Allied Gold Corporation (TSX: AAUC, OTCQX: AAUCF) has made significant strides in its financing strategy for the Kurmuk gold project in Ethiopia, announcing the receipt of its first construction payment under a $175 million streaming agreement with Wheaton Precious Metals International Ltd. (a subsidiary of Wheaton Precious Metals Corp. – NYSE: WPM). This payment, amounting to $43.75 million, marks the first of four planned installments from Wheaton, contingent upon Allied meeting customary conditions associated with the Kurmuk stream agreement.
In addition to this substantial funding, Allied has also entered into a gold prepaid forward arrangement with selected lenders, securing an advance of $75 million. This arrangement entails the purchase of 2,802 ounces of gold per month for a year starting in October 2026. The lenders involved in this agreement include notable financial institutions such as National Bank of Canada, Macquarie Bank Limited, and Citibank, N.A. This gold prepay arrangement is designed to provide low-cost capital financing and is part of a broader financial package aimed at advancing the construction and development of the Kurmuk project.
The Kurmuk project is situated in western Ethiopia, approximately 500 kilometers from Addis Ababa, within the mineral-rich Arabian-Nubian Shield. Allied Gold aims to achieve an initial production target of around 270,000 ounces of gold over the first five years, with an average production rate of 240,000 ounces annually throughout its operational life. The project boasts an impressive All-In Sustaining Cost (AISC) projected to be below $1,000 per ounce.
With initial Proven and Probable Mineral Reserves estimated at 2.7 million ounces, Allied is optimistic about extending the mine’s lifespan beyond 15 years through ongoing exploration efforts. The Kurmuk project is fully permitted and currently under construction, with initial gold production anticipated by the second quarter of 2026. Key construction activities are progressing on schedule and within budget, including earthworks and camp construction.
The recent financial agreements are pivotal for Allied Gold as it positions itself for growth amid a transformative phase. The streaming agreement with Wheaton not only provides immediate capital but also underscores the project’s potential value. Under this agreement, Wheaton will have the right to purchase 6.7% of payable gold from Kurmuk until a total of 220,000 ounces is delivered; thereafter, this percentage will decrease to 4.8%.
The strategic use of gold prepay financing further enhances Allied’s capital structure while minimizing costs associated with traditional debt financing. This approach allows the company to maintain flexibility as it progresses through construction and into production.
In tandem with construction efforts, Allied Gold is also advancing an aggressive exploration program at Kurmuk, allocating a budget of $7.5 million for exploration activities in 2024. Current initiatives focus on extending known mineral resources around planned open pits and exploring regional targets such as the newly identified Tsenge area.
Allied Gold Corporation’s recent financial maneuvers reflect a robust strategy aimed at capitalizing on the promising prospects of the Kurmuk project. With significant funding secured through both streaming agreements and prepaid arrangements, Allied is positioned to enhance its production capabilities and drive sustainable cash flows in the coming years.
