Allied Gold partners with UAE investment fund, secures $500M for growth plans

Allied Gold (TSX: AAUC) announced on Tuesday it has entered a strategic partnership with a United Arab Emirates-based investment group to help advance its mining operations based in Africa.

The transaction, says Allied, is expected to provide “key regional expertise and broader market support” through the partnership with Ambrosia Investment Holding, a newly formed investment fund at the forefront of the UAE renewable energy sector.

The company also notes that the UAE has emerged as Africa’s most prominent backer of new business, surpassing China. Between 2019 and 2023, it is estimated that Emirati companies have committed more than $110 billion to African projects.

To form the partnership, Ambrosia will buy half of Allied’s gold mining assets in Mali, which include an 80% interest in the Sadiola mine, for $375 million in cash. Of this amount, $145 million will be paid to Allied on closing, with the remaining $230 million paid later. Following the sale, the parties will create a 50/50 joint venture on the Malian assets.

Ambrosia will also acquire a 12% equity interest in Allied Gold for approximately C$156.6 million, which will be used to fund the ongoing phased expansion of Sadiola. In total, around 46 million shares will be purchased at C$3.40 per share, a discount to Tuesday’s opening price of C$4.70.

By 11:10 a.m. in Toronto, Allied’s shares traded at C$4.41 apiece for a market capitalization of C$1.45 billion.

“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,” commented Peter Marrone, Allied’s chairman and CEO.

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

Growth plans

Allied said this transaction, with a total value of $500 million, will further 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 phased expansion approach at Sadiola is driving production increases from approximately 170,000 oz. in 2023 to a mid-term range between 200,000-230,000 oz. per year as 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 solutions company ATGC. This, Allied says, is expected to improve the asset’s costs and environmental footprint.

In Ethiopia, the Kurmuk project is expected to enter production in mid-2026 with a target production level of approximately 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 upside, 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.

New York listing

Meanwhile, Allied is looking to join the long list of major gold miners to trade in both the US and Canada, and is said to have started its application process with the New York Stock Exchange.

In an interview with Bloomberg, chief executive Marrone said the company was advised that it meets the criteria for a NYSE listing and expects a decision on its application in the first half of the year.

“Canada is a great place to be a mining company, but New York is the king of the mountain in terms of listing seniority,” Marrone said in the interview. “That’s where we want to be.”