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Africa|Gold|PROJECT
Africa|Gold|PROJECT
africa|gold|project

Newly listed Allied Gold board approves $500m Ethiopia project

Peter Marrone is the CEO of Allied Gold

Peter Marrone is the CEO of Allied Gold

12th September 2023

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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Africa-focused Allied Gold, which on Monday listed on the TSX, has approved the expanded Kurmuk project, in Ethiopia, earmarking $500-million for a two-phase development plan.

Kurmuk is now planned as a 240 000-oz/y gold mine with all-in sustaining costs (AISC) targeted below $950/oz, with a strategic mine life extending for an initial 15 years.

The expanded project that involves upgrading the processing plant's capacity from 4.4-million tonnes a year to between 5.4-million tonnes and 5.7-million tonnes a year. 

The expanded project will produce an average of nearly 275 000 oz/y for the first four years and an average of 240 000 oz/y over its mine life. This compares favourable to the original project, which would have produced an average of 200 000 oz/y with similar capital costs.

Allied noted that, by capitalising on the deployment of existing major equipment owned by the company and relying on contractor mining, the expanded project would be developed with the same capital requirements as initially planned.  

The project development capital would be spent from 2023 to 2026, funded by available cash on hand and cash flows from producing mines, with the first gold pour expected in the second quarter of 2026.

Allied has just completed a $267-million financing, including a significant investment from incoming management in the amount of $40-million. Chairperson and CEO Peter Marrone anchored the investment of incoming management.

Allied Gold and Allied Merger Corp, which was formed by Marrone and fellow former Yamana Gold executives, last week completed a business combination and reserve takeover transaction.

"The commencement of trading on the TSX marks the final step as we complete our transition to a public company and embark on our next phase of growth," Marrone commented on Monday.

"We are excited to have been part of this foundational event for the Company and are now positioned to execute our strategic vision, with a renewed commitment to delivering on our high-quality, organic growth profile and generating substantial value for our shareholders. Our goal is to evolve into a significant mid-tier next-generation gold producer and ultimately become a leading senior global gold producer," he said.

OTHER EXPANSION APPROVALS
Meanwhile, the Allied board also approved an allocation for the advancement of the Diba project, located 15 km south of the processing plant at its flagship Sadiola gold mine, in Mali.  The company previously announced that it entered into an agreement to acquire the Diba project from Elemental Altus Royalty with the aim of providing higher-grade and lower-cost oxide ore feed to the Sadiola gold mine, particularly in 2024 and 2025.

Allied plans to progress with delineation drilling, road, and infrastructure upgrades throughout 2023 and intends to confirm mineral reserves, and commence ore processing at Diba in the first half of 2024.

The total development costs approved by the board, including expenses for an access road to transport ore to the Sadiola plant, are expected to be $12-million in 2023 and 2024. 

The board also approved the Phase 1 expansion of Sadiola, with a total capital investment of $61.6-million, scheduled for execution in 2024. This expansion is part of a broader plan for Sadiola, transitioning the mine from producing gold from oxide ore to fresh rock. In this initial phase, the existing plant, originally designed for oxide ore processing, will be upgraded to handle up to 60% of the total ore feed as fresh rock.

As a result of this upgrade, Sadiola is expected to increase its gold production from 175 000 oz/y to an average level of 200 000 oz/y between 2024 and 2028.

The Phase 2 expansion, planned as a new processing plant to be built beginning in 2027 and dedicated to processing fresh rock starting in 2029, is expected to increase production to an average of 400 000 oz/y for the first four years and 300 000 oz/y on average for the mine's 19-year life, with AISC expected to decrease to below $1 000 per gold ounce.

In addition to these developments, the board has approved an optimization plan encompassing a series of enhancements at existing mines. These enhancements include upgraded and improved power generation facilities, instrumentation upgrades, improved procurement and supply chain processes and management, enhanced contractor interaction for improved mine production and operational right-sizing to improve efficiency and costs across all of the company's mines.

Edited by Creamer Media Reporter

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