth trajectory.
The Partnership will leverage the regional, national, and continental understanding and influence of Ambrosia, through the United Arab Emirates in Africa, which will build on Allied’s similar competencies, along with Allied’s technical and operational expertise, strong public markets knowledge, financial capacity, and strategic capital allocation capabilities to accelerate the Company’s growth initiatives, optimize operations, pursue strategic options, and enhance shareholder value. The Transaction recognizes and supports the Company’s inherent value proposition and peer-leading growth strategy while endorsing and complementing the Company’s efforts in Mali, particularly the ongoing phased expansion of its generational Sadiola mine. Furthermore, the Transaction is expected to provide key regional expertise and broader market support through a strategic partner with meaningful financial participation in the Company. The United Arab Emirates has emerged as Africa’s most prominent backer of new business, surpassing China. Emirati companies committed over US$110 billion to projects in the continent between 2019 and 2023, including US$72 billion in renewable energy.
The Transaction estimated aggregate proceeds of over US$500 million, including approximately US$250 million in upfront cash consideration, crystalizes significant upfront value for Allied’s shareholders and creates a fortress balance sheet, further improving the Company’s financial flexibility. This robust balance sheet underpins Allied’s transformational growth plans, including the development of its Kurmuk project in Ethiopia and the ongoing phased expansion at Sadiola in Mali.
Kurmuk is expected to start production in mid-2026 with a target production level of approximately 290,000 gold ounces per annum over the first 4 years and 240,000 gold ounces per annum over the life of mine at industry-leading All-In Sustaining Costs (“AISC”). With Proven and Probable Mineral Reserves of 2.7 million ounces of gold and significant geological upside, the Company is targeting a mine life greater than 15 years driven by an extensive exploration program. The phased expansion approach at Sadiola is driving production increases from approximately 170,000 ounces in 2023 to a mid-term range between 200,000 and 230,000 ounces per year as result of oxide ore feed and the implementation of the first expansion phase later this year. This is followed by a further expansion stage expected to be completed in late 2028, which will target a production level of 400,000 gold ounces per annum over the first 4 years and 300,000 gold ounces per annum over a 19-year mine life based on 7.2 million ounces in Mineral Reserves. The Company is advancing metallurgical and engineering studies to confirm the opportunity to increase production over these life-of-mine levels through the optimization of metallurgical recoveries and a progressive expansion approach. The Partnership also contemplates the provision of a state-of-the-art renewable power solution to Sadiola, which is expected to improve the asset’s costs and environmental footprint.
The improved financial flexibility arising from the Transaction will provide the opportunity to optimize these expansion plans at Sadiola and Allied’s other assets while also providing the Company with tools to pursue strategic opportunities along with its new partner, Ambrosia.
Transaction Highlights
The Partnership includes the following components:
- The sale to Ambrosia of 50% of Allied’s interest in Allied Gold ML Corp. (“Allied Holding”), which entity owns, directly and indirectly, Allied’s interests in its Mali operations (the “Mali Transaction”), including 80% of Societe d’Exploitation des Mines d’Or de Sadiola SA (“SEMOS”), for a purchase price comprised of:
- US$145 million in cash on closing; and
- present value of US$230 million deferred cash consideration.
As a result of the sale of 50% of Allied’s interest in Allied Holding, a 50:50 joint venture will be created with Ambrosia, which will govern the relationship of the parties in Allied Holding and SEMOS and provide for the governance of the Sadiola mine. Allied will remain the operator of SEMOS and will continue the advancement of the ongoing value-creating initiatives at Sadiola and the execution of its business plan.
- The implementation of a state-of-the-art power supply system to provide energy to the Sadiola mine under the terms of a power supply agreement between United Arab Emirates-based power solutions company ATGC LLC (“ATGC”) and SEMOS pursuant to which, among other things, ATGC will provide a power solution to SEMOS for a minimum period of 12 years by July 2026, including the deployment of photovoltaic power generation and industry-leading solid-state energy storage. This will provide Sadiola with a reliable, cost-efficient, and environmentally friendly supply of energy for its operations, which is expected to improve its operating costs through a reliable energy supply at rates comparable to or better than those available in the market.
- Share subscription and market support in connection with which Allied will issue to Ambrosia, on a private placement basis (the “Private Placement”), 46,044,270 common shares of Allied (the “Private Placement Shares”) representing approximately 12% of the proforma issued and outstanding shares of the Company, at an issue price of CDN$3.40 per share for aggregate proceeds of CDN$156,550,518, the net proceeds of which will be used by Allied to fund the phased expansion at Sadiola. The issue price represents a modest premium to the five-day volume weighted average price of Allied’s common shares on the Toronto Stock Exchange (the “TSX”) between January 13 and January 17, 2025, being the period during which the parties met and first discussed indicative pricing and other commercial terms of the transaction.
Ambrosia has advised Allied that it intends to increase its participation in the Company through the purchase of Allied’s shares in the market following the closing of the Private Placement. Ambrosia has agreed not to exceed 19% aggregate beneficial ownership without the Company’s consent. Accordingly, Ambrosia may achieve 19% proforma ownership in Allied through the acquisition of the Private Placement Shares and market purchases at prevailing market prices.
Transaction Rationale
- Strategic Regional Expertise: Ambrosia’s experience and relationships in West Africa and, in particular, in the Republic of Mali, alongside the strong endorsement from the United Arab Emirates authorities, are expected to complement and enhance the Company’s own relationships and collaborative approach and be of significant value to Allied and its shareholders. Furthermore, the combined expertise and relationships will allow Allied to consider and pursue other significant value-creation opportunities in the region and emerging markets in general.
- Sadiola Power Solution and Environmental Performance: The power supply agreement with ATGC provides Sadiola with a cost-competitive, reliable, and environmentally friendly supply of energy through the deployment of photovoltaic power generation and state-of-the-art solid-state energy storage. This is expected to improve the mine’s costs ahead of the implementation of the second phase expansion while reducing Sadiola’s reliance on fossil fuels. Furthermore, through the partnership with Ambrosia and ATGC, Allied will gain access to significant technical expertise and capacity to deploy reliable, cost-effective, and renewable energy solutions at its other sites.
- Value Realization: The Mali Transaction will provide immediate crystallization of value for Allied’s shareholders through the upfront cash payment and the deferred consideration while retaining exposure to the significant growth and mineral reserves at Sadiola. The Mali Transaction values the Company’s 80% interest in the Sadiola mine at US$750 million, representing a premium to the implied trading value of the asset. Additionally, the Company anticipates that, as a result of the Transaction, its remaining 40% interest in Sadiola will garner increased market value as different opportunities for value creation can be accelerated and materialized.
- Financial Flexibility: The aggregate proceeds from the Private Placement and the Mali Transaction, expected to total over US$500 million, with approximately US$250 million in upfront cash consideration, create a fortress balance sheet, further improving the Company’s financial flexibility. This robust balance sheet underpins Allied’s transformational growth plans, including the development of its Kurmuk project in Ethiopia and the ongoing phased expansion at Sadiola. Kurmuk is expected to start production in mid-2026 with a target production level of approximately 290,000 gold ounces per annum over the first 4 years and 240,000 gold ounces per annum over the life of mine at industry-leading AISC(1). With Proven and Probable Mineral Reserves of 2.7 million ounces of gold and significant geological upside, the Company is targeting a mine life greater than 15 years driven by an extensive exploration program. The phased expansion approach at Sadiola is driving production increases from approximately 170,000 ounces in 2023 to a mid-term range between 200,000 and 230,000 ounces per year as result of oxide ore feed and the implementation of the first expansion phase later this year. This is followed by a further expansion stage expected to be completed in late 2028, which will target a production level of 400,000 gold ounces per annum over the first 4 years and 300,000 gold ounces per annum over a 19-year mine life based on 7.2 million ounces in Mineral Reserves. The Company is advancing metallurgical and engineering studies to confirm the opportunity to increase production over these life-of-mine levels through the optimization of metallurgical recoveries and a progressive expansion approach. The improved financial flexibility arising from the Transaction will provide the opportunity to optimize these expansion plans while also providing the Company with tools to pursue strategic opportunities along with its new partner, Ambrosia.
- Capital Allocation: The Partnership allows Allied to optimize its capital allocation strategy for its Sadiola mine expansion while retaining exposure to the asset’s growth and significant inherent value. In partnership with Ambrosia, the Company can assess improved growth paths for Sadiola, including the studies to increase metallurgical recoveries, the progressive expansion approach, other project optimizations, and their implementation, along with the acceleration of the development of exploration targets and other value-added initiatives in the region. The Transaction also allows the Company to more critically evaluate the potential for growth initiatives at its other assets, including the increase of mine life at its Bonikro and Agbaou assets and the potential development of new mining areas at Kurmuk while preserving a net cash position to pursue other opportunities.
- Geological Endowment and Returns: The Mali Transaction endorses the significant value opportunity in the Mali-Senegal shear zone and the Sadiola land package in particular. The region hosts several multi-million-ounce deposits, which provide the opportunity to realize sizeable returns on investment.
Peter Marrone, Allied’s Chairman and CEO, commented, “We are delighted with the formation of this strategic alliance and to partner with such influential persons who have a similar understanding and appreciation of Sadiola and the Republic of Mali. Our approach is to establish rapport and build relationships in the countries in which we operate. Our new partners are similarly minded and have experiences in the country that complement ours. We were also impressed with the commitment of the Government of The United Arab Emirates in Africa at large and the Republic of Mali specifically. 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, with individuals with comparable in-country experience and bringing a unique and very well-priced power solution to Sadiola which will reduce costs and create a better, longer life operation. We believe this collaboration is the first of its kind, with a Canadian company partnering with Emirati entrepreneurs and business persons investing in Mali. We welcome them as partners in Mali and as shareholders and supporters of our broader growth plans.”
Mr. Ahmed Amer Al Amry, Chairman of Ambrosia, stated: “We are delighted to partner with Allied Gold. We have been looking for some time at establishing an alliance with a high-quality precious metals mining company. We have found that in Allied Gold with its impressive portfolio of assets and management team. We are excited to be a shareholder and will continue to support the efforts of the company. We also look forward to our partnership in Sadiola, which we view as an exceptional opportunity. With the support of the United Arab Emirates government and given our familiarity with the country, we will work cooperatively with the Republic of Mali government, side by side with our partner Allied Gold, to realize, maximize, and expedite the inherent significant value in Sadiola.”
Senior Advisor to the transaction, Omar Abu-Sharif, CEO of Resonance Capital said: “We are delighted with this landmark transaction that was achieved through a strategic vision and structuring innovation, bringing together distinguished and experienced investors from the UAE, and a leading precious metals mining group. This partnership marks the beginning of a strong and promising future, built on a shared vision, expertise, and long-term growth potential.”
Transaction Details
The Company and Ambrosia have entered into a definitive subscription agreement in connection with the Private Placement and binding term sheets providing for the terms of the other components of the strategic partnership. Closing of the Transaction and funding of the Private Placement is subject to finalization and entry into a definitive share purchase agreement relating to the sale of 50% of Allied’s interest in Allied Holding, a joint venture and shareholders agreement to govern the joint venture, a power supply agreement to provide the power solution to SEMOS, as well as the satisfaction of conditions precedent, including receipt of regulatory and third party consents and approvals.
The Private Placement is expected to close on or about March 17, 2025, or such other date as the parties thereto may determine and, as noted above, is subject to the satisfaction of certain closing conditions. The TSX has provided its conditional approval for the listing of the Private Placement Shares. The Private Placement Shares will be subject to a statutory hold period of four months and one day from issuance of such shares on closing of the Private Placement, in accordance with applicable Canadian securities legislation.
Advisors and counsel
In connection with the Transaction and Private Placement, Allied has retained Stifel Nicolaus Canada Inc. and National Bank Financial Inc. as financial advisors, and Cassels Brock & Blackwell LLP and Hogan Lovells International LLP as legal counsel. Ambrosia is being advised by SCP Resource Finance LP as financial advisor and by A&O Shearman and McCarthy Tétrault LLP as legal counsel.
The Board of Directors of Allied has approved the Private Placement and the binding term sheets in connection with the completion of the Transaction. Stifel Nicolaus Canada Inc. and National Bank Financial Inc. have each provided an opinion to the Board of Directors of Allied to the effect that, as of February 23, 2025, the consideration to be received by Allied under the terms of the Mali Transaction is fair, from a financial point of view, to Allied, in each case, subject to the respective limitations, qualifications, and assumptions set forth in such opinions.
