Allied Gold has partnered with UAE’s Ambrosia Investment Holding, acquiring $500 million to expand its mining operations in Africa. Ambrosia will purchase 50% of Allied’s gold assets in Mali, including a significant stake in the Sadiola mine. This partnership will bolster production capabilities and enhance financial flexibility as Allied aims to increase outputs in its projects, including Kurmuk in Ethiopia. Furthermore, Allied is pursuing a New York Stock Exchange listing for greater market visibility.
Allied Gold (TSX: AAUC) has established a strategic partnership with an investment fund based in the United Arab Emirates to advance its mining operations in Africa. This collaboration with Ambrosia Investment Holding, a newcomer in the UAE renewable energy sector, aims to leverage regional expertise and enhance market support for Allied’s operations. Notably, the UAE has become a significant investor in Africa, outpacing China with over $110 billion committed from 2019 to 2023.
As part of this transaction, Ambrosia will acquire 50% of Allied’s gold mining assets in Mali, including an 80% stake in the Sadiola mine, for $375 million. The agreement stipulates an immediate payment of $145 million, with the balance of $230 million payable at a later date. After finalizing the deal, a 50/50 joint venture will be formed to manage the Malian assets.
Ambrosia will also secure a 12% equity stake in Allied Gold for approximately C$156.6 million, targeted at supporting the phased expansion of Sadiola. This comprises the acquisition of around 46 million shares priced at C$3.40 each, which is lower than the opening price of C$4.70 on the day of the announcement. As of 11:10 a.m. in Toronto, Allied’s shares were valued at C$4.41, leading to a market capitalization of C$1.45 billion.
Peter Marrone, chairman and CEO of Allied, remarked on the uniqueness of this transaction, highlighting the combination of Canadian management experience with Emirati investment in Mali. He expressed confidence in the collaboration, considering it a pioneering initiative in the mining sector.
The overall value of this transaction is estimated at $500 million, which will bolster Allied Gold’s financial position as the company seeks to expand its operations. Specifically, it aims to increase annual production at Sadiola from approximately 170,000 ounces in 2023 to between 200,000-230,000 ounces through its phased expansion strategy, with the first phase launching later this year.
Future plans include an additional expansion, scheduled for completion by late 2028, with a production target of 400,000 ounces annually for the first four years, followed by 300,000 ounces per year with a total 19-year mine life, based on current mineral reserves. The costs for these expansions are anticipated to be $65 million and $400 million respectively.
This partnership will also implement a photovoltaic power generation system at Sadiola under a 12-year agreement with UAE-based ATGC, aimed at reducing costs and environmental impact. Meanwhile, the Kurmuk project in Ethiopia is projected to commence production by mid-2026, with a target output of approximately 290,000 ounces annually during the first four years, and 240,000 ounces over its lifespan.
To facilitate development, Allied has secured a C$175 million gold streaming agreement with Wheaton Precious Metals set for late 2024. Concurrently, Allied Gold is preparing to apply for a listing on the New York Stock Exchange, aiming to align itself with other significant mining firms and increase its market presence. CEO Marrone emphasized the prestige of a New York listing compared to Canadian markets, stating the desire to position Allied where it can achieve greater visibility and seniority amongst gold mining entities.
In summary, Allied Gold has formed a significant partnership with Ambrosia Investment Holding, securing $500 million for its growth initiatives in Africa. This strategic alliance is anticipated to enhance production rates at the Sadiola mine and facilitate the development of new projects in Ethiopia. The collaboration not only positions Allied for financial improvement but also underscores the growing investment link between the UAE and Africa’s business landscape.
Original Source: www.mining.com
